Affiliate marketing is a partnership with a brand or retailer and an individual (we’ll call them a website owner) from which both parties benefit.
The website owner first signs up for an affiliate program. Some brands run their own affiliate programs, while others are managed by an affiliate company. Amazon Associates is one of the best-known affiliate programs.
After registering to be an affiliate, the individual can post special links to products on their website or social media channels. These links contain tracking codes so that the brand or affiliate program knows where the traffic came from.
When someone clicks on an affiliate link and goes on to make a purchase, the website owner will receive a percentage of the sales revenue as commission.
In this way, the brand benefits from increase exposure of their products, and the website owner can make passive income from people browsing and clicking links on his site.
Affiliate commissions can range from anywhere from 1% or less of the product value to 50% or more. Some commission programs will pay commission on every product an individual buys after clicking an affiliate link, even if they don’t buy the specific product they first land on.
How Merchants and eCommerce Businesses Can Benefit from an Affiliate Program
As affiliates are paid money for sales they refer, they’re highly motivated to market products and businesses that run affiliate programs.
Over 80% of brands use affiliate marketing programs so it’s clearly a popular and effective way to boost sales.
You don’t necessarily need any special software or service to start working with affiliates. Smaller brands sometimes set up their affiliate programs manually.
This could be as simple as giving an influencer/affiliate a unique coupon code to share with their audience. When a customer enters this code at checkout, the merchant will know which affiliate referred the sale and can calculate their commission accordingly.
However, most eCommerce companies that work with affiliates use some kind of software to manage the program and track sales.
Affiliate Tracking Systems
The easiest way to set up an affiliate program is by joining an affiliate network like share-a-sale or CJ affiliate.
These networks make it easier to find affiliates, provide tracking code and analytics software, and allow you to set up an electronic agreement with each affiliate you accept.
However you’ll need to pay a monthly fee and/or a percentage of your sales to the network.
If you want to set up your own affiliate tracking program, there are various plugins and extensions that can help you to do so.