Affiliate marketing is a performance-based model where a publisher (affiliate) promotes a merchant’s product on their own channel and earns a commission on the resulting sale or action. The merchant only pays for a realized outcome — that’s the key difference from ad models priced per impression or per click.
Three Parties
- Merchant (Advertiser): The party selling the product or service and paying the commission.
- Affiliate (Publisher): The party promoting the merchant’s product on their own channel — a blog, YouTube channel, email list, or coupon site.
- Affiliate Network: The intermediary platform that connects merchants and affiliates and manages the tracking infrastructure and payment process. A merchant can also run its own affiliate program directly, without a network.
Commission Models
- CPA (Cost per Action): Payment is made when a specific action happens — a sale, a form fill, a signup. The most common model.
- CPS (Cost per Sale): A percentage of the sale amount is paid; the most common variant in e-commerce.
- CPL (Cost per Lead): Payment is made when a lead’s information is collected; common in high-transaction-value sectors like insurance and finance.
- Recurring commission: For subscription products, the affiliate earns a commission every period for as long as the customer keeps paying.
How Tracking Works
When a user clicks an affiliate’s link, a cookie or similar identifier is placed in their browser. If the user then completes a purchase — either in the same visit, or within a set period called the “tracking window” (typically 30–90 days) — that sale is attributed to the affiliate. The tracking window’s length varies by the merchant’s commission policy; a short window suits impulse purchases, while products with a longer decision process (software, insurance) need a longer window.
As browsers increasingly restrict third-party cookies, some affiliate networks are moving to server-side tracking or URL-parameter-based solutions — the same logic covered in What Is Server-Side Tagging?, applied to affiliate tracking.
Who It Fits
- For merchants: Cash-flow risk is low (you only pay for results), but setting up an affiliate network/program and managing commissions takes time.
- For affiliates: If you already have an audience (a blog, a YouTube channel, an email list), it’s a low-cost way to turn existing content into a revenue line.
Risks and Limits
Affiliate marketing hands partial control of the brand message to the affiliate — how the affiliate describes the product isn’t under the merchant’s control, which can lead to inconsistent or misleading claims. “Coupon site” affiliates in particular can insert themselves right as a user was already about to buy, unfairly claiming the commission (an attribution problem) — which is why it’s worth evaluating whether traffic actually represents a new sale or is just riding on a sale that would have happened anyway, before paying out.