What is affiliate marketing?

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Affiliate Marketing

What is affiliate marketing? A cornerstone of performance-based marketing, an affiliate partnership is an arrangement between a publisher and an advertisers; the publisher drives traffic to the advertiser’s site or offer and earns a commission when a specific outcome, such as a sale or a lead, is achieved. Affiliate can also be considered a form of native advertising, such as a website’s “gift guide” that features links to complete a purchase that tend to reflect the look and feel of a publisher’s organic editorial content.

How does affiliate marketing work? An affiliate program generally begins by connecting a publisher with an outside business with something to sell.

Here is a simplified overview of how affiliate marketing works:

  1. A business creates an affiliate program and provides affiliates with unique affiliate links or tracking codes.
  2. Affiliates promote the business's products or services on their own website, blog, social media channels, or other platforms.
  3. When a user clicks on an affiliate link and makes a purchase or generates a lead, the affiliate is credited with the sale or lead.
  4. The business then pays the affiliate a commission on the sale or lead.

How to measure affiliate marketing: A variety of KPIs are brought to bear on affiliate marketing programs, including:

  • Clicks: The number of people who click on an affiliate link.
  • Impressions: The number of times an affiliate link is seen by a user.
  • Sales: The number of sales generated by an affiliate.
  • Leads: The number of leads generated by an affiliate.

Those are the general metrics for measuring affiliate success. Partners also employ more specific measurements, such as:

  • Conversion rate: The percentage of people who click on an affiliate link and go on to make a purchase or generate a lead.
  • Cost per acquisition (CPA): The average amount of money an advertiser pays for an acquisition, such as a sale or lead.
  • Return on investment (ROI): The amount of money an advertiser makes for every dollar they spend on affiliate marketing.

General examples of affiliate marketing in action include:

  • A blogger writes a review of a product and includes an affiliate link in the review. If a reader clicks on the link and purchases the product, the blogger earns a commission on the sale.
  • A social media influencer posts about a gaming app they love and includes an affiliate link in the post. If a follower clicks on the link and downloads the app, the influencer earns a commission.
  • An online publisher promotes a “top streaming platform” guide that includes affiliate links for different streaming services. If a visitor to the website clicks on a link and signs up for a free trial, the publisher earns a commission on the registration.

Why is affiliate marketing important to marketers? The clear outcomes promised by affiliate deals are one of the most actionable and cost-effective methods to generate sales or leads. Marketers only pay affiliates when they drive the intended result, so the risk to the advertiser is minimal.

Who needs to know what affiliate marketing is:

  • Digital marketing manager
  • Paid search specialist
  • Social media manager
  • Content marketing manager
  • Affiliate manager
  • E-commerce manager
  • Product manager
  • Business development manager
  • Marketing analyst
  • Brand manager

Use affiliate marketing in a sentence: “Affiliate sales represent a clear value for marketers demanding clear actions, consumers who want products from a seller they can trust, and publishers looking to unlock new revenue streams.”