What Is Affiliate Marketing?

Affiliate marketing is an Internet based marketing strategy used for sharing revenues between an online merchant and the owner of the website, also known as an affiliate. This type of affiliate marketing involves placing of online merchant’s products and services advertisements on the web site owner’s website. The method of marketing helps the business enhance their web site exposure and identify potential customers leading to increase in their sales, while leading to revenue generation or fees for the website owner.
The term affiliate marketing also includes all the people and companies involved in this type of marketing including all affiliated networks, affiliate management companies and all third party vendors involved in promotion of products and services of partner products. The advertisements placed can be in the form of banner ads, text ads, graphics and text combination, or links leading to affiliates websites.
Affiliate marketing leads to a win-win situation for both the merchant and the affiliate where the merchant can increase the sales of their products or services without spending on direct marketing campaigns. Also, the affiliate earns revenues just by virtue of placing ads on their websites. However, the affiliate marketing method hasn’t still gained a lot of popularity and is used only after search engines, e-mail, and website syndication.
The online merchant can pay the affiliate in any of the following three ways:
Click-based payment: This type of payment is credited in the affiliate’s account each time a visitor leaves their site by clicking on the website link that leads to the online merchant’s website. Depending on the type and the popularity of the product and the amount of commission agreed upon, the amount of dollars or pennies can be converted.
Sale-based payment: This type of payment gets accrued in the affiliate’s account each time a sale is made on the online merchant site as a result of advertising on the affiliate’s website. The payment can be in the form of fixed percentage of sales or an amount of commission.
Lead-based payment: The affiliate earns this type of payment each time a client registers on the online merchants website as a result of the advertisement displayed on the affiliate’s website. In many cases, this amount is determined beforehand.
However, it is important for the affiliate to research properly before placing an ad on their website. This helps in avoiding future problems, such as non-payment of commission by the online merchant.