Affiliate Marketing

It is an Internet marketing strategy, designed as a purely performance-based system that rewards an individual or entity with a share of profits after a sale. The individual or entity, known as the ‘affiliate’ enters into a formal agreement, a coded link is added to their website and when visitors to that site click and follow through with a sale, the affiliate receives a previously agreed upon percentage of that sale.

There are four core elements to this type of business relationship: 1) merchant or retailer; 2) network backbone that directs the purchaser to the sale and processes payment; 3) affiliate; and 4) customer.

In some cases, affiliate marketing can be confused with referral marketing but the latter relies solely on trust and personal relationships to drive sales. Internet marketing is also employed to drive affiliate marketing with search engine optimization both organic and pay per click. As blogs like WordPress emerged, affiliates began to include reviews coupled with the product links they promote, which has raised some eyebrows but continues to be a way to drive traffic and gain clicks and purchases.

This form of marketing has also graduated into email newsletters published by an affiliate to generate more interest. Suffice it to say that considerable attention has to be paid to these programs for any kind of profit to be realized. With the exception of some vertical markets, it is rare for an affiliate program to generate considerable revenue with poor management or no management at all.

And in recent years, to add to the difficulty for affiliates, spammers have found that these types of ads on their sites can generate links with false advertising and outright trademark infringement. However, an increasing number of merchants are seeking alternative options found in relatively new outsourced (affiliate) program management (OPM) companies, which are often founded by veteran affiliate managers and network program managers. OPM companies perform affiliate program management for the merchants as a service, similar to advertising agencies promoting a brand or product as is done in offline marketing.