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What is Affiliate Marketing?

By Deborah Ng
Updated May 16, 2024
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Affiliate marketing is a revenue-sharing venture between a website owner and an online merchant. The website owner places advertisements on the site to either help sell the merchant's products or to send potential customers to the merchant's website. This is done in exchange for a share of the profits. There are three ways to earn money through this form of marketing: pay per click, pay per sale and pay per lead.

Marketing Types

In pay per click marketing, every time a potential customer leaves the affiliate website by clicking on the link leading to the merchant's website, a certain amount of money is earned by the affiliate. This amount can vary depending on the product or service that is advertised and the agreed-upon commission. The money might be electronically transferred immediately to the affiliate; the money might be transferred at regularly scheduled times of the day, week or month; or a check might be mailed to the affiliate at regular intervals.

Pay per sale advertising allows the affiliate to earn money every time a sale is made as a result of advertising on the affiliate's website. The affiliate might earn a percentage, or commission, based on the amount of the sale or might earn a flat rate, depending on the agreement.

In pay per lead advertising, every time a potential client registers at the merchant's website as a result of the advertisement on the affiliate's account, a previously determined amount of money is earned by the affiliate.

Advantages and Disadvantages

For many website owners, affiliate marketing is a great way to earn extra money without actually having to "do" anything. All it involves is placing an ad on the affiliate's website, and there's no selling or promotion of any kind. The affiliate can just sit back and wait for the profits to roll in.

It also is beneficial to the merchant. By placing advertising on websites all over the Internet, the merchant can attract customers and doesn't have to pay unless or until it gets results. The more websites with which a merchant is affiliated, the more exposure the products or services get.

Although affiliate marketing has its benefits, there also are a few disadvantages. The merchant has to share the profits with an outside party, for one. If an affiliate uses unsavory means to bring customers to a website or the site includes material that some people might consider objectionable, it might affect the merchant's reputation.

A website owner is advised to thoroughly research the merchant before agreeing to affiliation. Not doing so can result in providing advertising for a merchant that refuses to pay commission fees, relocates or changes businesses without informing the affiliate. This is rare, however, and most merchants and affiliates have a pleasant and profitable business arrangement.

In some cases, an ad can be placed on an affiliate's website for months before a potential customer clicks on it or purchases anything. If the commission is very small, this can lead to a frustrating relationship. Both the affiliate and the merchant are advised to do what they can to ensure that the relationship will be mutually beneficial.

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Discussion Comments

By anon984018 — On Jan 04, 2015

Great posts, Deborah and Niki. It's always good to read a great article about affiliate marketing. This is something that I've really been passionate about for the past five years.

It is really possible to make money online. All you have to do is find and use the right tools. Just as it says on the article. You have the advantages and the disadvantages all you need to do is to apply the principles that work for you and get better at it. Thanks a lot for sharing.

By anon958863 — On Jun 30, 2014

This information would open many of the newbies' eyes about affiliate marketing. In one case, you receive your affiliate link for the products you are selling, and you have to forward the link with your own domain to brand yourself and create a follow up page to build your list!

By anon347909 — On Sep 11, 2013

Great post, if you are thinking of starting an affiliate program, then you should consider getting OSI Affiliate Software. It is an easy to use software that has helped me to grow my business.

By anon313025 — On Jan 10, 2013

It is the best marketing strategy for making money online. Each business affiliates are rewarded by vouchers and commission for promoting website owner's business and services.

By anon306555 — On Nov 30, 2012

I am still not sure how this affiliate marketing works. If I sign up with someone who sends me an email, how do I get started and what costs will I incur? Thanks for your help. --Brad

By anon268907 — On May 16, 2012

I'm a newbie in blogging but have been an affiliate for three years.

The problem for newbies, as I know, is there is so much information about the same product but with different way. And new people will be confused if they don't follow just one style or expert/ experienced person in affiliate marketing.

Yes, new people have to have one experienced guru to start out. After five years, maybe the person can learn from others.

By anon258498 — On Apr 02, 2012

Nothing seems to work for me. How can I get more traffic? What am I doing wrong?

By kevinnash — On Oct 04, 2011

There are certainly a lot of details like that to take into consideration. That is a great point to bring up. I offer the thoughts above as general inspiration but clearly there are questions like the one you bring up where the most important thing will be working in honest good faith. I don't know if best practices have emerged around things like that, but I am sure that your job is clearly identified as a fair game.

By anon168594 — On Apr 18, 2011

Nice post on affiliate marketing and strategies.

By anon70756 — On Mar 16, 2010

Please let me know how we can identify the genuine advertiser or publisher. Does anybody have any particular method for it? Please share with us.

By anon65825 — On Feb 16, 2010

you must promote a program that you like and have interest in and a payout of 60 percent or more would be a great choice.

By anon44641 — On Sep 09, 2009

Anon you should sign up with click bank. I think it cost $50 and then they post it in the marketplace and affiliates help sell it.

By anon35030 — On Jul 01, 2009

hello anon, if you have a book to sell and you need affiliates to help you promote those products. I suggest you Commission affiliate per sale because its not a nice idea to commission them per click. It will cause you a lot amount of money if your affiliate promoting your product earn lots of clicks. And you pay without being assured that your product sells, so I suggest that you pay whenever your affiliate makes a sale. You can submit your product at clickbank. Its one of the Top market place in the internet and they got lots of active affiliates. Thank you and goodluck. --Sampaguita Jien

By whq — On Dec 28, 2008

Hi there anon15153, Are you selling your book as a digital format or in physical form?

By anon15153 — On Jul 03, 2008

I have written a book titled 'Success Have Eyes' and I am thinking of getting affiliates to sell it. How do I get affiliates and what percentage of commission do I need to pay per sale (not per click or per lead)? Thanks, William Lew

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