How Does Affiliate Marketing Work?
Affiliate Marketing is a performance based marketing.
Affiliates get paid when they drive traffic (customers) to an offer and the traffic (customers) converts.
By converting I mean making a sale or generating a lead (getting the contact info).
In affiliate marketing there are 4 main players.
The merchant or the product owner that needs more traffic for his offers and who is offering money in return for a given action. That action can be a sale or a lead (user fills a form).
The network is the referee between the affiliate marketer and the product owner. In an affiliate network you can find offers listed from the product owners and affiliates promote those offers for a monetary compensation. The network makes sure the affiliate marketer gets paid on time. The payment can be monthly or weekly, it depends on the network. The network has to deal with the product owner for all the payments. Affiliate Networks earn a commission from every action performed by the customer.
The affiliate marketer or publisher is the one that drives traffic to the offers through a special link given by the affiliate network. When there is a conversion (customer performs the desired action) it gets registered in the affiliate network's dashboard and the affiliate marketer gets paid a commission.
The customer is the person looking for a service or product offered by the product owner. The affiliate marketer publishes ads to drive the customer to the product owner's offers. The customer has to fill a form or buy a product for the affiliate marketer to get a commission.
Here is an image that shows an overview about how affiliate marketing works from the perspective of an affiliate marketer.
First the affiliate marketer has to get approved by the affiliate network.
Some affiliate networks are more restrictive than others and they don't approve people from a given country.
Once the affiliate marketer has a link from the affiliate network to promote an offer, he goes and creates a website around that niche or places ads to drive traffic to his links.
If someone buys throw the affiliate marketer's links, then the affiliate gets a commission from the affiliate network.
The affiliate commissions are usually paid monthly but if you are an awesome affiliate and you make a lot of conversions, that affiliate network might even pay you weekly.
How does the affiliate network get paid?
The merchant pays the affiliate network. From what the merchant has paid to the affiliate network, the affiliate network then has to pay the affiliate marketer a commission. Of course the affiliate network keeps also a commission 🙂
For the customer, normally the affiliate marketer is transparent.
In most cases, the customer doesn't even know there is an affiliate marketer as he is paying the same amount as if he were going direct to the merchant and some times the customer pays even less if the merchant gave the affiliate marketer a discount link.
This is a diagram about how the customer sees an affiliate offer.
I have just posted some popular ad platforms, but there are many more.
This is a very simplified overview about how affiliate marketing works.
In simple terms it is just sending a customer through a middle man (affiliate marketer) and getting a commission for that sale.
I hope this clarifies affiliate marketing for you.