Affiliate marketing is a performance-based marketing channel where an affiliate, also known as a partner, is rewarded for generating sales for a merchant. This process involves three key players: affiliates, merchants, and consumers. Affiliates promote products or services , merchants are the entities with products to sell, and consumers purchase these products via the affiliate’s site.
How Does Affiliate Marketing Work?
Affiliates earn a commission when a visitor to their site clicks on an affiliate link—such as a banner, logo, or text link—goes to the merchant’s website, and completes a specific action, usually a purchase. Some merchants also reward affiliates for generating leads, such as completing an online application form or submitting an email address.
Example:
Imagine you’re looking to buy a new pair of sneakers. You might visit a fashion blog that reviews various brands and styles. After reading a review, you click on a link that takes you to the retailer’s website to make your purchase. In this scenario, the fashion blog is the affiliate, and the retailer is the merchant. The retailer rewards the fashion blog with a commission for driving the sale.
Similarly, in the Web3 space, if you’re interested in purchasing a crypto asset, you might visit a Web3 service provider. Clicking through to complete your purchase creates an affiliate lead, with the affiliate earning a commission for facilitating the sale.
What is an Affiliate Network?
An affiliate network facilitates tracking, payments, and relationships between affiliates and merchants. Once affiliates sign up to an affiliate network, they can browse various merchants via a merchant directory and request to join them. Once accepted, they can start promoting the merchants products on their website, through social media and via email marketing, and earn commissions on sales they generate.
Tracking Sales
Sales are tracked using cookies. When a consumer clicks on an affiliate’s link, they are redirected to the merchant’s site. A cookie is then dropped onto the consumer’s browser, enabling the network to track the consumer’s journey. When the consumer completes a purchase, the affiliate network uses this tracking information to award the commission to the affiliate.
Earning Money in Affiliate Marketing
Affiliate marketing primarily operates on a CPA (cost per acquisition) basis, meaning affiliates earn a percentage of the sale value they drive. Other payment models include:
- Cost per Sale: Affiliates earn for sales generated from interested customers.
- Cost per Lead: Affiliates earn for sign-ups generated from interested customers.
Types of Affiliates
Affiliates are categorized by how consumers interact with their sites. Common types include:
- Cashback: Sites that reward customers with monetary rebates.
- Influencers: Influencers earn by linking from their socials or YouTube video rewarding on conversions.
- Social & Blogs: Affiliates who use social networks or own blogs to promote products.
- Editorial Content: Online newspapers and magazines.
- Discount Codes: Affiliates promoting discounts through voucher codes.
Types of Merchants
Affiliate networks work with a wide range of merchants globally across various sectors, including travel, retail, finance, and telecommunications. Merchants interested in affiliate marketing can leverage extensive networks of active affiliates.
Web3 Brands and Affiliate Marketing
Despite the significant growth in traditional affiliate marketing, Web3 brands have yet to fully capitalize on this trend. The Web3 space presents a unique opportunity to harness the power of affiliate marketing to build awareness, drive conversions, and engage with a decentralized digital audience. By integrating affiliate marketing strategies, Web3 brands can lead this innovative and rapidly growing sector.
Affiliate marketing offers a low-risk, high-return route to market for both affiliates and merchants. By understanding the basics and leveraging an affiliate network, businesses can maximize their reach and revenue potential.
