Affiliate marketing is a form of performance marketing where people or companies known as affiliates earn commissions by marketing business products or services. In this form of marketing, the affiliate markets the business’s products through a specific link or referral code. When someone clicks on that link and makes a purchase or performs another predefined action, such as signing up for a service, the affiliate gets paid.
This is typically how it works:
1. The Merchant or Advertiser: This is the business or company offering products or services that affiliates can market.
2. The Affiliate or Publisher: The individual or entity that markets the merchant’s products or services. The affiliates make use of channels like blogs, websites, social media, and email marketing to promote the products.
3. The Consumer (or Customer): The user who clicks on the advertiser’s promotional link and performs his desired action or buys something, or performs some other conversion.
4. Affiliate Networks (optional): Affiliate networks connect affiliates with merchants, often serving as an intermediary. Affiliate networks provide tracking tools, reporting functionality, and often even process payments.
Compensation models:
There are various compensation models, such as:
– PPS (Pay-per-sale): The affiliate earns on every sale.
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– PPC (Pay-per-click): The affiliate gets paid on every click-through, regardless of whether someone buys anything or not.
– (Pay-per-lead): In this, the affiliate is paid on every lead generated by a visitor, such as signing up for a newsletter or filling out a contact form.
