What is Affiliate Marketing and How it works?

Affiliate Marketing

Affiliate Marketing


Affiliate Marketing is a fantastic way to earn money online. It is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.

For Bloggers and Online Marketers, Affiliate Marketing is the most lucrative way to make money online. Some affiliates are earning millions.



According to Pat Flynn’s Smart Passive Income,

Affiliate marketing is the process of earning a commission by promoting another person’s (or company’s) product. Products exist in your target market right now (that people are probably already buying) and if you can become the resource that recommends those products, you can generate a commission as a result.

This is a win-win for the merchants as well as affiliates. The Merchants sell the products or services and earn profits as well as reach potential customers. The Affiliates earn commission by recommending the products to their site visitors.

The merchants pay the affiliates only for their performance and that’s why it is called performance-based marketing. An affiliate has to promote the merchant’s products or services on his site. If he succeeds in attracting and convincing the potential customers of the value of the products and they end up buying the products or services, only then do the merchants pay him the commission.

In this article, we are going to focus on the basics of Affiliate Marketing, how it works, how an Affiliate gets paid, and how to become a successful Affiliate Marketer.

Let’s just dive in.

The first and foremost question that arises is: Who are the main parties involved in Affiliate Marketing?

As per Wikipedia, the Affiliate Marketing industry has four core players:

  • The Merchant or Retailer or Brand
  • The Network – contains offers for the Affiliates to choose from and also takes care of the payments
  • The Publisher ( also known as “Affiliate”)
  • The Customer

Now let’s look in detail at the relationship between these four core players:


  • The Merchant

Also known as the retailer, the brand, the seller, the creator, or the vendor, a merchant can be a big enterprise or a solo entrepreneur.

A merchant or seller is the party that creates the product. The product can be a physical object, like electronic gadgets, or a service, like online courses.

Suppose you have a product or service and want to reach out to more and more potential customers. And for this, you use publishers or advertisers for a fixed incentive without getting actively involved, then you’re a merchant.


  • The Network

The Affiliate Network acts as an intermediary between the Merchant and the Affiliate.

It contains offers for the Affiliates and the Affiliates have the liberty to choose multiple merchants within the network. It also takes care of the payments to the affiliates.


  • The Publishers or Affiliates

The Affiliates, also known as the publishers, can be an individual or a company. They can be anyone: Bloggers, YouTubers, or the friends of merchants on social media.

If you want to earn money online as an Affiliate, you need to run a review blog or make some videos about the merchants’ products. Through this blog or videos, you try to attract and convince potential customers of the value of the merchant’s products. If some of the customers make a purchase, you get a commission from the merchant.

You can also promote their products through a website dedicated to finding particular products.


  • The Consumer

If a product has no end consumer, no sale would take place. And, if there’s no sale, there wouldn’t be any commission to be paid to the Affiliates.

Consumers are the most important players in any marketing system.

You need to make good content and drive more and more traffic to your blog, videos, or website so that you can get more potential customers for the merchants’ products.


How does Affiliate Marketing work?

First of all, you have to apply for an affiliate program. After you are accepted, you will receive an affiliate link or a unique URL that includes your username or your affiliate ID. You can share that link or URL with your subscribers, visitors, and your connections on social networks.

If someone clicks on that link, he is redirected to the advertiser’s website, and the Affiliate software records that click. If the online visitor makes a purchase of any product, you will get a commission.


How do Affiliates get paid?

The Affiliates receive payment by the following payment terms:

  • Cost Per Sale (CPS): If there’s a sale, you’ll receive a flat fee per sale or a percentage of the sale price of the product.


  • Cost Per Lead(CPL): You receive payment for every completed or validated lead.

In this payment term, you’ll receive payment after people complete actions such as surveys, quote forms, subscribing to the newsletter, and downloading software or files.


  • Cost Per Click(CPC): Here, you receive payment for driving traffic via Ad Clicks. In this program, you must focus on moving the traffic from your site to the merchant’s site.


How to become a successful Affiliate?

Getting started as an Affiliate is very easy. Here, you don’t have to worry about creating or storing the products.

Apart from buying the Domain Name and Hosting, there’s no other cost involved.

You can work from the comfort of your home. There’s no special qualification or skill required to start as an Affiliate.

All you need is a Computer or Laptop and the Internet. That’s it.


Tips to become a successful affiliate

Following are the tips you can follow to become a successful Affiliate Marketer:


  • Choose a Niche

Select a Niche you are comfortable with. To post links and advertise the chosen products, you must be owning a website or a blog.



  • Choose relevant products and services in your Niche

As you already use and have an idea about plenty of products, choose the products or services that best fit your niche. Always go for the products that are appealing to the target audience and make sure it has a good reputation and is of good quality.

The products you are offering should be relevant to the audience. For instance, if you are running an electronic gadget website, Ads should be something related to mobile phones, laptops, cameras, tabs, etc.


  • Promote products by bringing visitors to your site

If you want to make a commission by recommending products, your affiliate website should get more and more visitors. Free consultation, adding subscribers to your newsletter, making videos, etc. are some of the ways to bring more visitors to your site.

You can also use some free advertising tools like SEO, Email marketing, and creating backlinks. People also use some paid advertising tools like Google AdWords, Facebook Ads, Instagram Ads, etc. to drive traffic to their site.

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  • Make quality content

The content should be given top priority. Making a list of products is not enough, you should also write reviews on each product. Such kind of content will compel the visitors to click on the link and they will end up buying the products.


  • Don’t stick with only one merchant

Promoting products from many different merchants will help you diversify the commission you make. This way you will be able to create a steadier stream of revenue for your Affiliate website.


  • Connect with other Affiliates

You should also connect with other Affiliates in your niche and cross-promote your products. There are many Affiliate networks where you can find successful affiliates. Some of the popular ones are Commission Junction, ClickBank, Amazon Affiliate Program, LinkShare, ShareASale, etc.





I hope everything must be clear by now about what affiliate marketing is and how it works.

Nowadays, affiliate marketing is one of the burgeoning industries.

Why? Because it is proven to be a cost-efficient and quantifiable means of attaining great profit for all the main players of affiliate programs such as merchants, affiliates, and affiliate networks.

Just follow all the abovementioned steps and start earning a handsome income from the comfort of your home.

Affiliate marketing has become a cost-effective and increasingly popular home-based business.

This is because it requires no production costs, very low start-up costs, no employees, no inventory, no order processing, no shipping, no customer service, and very limited risk.

But one thing you should always keep in mind is that it’s not a get-rich-quick scheme. Like any business, making good money with affiliate marketing requires hard work, dedication, and education.

What has been your experience as an affiliate marketer? Feel free to share your valuable tips on becoming a successful affiliate marketer in the comments.




12 thoughts on “What is Affiliate Marketing and How it works?”

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