Affiliate marketing is a marketing model in which third-party publishers promote a merchant’s goods or services and receive a percentage of the sales or web traffic made as a result. It is typically considered a key part of modern digital marketing. 

Affiliate marketing appeals to businesses because it enables them to meet their marketing goals at a low cost. It benefits affiliates by offering them the opportunity to make passive income. Generating affiliate revenue requires developing a platform and building an online audience. In addition, it's essential to stay current with industry trends. For example, according to Affiliate Insider, artificial intelligence (AI) and cloud software will play an increasing role in how affiliate marketers collect data to make decisions in 2023 [1].

In this article, learn more about this career path, how it works, and how to begin your affiliate marketing efforts. 

What is affiliate marketing?

Affiliate marketing is a revenue-sharing marketing method in which a third-party affiliate, such as a blogger or YouTuber, advertises a business’s goods or services to help them meet sales or marketing goals. A business might work with an affiliate to increase sales, web traffic, and brand awareness at a low cost and connect with a specific affiliate audience (e.g., a shoe company that partners with a fitness blogger to target fitness-minded readers). In turn, affiliates earn a percentage of their sales or customer traffic due to their marketing efforts.

While revenue-sharing is not a new marketing concept, modern affiliate marketing typically refers to online digital marketing in which affiliates link to a business's product or service online and receive a percentage of sales or web traffic. Statista estimated that affiliate marketing spending would reach approximately $8.2 billion in 2022 [2].

How does affiliate marketing work?

Affiliate marketing involves four main actors, who each play a unique part in the marketing process:

• The affiliate (or “publisher”): The individual or entity that promotes the merchant’s product or service

• The merchant: The individual or entity selling the product or service that the affiliate promotes 

• The affiliate network: An intermediary between an affiliate and a merchant’s affiliate program. While affiliates and merchants can connect without an affiliate network, it is a common channel for such relationships. 

• The customer: The individual who purchases a product through an affiliate. Merchants and affiliates collaborate to connect them with the affiliate’s audience in order to convert them into customers.

Typically, an affiliate can connect with merchants through an affiliate network. Affiliates may be able to find other appropriate merchants. For example, a network might suggest a range of tech products to an affiliate who reviews cellphones. 

Occasionally, an affiliate and merchant connect organically through direct outreach. For instance, a merchant who manufactures cake pans might connect with an affiliate who writes about baking in order to get their product in front of the affiliate’s audience.

Affiliate marketing examples

You likely have seen examples of affiliate marketing before, even if you didn’t realize it. The reason is simple: the most effective affiliate marketing tends to be paired with quality content that readers enjoy and find useful. Although it can be tempting to promote various products to make sales and drive traffic for merchants, affiliates who have developed trust with their audience by highlighting quality products they believe in are more likely to inspire audience members to make a purchase. In other words: quality and relevance sells.