How Affiliate Marketing Works: 6 Types of Affiliate Marketing

Affiliate marketing is a fast-growing marketing strategy in which businesses use third parties to advertise their product and pay them on a commission basis. Affiliate partners may be paid for each lead, visitor, or sale they bring to the business, depending on their agreement. This makes affiliate marketing a type of performance marketing, or marketing that relies on a specific action taking place in order to receive payment. Affiliate marketing programs have grown alongside online businesses, or e-commerce, blogging, and social media. Startup companies in particular view affiliate marketing as a low-cost way to launch their products.

You don’t necessarily need the internet to advertise on behalf of someone else, but affiliate marketing today is considered part of an online marketing strategy. Here’s how it works.

1. 1. Content creators provide affiliate links. Content creators provide links to affiliate products in their videos, email newsletters, blog posts, or articles. These are typically unique referral links that the company can easily identify with the affiliate marketer. Creators may also provide a unique affiliate discount code.
2. 2. Customers click the links. When customers click affiliate links, they land on the affiliate website. The company tracks data such as the source of the affiliate link and whether or not the customer makes a purchase.
3. 3. Affiliate marketer is credited and receives payouts. Some affiliate marketers are paid per click (PPC) while others receive a percentage of the affiliate sales, known as revenue sharing or cost per action (CPA). These deals often hinge on conversion rate, or the percent of clicks that yield actual purchases.

Affiliate programs have grown a great deal as a low-cost form of digital marketing where companies do not have to create the marketing campaign in-house, but can still oversee how the company’s products are advertised with successful affiliates through various marketing channels, such as video content, blogs, podcasts, and more.

1. 1. Influencers: Influencers are individuals with large followings on social media who make affiliate commissions off of products purchased through affiliate links or with an affiliate discount. Affiliate income is the primary source of income for some influencers. The advertisement could be a product review, a step-by-step guide, or simply a photo of the product. Influencers have clear, niche, target audiences and are well versed in how to advertise to their followers through their unique brand. Companies are usually involved in approving how the product or service will be shown within the influencer’s content. Due to complaints from consumers feeling misled by advertisers, including influencers, the FTC stepped in and now requires affiliate content from influencers to be clearly labeled as an advertisement.
2. 2. Bloggers: Blogging is a platform that provides written content, often with a strong visual aesthetic that may or may not include video and photos. Many of the affiliate links found in blogs do not expire. As new people find the content and click through to retailer sites, the blogger continues to earn passive income. Affiliate links are commonly found in tutorials, reviews, or product lists. Bloggers produce regular, quality content and often maintain a large email list of subscribers, allowing affiliate partners to benefit from their email marketing strategy.
3. 3. Search engines: Search engine advertising is so ubiquitous that you may not think of the ads that appear at the top of a search engine results page (SERP) as affiliate advertising. In the same way that companies track which blog referred you to their site, they can see when you arrived on their page from a search engine ad. Companies typically pay per click to have their pages appear near the top of the SERP. Instead of (or in addition to) paying for this premium space, many websites engage in search engine optimization (SEO), a content marketing strategy focused on ranking highly according to search engines’ algorithms.
4. 4. Review sites: While reviewing products may be part of an influencer or blogger’s content strategy, some websites exist solely to provide product reviews. Partnering with websites that find, test, and review the best products can be a great strategy for reviewers and companies alike, so long as the reviewers disclose their monetization model and ties to the affiliate site.
5. 5. Text links: Texting can be a valuable affiliate marketing tool. In the same way that you can subscribe to a blog or mailing list and receive affiliate links and codes in your inbox, you can subscribe to text messages that notify you of product launches, price drops, or events. These texts may contain affiliate links or discounts.
6. 6. Pay-per-lead: The above examples all involve a type of affiliate marketing strategy in which affiliates are paid per click or purchase. Affiliate partners, however, can also share information about potential customers with their affiliate network, and receive compensation per individual, or “lead.”

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