How Affiliate Marketing Works?


Affiliate Marketing is one of the quickest ways to get started in online marketing.

How often have we dreamed of passive income? Making money while sleeping or on a vacation in Aruba.

It is without a doubt that affiliate marketing has earned a place in the world of digital marketing, and for a good valid reason. After all, being an affiliate marketer doesn’t require you to come up with your own products or idea. Neither do you need to worry about procurement or logistics.

It is more of a ‘pay-per-performance’ deal.

As the product only, you will only pay the affiliate marketer when they bring you conversion – a lead or a sale. You will get to determine what triggers a payout and how much are the payout rates.


One of the best definition on affiliate marketing we came across is from Pat Flynn’s Smart Passive Income:

Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.

Simple right?

In affiliate marketing, sometimes there are 3 parties involved:

Product Owner/Seller ⇒ Affiliate Marketer ⇒ Customer

And sometimes there are 4:

Product Owner/Seller ⇒ Affiliate Network ⇒ Affiliate Marketer ⇒ Customer

How Affiliate Marketing Works?


The Merchant

Known as the creator/ seller/ brand, the merchant creates the product. They are the ones that pay affiliate marketers the sales commission. It can be a big company or brand, like Amazon.

Usually, the merchant will have an official affiliate program for affiliate marketers to join, or they specifically deal with their preferred group of affiliate marketers directly. Most of the merchant who has an active Affiliate Program running will have a landing page with guides on how to join, what products/services available, and the payout rate. For example: DomainPlus Affiliate Program.

The Affiliate Marketer

The affiliate is sometimes known as the sales & marketing person for the brand or company. Affiliate Marketer can range from individual to an entire company. Affiliate business is sustained by earning commissions from the sales made.

An affiliate will need to use their unique affiliate link to promo the affiliated products. It is important that any traffic to the merchant’s website is directed using affiliate link – so the merchant will know which affiliate bring them that traffic/conversion.

Marketing happens when an affiliate uses strategies to attract and convenience potential customers to try, review, recommend, or purchase the merchant’s product. This can be achieved in several ways such as writing a review on the product, unboxing videos, or put together your own website to your creativity. For example:

This is Why I’m Broke is an affiliate marketing team that features cool and quirky products from merchants all around the world.

The Consumer

The customer or consumer will be the party that does the shopping and purchasing. The affiliate will try to market to the consumer on different channels that best fit, using a targeted message that can attract them.

The consumer may or may not be aware that the message they are seeing belongs to an affiliate program or not. This is entirely up to the affiliate marketer to disclose. However, more and more affiliates nowadays are transparent about this.

Also, the consumer will not pay a higher price to the affiliate. The cost of the affiliate network is included in the retail price.

The Network

In many cases, a network works as an intermediary between the affiliate and the merchant.

Sometimes, affiliates have to go through an affiliate network to even be able to promote the product.  The network also is the ‘bank’ where they host many products. This is where affiliate marketers can choose which brands or products they wish to promote. For example, one of the biggest affiliate network that host consumer products is Amazon Affiliate. They let you promote any products that are sold on the Amazon platform.

By now, you should have a better grasp of what Affiliate Marketing is and how it works. Hence, go on and Google which affiliate program that can work for you and offers attractive payout rate.

Read more: DomainPlus Affiliate Program: How to Earn Extra Income

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