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What is Affiliate Marketing? - Definition, Types & Examples

Instructor: Yuanxin (Amy) Yang Alcocer

Amy has a master's degree in secondary education and has taught math at a public charter high school.

After reading this lesson, you'll learn who uses affiliate marketing and why they find it beneficial. You'll also learn about some potential pitfalls in affiliate marketing.

Definition of Affiliate Marketing

You may actually have a friend who is an affiliate marketer. And some people are even affiliate marketing without even knowing it! So what exactly is affiliate marketing?

Someone who does affiliate marketing is a sales person for an outside company. As the sales person, the affiliate marketer never carries any of the products himself. Instead, he sends people to the company, and when these people purchase something from that company, the sale is attributed to him and he receives a percentage of the sale.

Almost all major companies have an affiliate marketing program of some kind, and almost anybody can sign up to be an affiliate marketer for these companies. Some companies do require that affiliate marketers already have some prior affiliate marketing experience, though.

Almost anybody can become an affiliate marketer
affiliate marketing

This means that yes, you can become an affiliate marketer for Walmart if you wanted to. That's right, if you end up helping Walmart get more sales, then you'll be paid a certain percentage of each sale you help give to Walmart.

Affiliate Marketing Types

The most common type of affiliate marketing is done on the internet. With this type of affiliate marketing, you create a website that talks about the product you want to help sell and the company you are affiliated with gives you a special link to use. When people click on this link, the company knows that they came from your website. Then when these people buy something, you get a certain percentage of each sale.

So if you're affiliated with Walmart, for example, and you want to sell coffee makers, then you make a website about coffee makers. You place your special links on your website to show people where they can purchase your coffee makers. Then when people visit your site and click on your special links, they'll be taken to Walmart's website. And if they then make a purchase, you'll be paid a percentage.

Another common type of affiliate marketing uses email, in which people send out their special links to others via email. When using this method however, you have to make sure that you're not spamming others. You first need to have consent from others to let you send them promotional material.

Other types of affiliate marketing include:

  • Social media affiliate marketing (directing your social media followers to your special link)
  • Offline affiliate marketing (such as posting flyers with your special link in public places)

Affiliate Marketing Considerations

Not all companies have affiliate marketing programs; some have decided that this type of marketing is not a suitable option for them. This is because there are considerations that need to be taken into account both for the company and the potential affiliate marketer.

Companies have to decide whether their price points give them enough profit margin to also pay an affiliate for his or her sales. If a company doesn't have enough profit margin to pay an affiliate, then affiliate marketing won't be a financially viable option. Companies also have to consider the risk of an affiliate marketer misrepresenting the company. For example, an affiliate marketer might mistakenly claim that a particular lotion will make your wrinkles go away in two weeks, but in reality, the actual lotion product makes no such claim. An affiliate marketer could potentially cause problems for a company with such untested statements. Some affiliate marketers will say anything to make a sale, so companies need to weed these people out.

Affiliate marketers have to consider whether a particular product or company is worth their time to promote. Some companies only pay a one percent commission, while others pay 75 percent commission. And you can get paid as little as a few cents and as much as a few hundred or thousand dollars depending on the type of item sold. As the affiliate marketer, you also have to determine how much time you need to spend in order to make a sale. Affiliate marketing is not a set it and forget it kind of method, as some people claim it to be - it takes active work to make a sale. If you have to spend one hour in order to make $0.38, then it may not be worth it for you. But if you spend only 20 minutes and you get paid $50, then that's probably worth it.

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