What Is Affiliate Marketing?
Affiliate marketing pays a commission to external partners who drive sales to your business. Learn how it works and when it makes sense.
Key Takeaways
- Affiliate marketing pays a commission to partners only when they drive a sale
- It is a purely performance-based channel — you pay only for results
- Affiliate networks (AWIN, CJ, Rakuten) connect merchants with publishers
- Commission rate and cookie duration are the two key terms to negotiate
What affiliate marketing is
Affiliate marketing is a performance-based marketing model where external partners (affiliates or publishers) promote your products or services in exchange for a commission on each sale they drive. Unlike traditional advertising (where you pay for impressions or clicks regardless of outcome), affiliate marketing is purely pay-per-result — you only pay when a customer converts.
How it works
The merchant (your business) creates an affiliate programme. Affiliates (bloggers, comparison sites, voucher sites, influencers) join the programme and receive a unique tracking link. When a customer clicks that link and makes a purchase within the cookie window, the affiliate earns a commission — typically 5-20% of the sale value depending on the category and margin.
Affiliate networks
Most affiliate programmes operate through a network — AWIN, Commission Junction (CJ), Rakuten Advertising, or ShareASale. The network provides the tracking technology, pays affiliates, and gives you access to a pool of established publishers. The network charges a percentage of commissions (typically 20-30% of what you pay affiliates) plus potentially a monthly management fee.
Key terms to negotiate
Commission rate: the percentage of sale value you pay the affiliate. Cookie duration: how long after a click the affiliate gets credit for a purchase (typically 30 days). De-duplication policy: how you handle a customer who clicked multiple affiliate links — which affiliate gets credit? Voucher codes vs links: whether affiliates are allowed to create exclusive discount codes, which can cannibalise full-price sales.
When affiliate marketing makes sense
Affiliate marketing works best for businesses with meaningful margin to share, clear product-market fit (affiliates will only promote products they believe convert), and the ability to create affiliate-friendly creative assets. It is most effective in categories with strong content and comparison ecosystems — personal finance, insurance, technology, travel, and beauty — and less effective in niche B2B or highly specialised product categories with thin audiences.