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How Does Affiliate Marketing Work? September 6, 2014

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Put simply, an affiliate program is an arrangement where an internet-based merchant website pays an affiliate website a commission to send it traffic.

The affiliate websites post merchant site’s links on their websites and will be paid based upon a particular agreement. The agreement is normally based upon the number of traffic that the affiliate website directs to the merchant site.

It also could be based on the number of people that an affiliate site sends who perform some action or buys something. There are some arrangements that pay based on the number of clients visiting the page that contains the banner advertisement of the merchant site.

How does affiliate marketing work?

An affiliate transaction contains at least three parties:
• The consumer or the customer• Publisher or affiliate site• Advertiser or merchant site

Advertiser
In the affiliate marketing realm, an advertiser can refer to a company that sells products such as airline tickets, electronics, car parts, or even clothing. Also, an advertiser could even be an insurance company that sells policies. In other words, you will be deemed advertiser if you are ready and willing to pay other people to assist you sell as well as promote your business.

Publisher
This refers to an individual person or a company promoting the service or product that is being sold by the advertiser and they do this in exchange for a commission. Also called affiliate sites, advertisers agree to work with publishers and will often supply the publisher with creative. These are usually in the form of banners ads, text ads, unique phone numbers or even links. The publisher then incorporates these into their website.

The consumer
This is the final element completing the affiliate marketing triangle. This is the party that actually sees the advert and then decides to make an action through clicking a link or via submitting their information. Whatever action they are asked to perform, it leads them to the website of the advertiser where they complete it. Completing that action is referred to conversion in affiliate marketing circles.

Cookies are critical

A cookie refers to a technology that works with the web browsers to keep information like login, registration information or user preferences. It is what happens when a website asks you to “remember” your online account username or password.

In the world of affiliate marketing, one important task performed by cookies is to remember the ad or link that a website visitor clicks on. Not only that. Cookies will also keep the time of click as well as the date.

Cookies could even be used to remember the type of content or website that you like most. There are many different kinds of cookies as well as uses but the type of cookie relied upon most in affiliate marketing is referred to as first-party cookie.

When a user goes to the website of a publisher, and click on the creative ad of the advertiser, the visitor’s browser automatically receives the advertiser’s tracking cookie. This cookie identifies the advertiser, the precise creative ad, the commission amount and the publisher.

Such data is kept within then information called ‘parameters’ and may even include more anonymous information used for attribution.

Categories: marketing

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