Affiliate marketing is a method of promoting a web business in which an affiliate earns a commission for each visitor that takes action on the merchant’s website.
An affiliate may be rewarded for each customer sale (pay-per -sale, subscriber (pay-per-lead), or visit (pay-per click). The merchant decides the value rewarded for the action.
Sites like Amazon.com have decided to run their affiliate program directly from their website. Others use a third party service like Commission Junction (cj.com) or Linkshare.com to track affiliate links and sales.
How does affiliate marketing work?
Signing up for the program
An affiliate can sign up for a merchant’s program either directly on the merchant’s site, if that is where they run the program, or through the third party intermediary. Most affiliate programs are free. Because of spamming. and to insure the affiliate’s site matches the merchant’s, some merchants will now investigate the affiliate’s site before they allow them to join their affiliate program.
It is not unusual for a merchant to decide against allowing someone into the program. Their site may not relate to their own or they may not have enough traffic.
Your Affiliate ID
If the merchant accepts the affiliate, the affiliate is then given an affiliate ID or code that allows them to promote the website. This ID is found on all marketing and promotional tools offered by the merchant including banners, text links, and graphics. Some merchants allow the affiliate to customize their link by adding their own name.
Because this ID is found on all the marketing tools, an affiliate simply needs to place their banner or text link on their website or blog and then drive traffic to the site.
Earning your commission
When a visitor to the affiliate’s site clicks the banner, and then completes the action required, the affiliate would then earn a commission. The best way to describe this is if the affiliate was a car salesman, and someone bought a car they would earn a commission. An affiliate can earn a commission for generating a lead or sending a visitor to the merchant’s site on the internet.
The visitor must complete the action in order to receive the reward. It is important that the affiliate understands what they are being paid for.
The merchant will then give you a commission for the action completed. The commission rates vary depending on the merchant. Because there are so many affiliate programs on the web now, many merchants offer commission of 50% or higher in order to keep up with competition.
Some affiliate programs offer recurring commissions in which an affiliate would be rewarded for future sales as well. For instance, if the affiliate was part of a magazine site they would receive a commission every time their past subscribers renewed their subscription.
There are also tier programs. This works on recruiting new members into the program. When someone you referred makes a sale you earn from their commission as well.
Merchants are offering more ways for affiliates to earn such as, earning for offline sales and offering more marketing material for their affiliates.
To sum it up, affiliate marketing works by the affiliate aligning themselves between merchants and customers. The affiliate earns a commission, when an action is completed, via the affiliate ID.
