What is affiliate marketing and how does it work ?

The world of advertising has evolved a lot over the past few decades. And many businesses used to spend a bomb on advertising to establish and secure a place in the market.

They used radio, TV, and print ads to increase sales of their products/services. But, only a few could find a place in the sun as they depended on a sole strategy of paid ads.

But, now, all the businesses are committed to increasing their customer base to achieve growth and are exploring novel ways of advertising for the same.

And one way which has become extremely popular in the internet era is Affiliate Marketing.
The graph of firms using affiliate marketing and taking advantage of it is exponentially increasing. Businesses’ spending on affiliate marketing is estimated to be >$8 billion in 2022, i.e., more than a 50% increase over the past five years.

Affiliate Marketing is a process of promoting other businesses’ products or services and getting a commission for the sales you generate using your marketing skills. This advertising model is prevalent and beneficial to businesses as they drive sales and boost revenue without needing to spend much time and money.

Here is how it works:

• The business owner and the affiliates get into a mutual relationship directly or through a third-party network.

• The business owner shares a unique link to every affiliate so that they can track the sales and performance of the individual affiliate.

• The affiliate promotes the products/services on their preferred network (coupon/link).

• The customer engages with the link by clicking it and lands on the business landing page.

• Then the customer makes a successful transaction(purchase).

• The businesses record the sales, and the affiliates get a commission for each sale.

These affiliates are not working as members of the organization and usually work independently. This model will achieve a more significant sales and brand awareness target when the product/service is of excellent value and the affiliates marketing skills match.

This model is highly effective as the businesses get access to the existing audience of the affiliates and is cost-effective, performance-based marketing with an increased competitive advantage, which is easy to track and manage.