What is Affiliate Marketing?| Introduction to Affiliate Marketing

Having known what affiliate programmes are we shall now see what is affiliate marketing.  Affiliate marketing is a type of marketing in which promotors (affiliates or publishers) are rewarded for the customers they direct to advertisers(merchants). It is more or less a referral system of marketing but not
exactly the same as a referral system of marketing. Affiliate marketing is often done online or offline (words of mouth). It is mostly aided by means of the internet. The reward for the affiliates(promoters) is normally based on  commissions for sending visitors or  potential customers to the owners of such products or services which they are promoting.  The promoters do this by various methods and strategies. The promoters are not most times the owners of the products or services but because they promote such products or services they are paid commissions.

The concept of affiliate marketing normally involves the promoter, the affiliate network, the customers and  the creator of the products or services.  The promoters are called affiliates or publishers. The affiliate networks are the companies or third parties that  connect the promoters to the merchants. The affiliate networks make available the products or services of the merchants to the promoters. The affiliate networks also track the the links of the products or services of the merchants to ensure that only promoters that generated the clicks, impressions, leads or sales are compensated for their marketing efforts. Some affiliate networks are known to receive the payments on behalf of the merchants, process the transactions and pass on the responsibility of delivery of the products or services to the merchants who then directly or indirectly deliver the products or services to the customers. Thus the merchants handle the order fulfillment. The creator of the products or services are popularly known as the merchants. The merchants may be referred to as the manufacturers of the products or the brains behind  particular services. The merchants are also referred to as the advertisers who want their products promoted in order for them to create awareness for their products or services thereby  maximizing their sales. The customers are those that buy the products or pay for the services of the merchants to satisfy their individual, business or organizational needs.

Affiliate marketing can be simple or complex depending on the nature of the products or services involved. Affiliate marketing methods includes direct advertising, organic search engine optimization (SEO), paid search engine marketing  known as pay per click(PPC) or cost per click (CPC), e-mail marketing and content marketing.

Affiliate marketing is similar but not exactly the same as referral system of maketing. The major  difference between both of them is that affiliate marketing is immensely driven based on the commission structure which can spur promoters to increase their marketing efforts and strategies  while the referral system of marketing is driven by inter-personal relationships so as to effectively and efficiently promote products or services. Affiliate marketing is made effective by various approaches which can include email marketing, pay-per click(PPC), marketing of contents or  by using seach-friendly strategies popularly called search engine optimization(SEO). Another rapidly growing method is what is now referred to as mobile marketing. Also, it is not surprising to now say that wrting reviews about products or services are now considered as affiliate marketing strategies.

How Are Affilitiates Compensated?

Different affiliate programmes or affiliate networks compensate their affiliates by various methods which includes cost per action(CPA), cost per click(CPC) or cost per mile(CPM- cost per estimated 1000 views) and  revenue sharing or pay per sale (PPS).

Multi-tier programmes

According to wikipedia, some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms, publisher "A" signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher "A" attracts publishers "B" and "C" to sign up for the same program using his sign-up code, all future activities performed by publishers "B" and "C" will result in additional commission (at a lower rate) for publisher "A".

Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral programs beyond two-tier resemble multi-level marketing (MLM) or network marketing but are different: Multi-level marketing (MLM) or network marketing associations tend to have more complex commission requirements/qualifications than standard affiliate programs.