How Affiliate Marketing Works

Essentially, affiliate marketing is a three-party business partnership which participating affiliates can leverage to effectively market products/services and earn income. This partnership is usually between Product Merchants, Affiliates and Consumers. Affiliates provide the useful and beneficial link between Product Merchants and Consumers. They help to bring products from products merchants to the attention of consumers. When consumers make product purchases, the affiliate earns commissions from the sales for his marketing efforts. Affiliate marketing is thus a performance-based business model. The more sales an affiliate generates, the more commissions he earns. 

Affiliate marketing relies on the skills of a range of people as affiliates who rely on their own audience and independent skills and marketing channels to widely promote products/services for merchants. For affiliate marketing to work successfully, there are three parties who must as of necessity cooperate for their own benefits. These are:

1.    Product Creators and Product Merchants
2.    Affiliates or Advertisers
3.    Consumers or Customers

1. Product Creators and Product Merchants

Every product creator and merchant always wants to sell products to make money. They need the services affiliates to do so successfully and they are willing to pay commissions for these services. A product merchant also known as a seller can be an individual, a company, a brand or a retailer who has a product/service to sell. Such a product could be a physical item or a service. When affiliates help him to bring these items to the attention of consumers and they buy, he shares profits with the affiliates in form of commissions. Since product merchants expect to make money from affiliate partnership because of increased sales, they are always happy to participate actively in and remain loyal to the partnership even though they may not be required to participate actively in the marketing. Product promotion and marketing is the main business of affiliates who are in the partnership. All the product merchant does in the partnership is to ensure the product is always available for sale in the quality and form it is advertised.

2. Affiliates or Advertisers

The affiliate in affiliate marketing partnership is also known as a publisher, advertiser or product promoter who helps to promote products/services for product merchants in return for commissions. Affiliates are the middle link in the partnership. Content creators, Bloggers and Influencers are foremost affiliates in affiliate marketing. They make product merchants happy by helping them to promote their products and also make consumers happy by bringing quality products to their attention. Technically, an affiliate is a person or a business that helps to promote a seller’s products to potential customers in an engaging manner. Affiliates do this by advertising the product/service with a view to persuading consumers that it is worthwhile or advantageous to them. If they in the process manage to convince consumers to buy the product, they earn a commission from the sales. 

3. Consumers or Customers

Consumers or customers drive affiliate marketing sales. If consumers don’t buy products, affiliate won’t earn commissions and merchants won’t sell products. Affiliates introduce consumers to products through several online channels such as emails, social media, blogs, YouTube videos etc. etc. When consumers purchase products, the merchant makes sales and the affiliate earns commissions. That is how affiliate partnership plays out. Affiliates promote products through various online channels using special affiliate links to products on a product merchant’s website. They use enticing CTAs on their content to get consumers to click on these links. If a consumer clicks on these affiliate links and makes a purchase on the product merchant’s website, the merchant makes a sale and the affiliate earns a commission. Affiliates market mostly to their own audience whom they’ve built some form of relationship with over time. Influencers leverage this relationship to endorse or even recommend products/services to their audience. That influence does instigate sales and the influencer earns commissions.

Last Line

If affiliate partnership is working well, Consumers buy good products which Affiliate Marketers promote to them. The Product Merchant thus makes sales and the Affiliates earn commissions from the sales. That in a nutshell is affiliate marketing.