What Is Affiliate Marketing?

By Anna Johnson

Affiliate marketing is the process of referring people to a website (in order for them to take some kind of action, such as purchase a product or service) in return for payment.

Another way of looking at it - you are "brokering" website traffic from a given source (e.g. a search engine) to a given destination (e.g. a website) in return for payment.

Given this broad definition, it's no surprise that affiliate marketing incorporates a number of different business types. However, the model is generally the same in each case:

SOURCE (where prospects come from) --> YOU (whether "you" are a website, an email newsletter, an advertisement or any kind of web content) --> DESTINATION (where prospects take some kind of action).

There are generally four ways in which you will be paid:

• By displaying an advertisement - a "cost per impression" model where you get paid each time an image advertisement is loaded into a web browser, known as an "impression";

• Each time someone clicks on a link (including a link embedded in an advertisement) you display - a "cost per click" model;

• When someone signs up to a list - a "cost per lead" model; or

• When someone buys something - often a flat dollar amount or a percentage of the purchase price of the product - a "commission" model.

And, of course, depending on the affiliate program(s) in question, you might be paid each way.

How you generate prospects and get them viewing, clicking, signing up and/or buying is the basis for the kind of affiliate business you run.

• Do you wish to provide a lot of free content on a website or blog and display other people's ads or links (e.g. Google Adsense ads or otherwise)?

• Do you wish to build up a relationship with a list of prospects and recommend various products and services to them?

• Do you wish to run an online store or directory that includes affiliate links?

• Do you wish to do some combination of the above... or something else entirely?

You actually have a lot of choices. And, indeed, many affiliate marketers use these and other business models to make thousands, sometimes millions, of dollars in affiliate income.

That's not to say affiliate marketing is necessarily easy. There are strategies and tactics involved to make it profitable. But the concept IS reasonably simple: you are brokering traffic.