Affiliate marketing: how does it work and what does it help with?
Author: Monika Zeminová
Date of Publication: 28/09/2022
Affiliate marketing (commission marketing) is a promotional cooperation between two entities. In this cooperation, the affiliate advertiser receives promotional space and the affiliate partner receives profits from the advertiser's sales. Thus, it is a marketing tool that works on a partnership and commission basis. Yet unlike conventional forms of online advertising (PPC – pay per click, PPV – pay per view), in affiliate marketing the advertiser pays for the conversion. In addition, they pay for the demonstrable performance of the ad.
Who is an affiliate partner?
An affiliate partner is a company or person who promotes an advertiser's product or service. For example, a partner can be a review site, a price comparison site, a product catalog, a cashback portal, an interest blog or various online advertising specialists. So, the partner receives commissions from the partnership.
Who is an affiliate advertiser?
An affiliate advertiser on the other hand is a company or person who tries to sell something or get customers. So, it can be a company that sells any products or services. As a result, from the partnership the advertiser gets promotional space and traders, in order to make profit.
How does it work?
Affiliate marketing is a complex segment of marketing that is constantly expanding. The
commission system is commonly run as follows:
1. The customer goes to the company's
website via an affiliate partner and buys, orders something or signs up.
2. The company contacts the client and verifies the order/registration.
3. Once everything is agreed, the client pays the company.
4. After the company receives payment from the client, the affiliate advertiser pays the agreed commissions to the affiliate partner.
Forms of affiliate marketing:
On the Internet, affiliate advertising is most often in the form of:
● product galleries
● highlighted search positions or
● promoted posts.
Also, affiliate advertising can be part of newsletters and online ads.
Benefits of affiliate marketing
The biggest advantage is saving on advertising costs. Input costs are low and the price of advertising is based on the results. If the affiliate partner does not deliver any orders, the advertiser pays nothing. The affiliate partner is motivated to dedicate the promotion. If they want to get the highest percentage of commissions, they must process, place, distribute and target the advertisement well. However, a side effect of affiliate marketing can also be enhancement of SEO and brand. This is because more links and more traffic will go to the advertiser's website. Apart from that, in affiliate marketing, the web becomes an important sales channel for the advertiser. In order to fulfill this goal, portals need to choose specific advertisers. These regularly inform portals about new campaigns, upcoming events, new products and their business plans. This is particularly important so that sites can tailor their content and make the most of their audience.
Frankenfield, J. (2022, July 05). Affiliate Marketing. Investopedia. Retrieved August 29, 2022, from: https://www.investopedia.com/terms/a/affiliate-marketing.asp
Hayes, M. (2022, January 20). What Is Affiliate Marketing and How To Get Started. Shopify. Retrieved August 29, 2022, from: https://www.shopify.com/blog/affiliate-marketing
Smith, B. (2022, March 25). What is affiliate marketing? A guide for beginners. Retrievede August 29, 2022, from: https://www.oberlo.com/blog/what-is-affiliate-marketing