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What Is Affiliate Marketing?
Affiliate marketing is an online sales tactic that lets a product owner increase sales by allowing others targeting the same audience – “affiliates” – to earn a commission by recommending the product to others. At the same time, it makes it possible for affiliates to earn money on product sales without creating products of their own.
The cost to the customer purchasing the product or service through an affiliate is the same as buying directly from the product owner.
While product owners make less money per sale because they must pay a percentage of the sale to the affiliate, they are also reaching potential customers they probably wouldn’t reach on their own.
Affiliates can earn commissions on a one-time purchase or recurring income through sales of subscriptions or membership programs.
How It Works :
After being accepted into an affiliate program, marketers receive a unique URL that includes their affiliate ID. They share that unique URL with their subscribers, site visitors, and social networks via text links or ads. When someone clicks on that link, affiliate software records that click and any resulting product sales in the affiliate’s account. When commissions reach a pre-determined threshold, the affiliate is paid.
Because affiliate marketing works by spreading the responsibilities of product marketing and creation across parties, it manages to leverage the abilities of a variety of individuals for a more effective marketing strategy while providing contributors with a share of the profit. To make this work, three different parties must be involved:
- Seller and product creators.
- The affiliate or advertiser.
- The consumer.
Let’s delve into the complex relationship these three parties share to ensure affiliate marketing is a success.
1. Seller and product creators:
The seller, whether a solo entrepreneur or large enterprise, is a vendor, merchant, product creator, or retailer with a product to market. The product can be a physical object, like household goods, or a service, like makeup tutorials. Also known as the brand, the seller does not need to be actively involved in the marketing, but they may also be the advertiser and profit from the revenue sharing associated with affiliate marketing.
2. The affiliate or publisher:
Also known as a publisher, the affiliate can be either an individual or a company that markets the seller’s product in an appealing way to potential consumers. In other words, the affiliate promotes the product to persuade consumers that it is valuable or beneficial to them and convince them to purchase the product. If the consumer does end up buying the product, the affiliate receives a portion of the revenue made.
Affiliates often have a very specific audience to whom they market, generally adhering to that audience’s interests. This creates a defined niche or personal brand that helps the affiliate attract consumers who will be most likely to act on the promotion.
3. The consumer:
Whether the consumer knows it or not, they (and their purchases) are the drivers of affiliate marketing. Affiliates share these products with them on social media, blogs, and websites.
When consumers buy the product, the seller and the affiliate share the profits. Sometimes the affiliate will choose to be upfront with the consumer by disclosing that they are receiving commission for the sales they make. Other times the consumer may be completely oblivious to the affiliate marketing infrastructure behind their purchase.
Either way, they will rarely pay more for the product purchased through affiliate marketing; the affiliate’s share of the profit is included in the retail price. The consumer will complete the purchase process and receive the product as normal, unaffected by the affiliate marketing system in which they are a significant part.