Affiliate, in business terms (its roots in the Latin for adoption of a brother), refers to a positive partnership between at least two parties, often more. Affiliate Marketing, (the verb), as a marketing practice based on the Internet is when a business will reward one or more affiliates for each of the visitors or customers brought to the advertiser by the marketing effort of the affiliate.

Affiliate marketing (the noun) is industry name for a variety of different sorts of seo companies and individuals that perform this type of Internet marketing, including affiliate networks, affiliate management companies, and in-house affiliate managers, specialized third party vendors, and various kinds of affiliates/publishers who promote their partners’ products and services.

Affiliate marketing does have a degree of overlap with several other types of Internet marketing methods, as affiliates frequently use conventional and traditional advertising tools and techniques that include organic search engine optimization, paid search engine marketing, e-mail marketing, and to a certain extent, display advertising. However, affiliates sometimes employ less orthodox methods, like the publishing of reviews for services and/or products that a partner might offer.

Affiliate marketing—the use of one website to direct traffic to another—is a form of online marketing, often overlooked by advertisers. While online retailers might pay a considerable amount of research and money to the work of search engines, e-mail, and website syndication, affiliate marketing has yet to capture their full attention. However, affiliates do feature significantly in e-retailers' marketing strategies.

Compensation Methods

Predominant compensation methods

CPS – cost per sale –accounts for 80% of affiliate programs’ method of compensation today,
CPA - cost per action – 19%, with the remainder of the programs using other methods like
CPC - cost per click- or cost per mille (CPM).

Diminished compensation methods

Although exceeding popular as a methods of compensation in display advertising and paid search, CPC and CPM are used by less than one percent of traditional affiliate marketing programs today. <

CPM’s only requirement of the publisher to receive commission is to make the advertising available on his website and display it to his visitors. PPC requirements have an additional conversion process step to generate income for the publisher: beyond availability and awareness a visitor must also click on the advertisement to visit the advertiser's website.

CPC used to be more commonly used when affiliate marketing was a relatively new concept to Internet marketing, but its use has declined due to the issues of click fraud, similar to those that modern search engines face today. The figures returned regarding the decline of CPC usage do not include contextual advertising programs like Google AdSense, as there is uncertainty over whether contextual advertising truly falls into the category considered to be affiliate marketing.

Performance Marketing

Using CPM/CPC, a publisher isn’t bothered that a visitor should be a member of the audience the advertiser tries to attract and ultimately decides to convert, by this point a publisher will have already earned their commission. In the case of CPM the full risk and loss, in the instance of non-conversion by the visitor, and a greater one in the instance of CPC, is left to the advertiser.

Methods like cost per action/sale ensure conversion by referred visitors before an affiliate receives commission. In such cases the affiliate needs to send its most closely-targeted traffic as possible to the advertiser for increasing the chance of conversion and as such, the risk and loss is shared between the affiliate and the advertiser.

Affiliate marketing, also known popularly as "performance marketing”, typically compensates employees by commission on sales closed, and may include paid performance incentives if targeted baselines are exceeded. Affiliates are not employees of an advertiser whose products or services they promote, but the compensation models applicable to affiliate marketing are comparable to those used for people in the advertisers' internal sales department.

"Affiliates are an extended sales force for your business", is a phrase often expressed, as explanation of affiliate marketing, though it is not entirely accurate. The major difference between the two is that affiliate marketers are unable to influence the conversion process of a possible prospect after that prospect has been channeled to an advertiser's website. The advertiser’s sales team, however, does retain control and influence up to the point where the purchase is completed by the prospect or the contract is signed.

Multi-tier programs

There are some advertisers in a hierarchical referral network of sign-ups and sub-partners who offer commission distribution through multi-tier programs. If publisher "A" were to sign up to the program with an advertiser and receive commission for an agreed activity executed by a referred visitor and publisher "A" then invited publishers "B" and "C" to sign up for the same program using his sign-up code, any future activity performed by publishers "B" and "C" would result in additional commission (at a reduced rate) for publisher "A".

Only a minority of affiliate programs are two-tier; most of them are simple one-tier operations. Referral programs that are more than two-tier involve network marketing or multi-level marketing (MLM).

From the advertiser perspective

Pros and cons

Merchants tend to favor affiliate marketing, as it is usually "pay for performance"; marketing expense is not incurred unless results are realized (excluding initial setup costs). Some businesses, notably Amazon.com, owe much of their success to this marketing technique. Compared to display advertising though, affiliate marketing does not scale easily.

Implementation options

Some in-house affiliate programs, those that merchants run themselves, use popular software while other merchants employ third-party services that intermediaries provide for tracking sales or traffic referred from affiliates (see outsourced program management). Affiliate management solutions, of two different types, are available for merchants: hosted services, otherwise known as affiliate networks, or stand-alone software. Payouts to publishers or affiliates can be made either by networks on the merchant’s behalf; consolidated across all those merchants with whom the publisher earned commissions and has a relationship, or payouts can be made directly by the merchant itself.

Affiliate management and program management outsourcing

There is a considerable amount of maintenance work required for a successful affiliate program; it is more difficult now than when the emergence of such programs had just begun. Affiliate programs rarely generate significant revenue with inadequate management or no management (ie, "auto-drive") though exceptions do exist in some vertical markets.

Uncontrolled affiliate programs in the past (and continuing yet) have aided rogue affiliates who employ spamming, trademark infringement, false advertising, "cookie cutting", typosquatting, and a variety of unethical ploys that have unfortunately labeled affiliate marketing as disreputable to many.

Increases in the number of Internet businesses and people who trust the current technology sufficiently to conduct business and shop online will permit further maturation of affiliate marketing. There are opportunities to generate significant profit in such a crowded marketplace though being saturated with competitors of equal quality and size makes being noticed here more difficult for merchants. If however you can get noticed in this environment, greater rewards await.

Online media, in certain areas, has been rising to meet the superiority of offline media, in which advertising, long-established with a cut-throat reputation, has been largely professional and competitive. As such, to achieve success, there is considerably more required of merchants now, and as those requirements become too onerous for merchants to successfully manage in-house, an increasing number are seeking alternative options found in the relative newcomer to the industry, outsourced (affiliate) program management (OPM) companies. These companies are often established by veteran affiliate managers and network program managers; they perform affiliate program management as a service for the merchants, similar to advertising agencies doing offline marketing promotion of a brand or product.

Types of affiliate websites

Affiliate websites often categorize by merchants (ie, advertisers) and affiliate networks. At present there are no industry-wide accepted standards for the categorization. The following list of website types though generic, are commonly used and understood by affiliate marketers.

• Search affiliates utilizing pay per click search engines for the promotion of advertisers' offers (ie, search arbitrage)


• Comparison shopping directories and websites


• Loyalty websites, those that usually provide a reward system for purchases via points back, cash back, or charitable donations


• Coupon and rebate websites with a focus on sales promotions


• Content and niche market websites, that include sites for product reviews


• Personal websites (mother of affiliate marketing; though such websites now have little relevance in comparison to the other types of affiliate websites.)


• Weblogs and website syndication feeds


• E-mail list affiliates (ie, proprietors of large opt-in -mail lists typically employing e-mail drip marketing) and newsletter list affiliates – usually more content-heavy


• Co-registration or registration path affiliates that include other merchants’ offers during the registration process on their own website


• Shopping directories listing merchants by categories without providing coupons, price comparisons or other features, based on frequently changing information, thus requiring continuous updating


• Cost per action networks (ie, top-tier affiliates) that expose offers from their affiliated advertiser to their own network of affiliates

Publisher Recruitment

Affiliate networks already having several advertisers are likely to have access to a large number of publishers too. These publishers are recruitment potential, and there may also be a greater likelihood of publishers in the network applying to the program independently, abnegating any requirement by an advertiser to actively recruit.

Relevant websites attracting shared target audiences of the advertiser without competition can be potential affiliate partners too. Existing customers or vendors may also become recruits if there is no violation of any law or regulation and it makes sound business sense.

Just about any website might be recruited as an affiliate publisher, though high-traffic websites would more likely to be interested in (for their own sake) low-risk CPM or medium-risk CPC deals as opposed to higher-risk CPA or revenue share deals.

Locating affiliate programs

Locating affiliate programs for a target website may be done in the following three (main) ways:

1. Affiliate program directories
2. Large affiliate networks providing platforms for a multitude of advertisers
3. The actual target website. (Websites offering affiliate programs frequently show a link called "affiliate program", "affiliates", "referral program", or "webmasters"—normally in the footer or "About" section of the website.)

If these locations fail to yield information that pertains to affiliates, perhaps there exists a non-public affiliate program and contacting the owner of the website directly for information should give you a definitive answer.