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You’ve probably heard a lot about affiliate marketing and how businesses use it to make money. Maybe you’ve even considered trying it yourself. But what is affiliate marketing, and how does it work?
In this article, we’ll give you a crash course in affiliate marketing. By the end, you should have a good understanding of what it is, how it works, and whether or not it could be a good fit for your business.
What is affiliate marketing?
Affiliate marketing is a performance-based marketing strategy in which businesses reward affiliates for each customer they bring in. The customers themselves don’t need to spend any money – businesses pay the affiliates out of their own pockets.
There are two different types of affiliate relationships: pay-per-sale and pay-per-lead. In a pay-per-sale relationship, affiliates only get paid when they actually drive sales. In a pay-per-lead relationship, affiliates get paid for every customer they bring in, even if those customers don’t make any purchases.
How does affiliate marketing work?
The basic principle behind affiliate marketing is simple: businesses offer rewards to people who promote their products or services. The people who do the promoting are called “affiliates”, and they typically promote products or services through special links that track their activity.
When an affiliate promotes a product or service and someone clicks on their link, the affiliate gets credit for that click. If the person who clicked on the link then goes on to make a purchase, the affiliate gets credit for that sale as well. The specifics of how rewards are calculated vary from program to program, but generally speaking, affiliates earn more when they drive more sales.
Why do businesses use affiliate marketing?
There are two primary reasons why businesses use affiliate marketing: to make money and to generate leads. Some businesses only care about making money, while others are primarily interested in generating leads (which can be converted into customers at some later point). Still other businesses care about both equally. The reason why your business uses affiliate marketing will determine how you structure your program and which affiliates you choose to work with.
