An Internet affiliate is a company, organization, or individual that markets another company's products through their website. In exchange for marketing their products, companies pay affiliates a commission for each sale they generate.
Affiliate programs exist for many different industries, such as travel, clothing, technology, and online services. This allows web publishers to promote specific products or services related to the content of their websites. For example, the webmaster of a fashion website may publish affiliate banners for a clothing store. The owner of a software review website may include affiliate links to different software programs.
Affiliate marketing is a type of PPS advertising, since affiliates are only paid for sales they produce (unlike PPC advertising). Therefore, merchants must offer affiliates high enough commissions to make it worthwhile for the publishers to run their ads. Affiliate commissions vary widely between industries and also depend on average sale amounts. Low-margin products, such as consumer electronics, may offer commissions as low as 2%, while high-margin products, such as computer software, may offer commissions as high as 75%. Most affiliate commissions fall in the range of 5 to 20%.
Affiliate programs provide free marketing for merchants and an extra source of revenue for web publishers. While it is a win-win partnership, setting up an affiliate system to track sales and generate payments is a complex process. Therefore, many companies run their affiliate programs through a third party e-commerce platform, such as Commission Junction or DirectTrack.
Updated: May 30, 2014