What is Affiliate Marketing and how does it work?

Last Updated on April 8, 2023 by Rashid Hassan

Affiliate marketing is a type of digital marketing in which third-party sites, affiliates, give space to an advertiser’s products or services, and the advertiser, in return, delivers a commission to the affiliate for each goal achieved.

This is a marketing strategy that was born in the late 1980s in the United States, and which was given its definitive impetus in the mid-1990s by the founder of Amazon, Jeff Bezos, who devised a way to link the pages of other sellers so they could earn a commission every time they sold one of their books.

The main advantages of this type of marketing for the actors involved are:

• Advertisers manage to attract new customers and only pay for the results obtained, which means that the return on investment is always positive.
• Affiliates manage to monetize their website, blog or their profiles on social networks in a simple way that does not require making large investments.

How does it work

Affiliate marketing uses cookies in order to correctly track information from banners and links placed on affiliate sites. Thus, when the user clicks on the advertising content, a cookie will be installed on their device. Thus, when it arrives at the advertiser’s website, it will receive information that allows it to know which site it came from, the ad that was clicked on, whether the required action is taken, and even the importation of the commission.

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Simplifying a lot, the operation would be the following:

• Affiliates and advertisers reach an agreement for the former to promote the products or services of the latter in exchange for a commission, which will only be generated when a user performs a certain action on the advertiser’s website.
• It will also be agreed how the promotion will be carried out. They are usually banner ads or promoted content.
• These content or advertising banners will include a link to the advertiser’s page. Usually, these links include a tracking code that allows you to improve user tracking from the affiliate site.
• As soon as the user clicks on one of these links, a cookie will be stored on their computer with the following information. Affiliate ID and Cookie expiration date
• If the user finally performs the action for which the commission was agreed, the cookies stored on the user’s device will give them all the information about the affiliate, and they will be able to record the commission.

What forms of compensation are there?

We can find different types of remuneration, depending on the action that the user has to carry out in order for a commission to be generated. The most commons are:

• Payment for Sale. Every time a user coming from the affiliate site makes a sale, a commission is paid.
• Payment per Lead or per registration. In this case, the commission will be generated each time a user who reaches the advertiser’s website through the affiliate registers in a form.
• Payment for Call Tracking. Here, instead of asking the user to fill out a form with their data, they are required to leave a phone number for the advertiser to call them.
• Pay per click: you pay each time a user clicks on the ad and reaches the advertiser’s website.
• Pay per thousand impressions (CPM). In the world of online advertising, an impression is typically produced each time an ad is viewed by a user.

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Types of affiliate marketing

Experts differentiate six categories of affiliate marketing:

• Niche pages: pages with specific content related to the product or service offered by the advertiser are used. For example, a seller of climbing equipment will look for specialized pages on the subject and, therefore, are visited by potential customers of their products.
• Cash Back: in this case, a database of subscribers is used with whom the income obtained is shared. Typically the required action is for the user to make a purchase, and when they do, they receive a percentage back.
• Affiliates through search engines: in this case the affiliates promote the products through search engine advertising. They work on a certain number of specific keywords, in order to create qualified traffic to the website from the different search engines.
• Email marketing: the affiliate uses a database made up of users interested in the type of products or services offered by the advertiser to promote them in the mailings it makes to its subscribers. In this case, it is essential that the advertiser defines very well the type of client to which it is directed, so that the affiliate can direct its shipments to the most suitable users.
• Co-registration: in this case, users interested in certain products or services subscribe to a newsletter sent by the affiliate and expressly consent that their data can be sent to an advertiser in that specific sector. The next step is for the affiliate to make the user’s data available to the advertiser.
• Affiliate networks: are platforms that serve as intermediaries between affiliates and advertisers. Typically, the advertiser contacts the affiliate platform and makes an offer, which is called an affiliate program. The members of the network interested in the offer will request to participate in it, and the advertiser will have the possibility to select among all the requests those that best suit their needs and the objectives of their advertising campaign.

 Tips for making an affiliate campaign work

At first glance, affiliate marketing is a simple and risk-free way to turn a website into a source of income, but we must start from the idea that to obtain benefits it is necessary to do a lot of work.

To begin with, before considering getting a return on our website, we have to work, and not a little, so that it is really possible to attract the attention of an advertiser and that an affiliation campaign ends up reporting benefits:

• The site must be provided with useful and quality content capable of attracting the attention of users.
• Once a wide audience has been achieved, it is essential to continue working to maintain the quality and usefulness of the content. In addition, it is necessary to update frequently, in order to retain the audience and continue expanding it.
• It is essential to work with the objective of transmitting an image of credibility. This will make it easier for users to trust the recommendations of products and services that are made from the site.
• You have to analyze the audience of the site to know who they are, what they want, what their interests are. This will make it easier for the campaigns that are launched to really work and report benefits.
• Using a good lead capture strategy, which allows segmenting the site’s audience, will help when it comes to disseminating the content to the most appropriate audience on each occasion.

This previous work is essential to be able to succeed in any affiliate campaign, but it is not a guarantee. In most cases, the first affiliate campaigns do not meet expectations, and only after a while, which serves as learning, do they end up turning this type of action into an important source of income.

Many times it is a trial and error process, although there are a series of tips that can help shorten those learning times:

• The affiliate must be able to provide added value. Include, for example, content that explains the usefulness or use that our users can give to that product or service that we promote. In this way, it will be easier for you to get a click and a conversion.
• A good design is also essential. Every detail counts, and offering a good image will help improve conversions. Also, if the affiliate manages to make the advertising content fit naturally, it will be easier for the user to end up converting.
• Working on SEO positioning is also a fundamental aspect. For starters, it will help attract new users who are searching for the product or service being promoted. In this sense, it is convenient to work on the so-called long-tail words, because they are easier to position, and because they will allow us to reach users who are already interested in what the campaign offers them.
• In order to get as much traffic as possible, and thus increase the chances that users will click on the links in the campaign, it is important to disseminate the content through the many means that we have at our disposal: newsletters, content on social networks etc.