What is Affiliate Marketing?

Affiliate marketing is a way of selling through partners who are paid on results. A business gives each partner, an affiliate, a unique tracked link. When someone clicks that link and signs up or buys, the affiliate earns a commission.

How does affiliate marketing work?

1. The affiliate joins a program and gets a unique link or code.
2. The affiliate promotes the product in content, email, video, social posts or paid ads.
3. A visitor clicks the link. The merchant records where the visitor came from, usually with a cookie or a tracking URL.
4. The visitor converts. They buy, start a paid plan or sign up.
5. The affiliate is paid. Commission is usually a percentage of the sale or a flat amount per action. See pay per sale and cost per action.

Affiliate marketing is older than most people think. Amazon launched its Associates program in 1996, and earlier programs existed before it.

Who is involved?

• The merchant (or advertiser) owns the product and pays commissions only for results.
• The affiliate (or publisher) drives the traffic.
• The network is an optional middle layer. An affiliate network provides tracking, reporting and payouts for many merchants. Some merchants run their own program instead.
• The customer clicks, buys and triggers the commission.

How is affiliate marketing used in B2B?

B2B software companies sell through affiliates too. Affiliates might be consultants, agencies, newsletter writers or review sites that already reach the right buyers. Commission can be a one-off amount per customer or a share of the subscription revenue. See how to create a partner program for your B2B SaaS.

What rules apply?

Disclosure. The US Federal Trade Commission says affiliates should disclose the relationship "clearly and conspicuously", close to the recommendation. It notes that people may not understand that "affiliate link" means the publisher is paid, while "paid link" right next to the link should be enough. Its Endorsement Guides were revised in 2023.

Search. Google's spam policies target "thin affiliation": pages that copy the merchant's product descriptions without adding anything. Google also says "not every site that participates in an affiliate program is a thin affiliate", and gives original reviews, testing, price information and comparisons as examples of added value. For paid links, Google asks sites to use rel="sponsored".

Tips for merchants

• Track conversions, not just clicks. You need to know which affiliates bring customers who stay.
• Know your traffic sources. Ask affiliates how they promote you, so your brand isn't attached to spammy tactics.
• Give affiliates good material. Accurate product facts and clear rules on bidding and messaging protect both sides.

Tips for affiliates

• Promote what you understand. Recommendations your audience can trust are the ones they act on.
• Work with more than one merchant. Relying on one program leaves you exposed if its terms change.
• Disclose every time. The FTC expects it in the US, and it protects your audience's trust everywhere.