According to Wikipedia, affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.
The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer. The market has grown in complexity, resulting in the emergence of a secondary tier of players, including affiliate management agencies, super-affiliates and specialised third party vendors.
Internet marketing ideally consists of some conventional marketing methods and affiliate marketing is a method that is non-conventional and has recently come on the block. Ideally, organic search engine optimisation (SEO), paid search engine optimisation, pay per click, e-mail marketing; content marketing and paid display marketing.
Affiliate marketing and referral marketing use third parties in order to drive traffic and sales on their website. However, both have a very discrete form of marketing as affiliate marketing counts on the financial motivation to derive sales and traffic, whereas referral marketing requires a personal level of trust and understanding- with or without the inclusion of finances.
Affiliate Marketing Explained In Layman Terms
The affiliate marketing works in a cycle of 4 steps, with three different parties involved. Let’s take an example of an online shopping website, which as a matter of fact is a huge and growing market today!
Online Shopper – Affiliate Website – Merchant Site versus Online Shopper –Affiliate Website – Merchant Site – Online
Ideally, this is an everyday situation for most of us involved in, pertaining to the highly succumbing desire of shopping online to beat multiple psychological shortcomings. That, however, is a different topic to discuss.