What is affiliate marketing and how does it work?

What is affiliate marketing?

Affiliate marketing is an arrangement in which a marketer promotes a business’s products or services and earns a commission for sales, leads, or clicks. 

How does affiliate marketing work, compared to regular advertising? Unlike advertising, where brands pay for exposure, affiliate marketing is performance-based. This means brands pay per result, depending on the commission model.

Customers also view these product promotions differently. While ads are often seen as intrusive, affiliate marketing features products or services in content, which can feel more natural.

Now, let’s look at key terms: 

• A business or a solo entrepreneur that uses affiliate marketing is called an affiliate merchant, or merchant partner.
• A marketer promoting the products or services is called an affiliate (also known as a partner or publisher).
• A marketer’s unique link used to attribute sales is called an affiliate link. 

Here’s how it works in practice. A travel blogger joins an activities affiliate program and recommends a tour to their audience. A reader clicks on the affiliate link and books. The blogger earns a commission. We’ll explain this in detail below using travel affiliate marketing as an example. 

How does affiliate marketing work?

Let’s take a closer look at the process, step by step. 

Step 1: A merchant creates an affiliate program

First, a brand launches an affiliate program and specifies conditions, such as payment model, commission rate, and allowed traffic sources. These programs exist across many affiliate niches, from e-commerce to education.

As an example, the GetYourGuide affiliate program is one of the most popular tours and activities programs among travel content creators.

Step 2: An affiliate joins the program

Next, an affiliate marketer joins the program and accepts its conditions. You can either join a program directly or via an affiliate network.

An affiliate network connects a merchant partner and an affiliate. It usually gives you access to several programs in one place, plus tools to manage and track your results.

For example, Travelpayouts Partnership Platform features more than 90 brands, sometimes with the same commissions as in direct programs. Plus, you get a unified dashboard to view all your earnings and results and AI-powered tools to help you earn more. 

Step 3: The affiliate gets a tracking link

Now, instead of regular links to products or services, creators use affiliate links. These automatically include a unique partner ID. So when someone buys through your link, the tracking system credits the sale to you. 

Step 4: The affiliate promotes the product

Next, the affiliate creates content for their audience. This can be a product review for targeted promotion, a list, or a recommendation in a post or video on a broader topic. Several content pieces can also work together to create an affiliate marketing funnel and increase conversions.

The content serves a double purpose: it benefits the creator’s audience and also promotes affiliate links. For example, here’s a GetYourGuide affiliate link in a Paris itinerary article by Lana from Adventures by Lana:

Step 5: A customer clicks the affiliate link

Next, a reader clicks the link they see in the content. At this point, a website or landing page they visit creates a tracking cookie on the customer’s device. The cookie is a small file that includes the link the customer clicked, the affiliate’s identifier, and the date and time of the click.

Step 6: The customer converts

Next, the customer completes a specified action. For example, they book a tour on the GetYourGuide platform.

The action can directly follow the click, but it doesn’t have to. As long as the customer makes a purchase or any other target action within the cookie duration, it will count towards the affiliate’s earnings. For GetYourGuide, that’s 31 days. So if the customer action happens within that period, the website can check the cookie and credit the booking to the right affiliate.

Step 7: The affiliate earns a commission

When the customer takes an action, it gets credited to the affiliate. After the brand approves it, the affiliate receives their commission payment – that is how you can make money with affiliate marketing.

In our example, a GetYourGuide affiliate gets 8% of the booking amount.

Types of affiliate marketing

One of the most prominent experts in the field, Pat Flynn from Smart Passive Income, divided affiliate marketing into three categories. Each represents the depth of connection between the creator and the product or service they promote.

Unattached affiliate marketing

The marketer has no ties to the product or service they are promoting. They haven’t personally used it and don’t even have an online presence in the niche. 

The marketer simply uses paid ads for product promotion on Google, social media, or elsewhere. They might also include unrelated ads in their content. 

Here, the marketer doesn’t build an audience and create a trusting relationship. They don’t use their reputation for promotion but also don’t risk it. The focus is only on making money through pay-per-click advertising.

It’s important to note that many brands prohibit this type of promotion. So if you want to pursue it, your program options might be limited.

Related affiliate marketing

The marketer has an online presence in the niche and includes related affiliate links or ads in their content. However, they haven’t personally tried what they are promoting.

For example, a travel blogger promotes a hotel they haven’t stayed at as part of their Instagram affiliate marketing. The blogger’s reputation in the niche makes the recommendation more appealing even though it’s not backed by personal experience.

Involved affiliate marketing

This is the closest association between the marketer and the product. The marketer promotes something they’ve tried and enjoyed. For example, a creator joins an outdoor affiliate program and recommends a tent they used on a camping trip. 

Personal experience and authentic details make the product endorsement more credible and appealing. This also means that the marketer carries a responsibility for promotions they run. So if the product isn’t good, customers will be disappointed and won’t trust the creator in the future.

Alex from Roam & Thrive

For a real-life example, Alex Wieteska-Gasior has been running her blog Roam & Thrive for eight years. She’s built a dedicated audience of a million readers every year. Trust is the most important part of her strategy, and that’s what helped her make $9,500 in six months on Travelpayouts:

For more inspiration, see our other affiliate website examples.

Which type of affiliate marketing is right for you?

If you want to quickly understand which type to choose for your affiliate marketing strategy, take a look at the table below: 

Choose the unattached type if you’re skilled in Google Ads and other paid promotion methods and don’t want to be a content creator. Choose the related type to use your reputation in a niche to earn commissions. Finally, choose the involved type if you want to make convincing recommendations and potentially get higher conversions.  

How is affiliate marketing tracked?

In affiliate marketing, tracking helps determine the source of referral traffic, correctly attribute conversions to specific affiliate marketers, and, finally, pay them commissions. 

Conversion tracking relies on affiliate links that include tracking IDs. The IDs point to specific merchants and affiliates. When a user clicks on an affiliate link, their browser saves a small file called a cookie. Cookies store the time of the click and the affiliate identifiers. Depending on each affiliate program’s rules, cookies expire a set number of days after the click.

When the customer makes a purchase, books a tour, or completes another target action, the tracking mechanism on the merchant’s website matches the sale information to the affiliate IDs in the cookies. That’s when conversion attribution happens.

But what if a customer clicked on several affiliate links from different marketers? Different attribution models decide who gets the credit. Last-click attribution credits the affiliate whose tracking link was clicked last, while first-click does the opposite. There’s also a multi-touch model that shares the commission among affiliates. 

How do affiliates get paid?

Your affiliate marketing earnings depend on the payment model used by the affiliate programs. 

For more examples, check out our list of the best pay-per-click affiliate programs.

How to start affiliate marketing

Now that you know how affiliate marketing works, let’s briefly look at how you can start: 

1. Choose a niche. Pick a topic you like with consistent demand and low competition. 
2. Select a content platform. Whether it’s your blog, email newsletter, or social media platform, like Pinterest, choose your main channel. You can add more later on.
3. Find suitable affiliate programs. Explore the best affiliate programs in your niche and make sure they allow the channels you plan to use. 
4. Create useful content. Focus on providing value, being authentic, and building a genuine relationship with your target audience. Creating trust is essential for affiliate marketing to work.
5. Add affiliate links. Insert relevant links into your content and disclose that you’re earning from your audience’s purchases. 
6. Attract traffic. Use SEO, paid ads, or other traffic sources so that as many people as possible can see your content. 
7. Track results. Set up conversion tracking to understand how your content is performing. Periodically analyze the results and optimize your strategy to increase earnings.

This is a simplified instruction, and for a detailed guide, check out our article on affiliate marketing for beginners.

FAQ about affiliate marketing

Do you need a website for affiliate marketing?

No, you don’t need a website for affiliate marketing. You can promote affiliate links via paid ads, social media, or email without it. However, some affiliate programs restrict certain channels, so make sure you follow each program’s rules.

Can you join more than one affiliate program?

Yes, you can join as many programs as you want to have several income sources. Some brands may prohibit their affiliates from promoting competitors, but most brands do not.

How long do affiliate cookies last?

Affiliate cookies typically last around 30 days, depending on the program rules. Some programs have longer cookie durations of 90 days, while others limit them to 24 hours, like Amazon Associates.

Do affiliates need to disclose affiliate links?

Yes, affiliates must disclose affiliate links to comply with laws like the FTC’s guidelines in the US and affiliate program rules. Disclosures also help maintain audience trust.

Final thoughts

If you’re wondering whether affiliate marketing works, it does. Affiliate marketing is a lucrative monetization strategy that allows content creators and marketers to earn passive income. There are multiple affiliate channels to use, such as blogging, email marketing, paid search, and more, to drive traffic to affiliate offers. 

If you want to become a travel affiliate marketer, join Travelpayouts now to try it. The platform offers over 90 brands, comprehensive analytics, and smart monetization tools to help you make the most out of the strategy.