Understanding Affiliate Marketing

In this post I’d like to provide an overview of understanding affiliate marketing – what it is and how it works.

What is an affiliate?

An affiliate connects customers with vendors and earns a commission for each sale he or she refers.

What is a vendor?

A vendor is someone who sells a product, and they take care of the order processing and fulfillment. 

Amazon is a vendor, and if I were to sign up for Amazon.com’s affiliate program, I could begin sending them traffic through my website.  That traffic would be tracked by a special link known as an affiliate link.  If any of the traffic that I sent to Amazon ended up purchasing the product, I would receive a commission from Amazon.

What is an affiliate link?

An affiliate link will be provided to you when you sign up for an affiliate program.  If I were to sign up for Amazon.com’s affiliate program, I would log into my account, and I would grab my unique affiliate ID.  I would place this link on different places on my website because I want my website visitors to click this link. 

When someone clicks this link, a cookie is embedded in their browser.  If they make a purchase at Amazon after clicking my link, Amazon would check their browser for any cookies.  If they found a cookie that contained my affiliate ID, they would know to credit me with the sale.  This all happens automatically.

As an affiliate, your whole goal is to get as many people as possible to click on your affiliate link.

Understanding Affiliate Marketing image

There are two kinds of affiliate programs.  The first type is run In-house and the second type is run through an affiliate network.

And in-house affiliate program is where the vendor elects to run his own affiliate program.  Sometimes they’ll use third party affiliate software to take care of managing the affiliate accounts and tracking.  The software will also usually calculate payments.  In this case, it’s the job of the vendor to process and send out payments.

Many vendors, instead of running their own in-house affiliate program elect to sign up with an affiliate network which provides the tracking as well as manages the payouts.  Affiliate networks provide a lot of benefits to the vendor as well as the affiliates.

As far as vendor benefits, affiliate networks provide all of the tracking and sends the appropriate payments to both the vendor and the affiliates.  It also provides a “marketplace” which is a listing of various affiliate programs that an affiliate can browse through.  Being listed in a marketplace like this provides the vendor with greater exposure to potential affiliates.Understanding Affiliate Marketing

Affiliate networks also provide numerous benefits to affiliates.  First of all they provide one place where an affiliate can easily identify all of the products that they want to promote, and the vendors that they’d like to work with. 

Also, an affiliate can promote multiple offers from many different vendors and all of the tracking and earnings will be reported in one central location which is very convenient.  It is really convenient to receive consolidated paychecks were direct deposits for certain time period.

There are dozens of affiliate networks out there.  You can do a search for affiliate networks on Google, and you’ll find many of them.

Some of the larger more popular networks include:

  • Clickbank (digital products)
  • Commission Junction (physical products)
  • LinkShare (physical products)
  • Share-A-Sale (physical products)


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  • Terina

    Understanding Affiliate Marketing was a very informative article that helped me understand that there are different aspects to affiliate marketing. Thank you for the detailed comparison and enabling us to be better equipped for our businesses.

    • http://www.CarolAmato.com/ Carol Amato

      Hi Terina,

      I’m certainly glad to help. If you have any specific questions, please let me know. Have a great week. – Carol