Affiliate marketing is an online practice wherein a business rewards an affiliate for the visitors or customers brought in by his marketing efforts. The rewards are either cash or gifts and are given for either an offer completion or site referral. In this process, there are four players – the merchant, network, publisher and customer. Recently, this market has grown complex with the secondary players like affiliate management agencies, third party vendors (specialized) and super-affiliates. It works by simply using the affiliate’s website to drive traffic to the merchant’s own site or to allow visitors to be forwarded to the merchant’s main web page.
Basically, this is also what we can call revenue sharing between the online merchants and online affiliates. The compensation given to the affiliates depend on how many user clicks, sales or registrations were made on the merchant’s website via their own. Affiliate marketing enables the automation of the advertising processes and the payment for desired actions. Merchants have preferred this internet marketing strategy because it is a “pay per performance” model, where they do not incur any expenses for marketing their products unless the affiliate produces the results they need.
Affiliate marketing can also be translated as a type of business relationship where you, as an affiliate, promote a merchant’s services which is different from yours. This means that you do not need to have your own product in order to venture into affiliate marketing. You only need to promote your business provider’s services and products.
This is how it works – you need to have a web page that contains a link that directs your users or visitors to the main page or online store of the merchant. When one of your site visitors clicks on that link and purchases something from the merchant’s website, you will get a sort of commission or a referral fee. This way you are the one driving traffic to your merchant’s website through your own web page. The merchant will pay you whenever a visitor from your site buys something or signs up for something on their site. A special affiliate link is assigned to your web page, making it easy for the merchant to track customers coming from your site. One merchant is allowed different affiliate links and all of them will direct the users to its website.
Another strategy that works in affiliate marketing is the use of web page codes or web cookies. This is actually a very interesting way to still profit even if your visitor clicks on the affiliate link and does not purchase from the merchant’s site at once. How does this work? The moment a user clicks on the link, a cookie is stored in his computer, indicating that he or she visited the merchant’s site and recording your page as the one that referred him to that website. If, let’s say a couple of weeks later, the user finally decides to buy something from the merchant’s online store and types the web address of the merchant directly into his browser, the cookies stored in his computer will still recognize the purchase as a referral from your affiliate link, allowing you to receive a compensation from the merchant. Note that cookies have expiration, so you must read the affiliate program’s terms carefully to check the life span of these cookies.
The success of affiliate marketing has also paved way for the rise of many online companies such as Amazon.com, which now has thousands of affiliates.