How to Understand Affiliate Marketing Programs

For most marketers, affiliate marketing simply involves referrals and commissions payments. It significantly involves referrals where bloggers, influencers and publishers get paid when a buyer takes action based on their recommendation. What that signifies to all participants in affiliate marketing programs is essentially that when a blogger, influencer or an affiliate promotes a certain product/service, he receives a commission when someone signs up or makes a purchase as a direct result of such promotion. That relationship works smoothly when merchants provide gateway links to access their products which publishers promote in their own websites or blogs. A click on that link takes online visitors to the product/service being promoted. This model of affiliate marketing works well when a popular and well-trafficked website/blog embeds an affiliate link into a post on its website/blog. This is with a view to guiding website visitors to take a certain action. If per chance such action leads to purchase of the product or to a sign up for a certain subscription or on-going service, the publisher earns a commission based on prior agreed percentage of the sale. In some variants of affiliate marketing, even a click is enough to earn a commission irrespective of whether a purchase was made or not.

Businesses seeking to advertise through affiliate marketing channels must first find influencers or affiliates operating in the same or similar niches to their own. With the advantage of similar audiences to their own, it becomes fairly easy to quickly and effectively promote a merchant’s products/services to enhance its desired growth of sales and leads. This is quite a very simple and mutually beneficial relationship for all the parties involved in the business if you ask me.


 
For an affiliate marketing program to work well, it requires the participation of the following three parties:

The Merchant

A merchant is the entity that takes ownership of the product/service to be promoted. For that reason, it is the merchant’s responsibility to pay the affiliate a commission for promoting its product/service on their own website, social media service or blog. A merchant may be a company that directly owns the product/service or has the mandate to sell product/service.

The Affiliate

An affiliate is the entity that has responsibility to promote the product/service on behalf of the merchant and earns a commission from its promotional efforts by way of affiliate agreements and understanding with the merchant. Most affiliates use their own websites/blogs as well as their social media sites where the referral link to the product/service is posted. With large following and good website traffic, they are able to expose the referral link to a wide and diverse audience comprising of potential buyers/customers.

The Buyer

A buyer is the entity that responds to the referral link posted by affiliates and takes action to buy the product. The affiliate is effective when many more buyers are able to see and respond to the affiliate link embedded into its website/blog posts. It is this link a buyer follows to become a customer by making a purchase or taking some kind of desired action.

For all three parties, it is a win-win partnership. The merchant site benefits from targeted exposure. The affiliate site makes passive income for promoting the referral link. The consumer gets the value of a personalized and trusted recommendation and in some cases even a discount, a coupon or some other valuable incentive. This is essentially how affiliate marketing programs work for all parties involved in the business.