What is affiliate marketing and how does it work?

What is affiliate marketing and 

how does it work?

Essentially affiliate marketing involves a merchant paying a commission to other online entities, known as affiliates, for referring new business to the merchant's website. 

Affiliate marketing is performance-based, which means affiliates only get paid when their promotional efforts 

actually result in a transaction.

To those on the outside, affiliate marketing can seem like a black box. It’s inner workings are mysterious to most marketers and in many companies it’s not treated with the same seriousness as other channels. Some marketers, only familiar with the bad reputation acquired by some industry players in the 2000s, deride it as a source of spam and little more.

The truth is much more complicated. It’s true that affiliate programs can be sources of phantom revenue and off-brand promotion. But managed properly, they can also make up 5-15 percent of online revenue and have an ROI among the highest of any online channel. CMOs are realizing that affiliate marketing can be an important part of their arsenal and are integrating the channel into their overall marketing strategies.

This series is designed as an introduction to affiliate marketing, outlining what it is and general best practices for getting the most out of your program. For specific information about what type of affiliate program is best for your company.