Affiliate is a term describing a commercial entity (person or a company) which agrees upon advertising products or services of another entity for a commission. This basically means that the merchant (the owner of the business who requires advertisement of his/her products or services) pays his publishers (affiliates who take upon themselves the process of affiliated advertisement) a commission for advertising (strategies can differ and so can payments) products and services to customers. Affiliation marketing can be undertaken in everyday life but has flourished primarily as an online marketing strategy (it has been a marketing strategy on the Internet since 1994).
Affiliation strategies are various but they mostly fall into one of the two categories:
Pay Per Click (PPC)
Pay Per Click and its associated techniques are constituted as affiliation relations where the publisher places clickable ad boxes or links on diverse platforms. The advertisement, once clicked on, leads to a home page of the merchant where the process of marketing continues (however, the affiliate has nothing to do with this process). Omissions are achieved as soon as a visitor clicks on the advertisement which means that the payment does not depend on whether the visitor converses into a buyer. Sometimes the payment depends on an agreed quantity of clicks (for example, pay-per-mille – after one thousand clicks have been accumulated, the affiliate receives payment).
However, due to an extreme multitude of click-on ads and links based on the PPC, the efficiency of this form of affiliate marketing decreased substantially over the past few years. It is obvious that the affiliates have no connection or actual opinions about the product or service which they are promoting and, consequently, potential customers tend to ignore such advertisements.
Payment based on Performance
Here the publisher’s payment depends on conversion of visitors to buyers. The affiliate usually has a website or a blog where advertisement of certain products or services is made in addition to the content which the individual provides. The affiliates promote products and services within their own niche (for example, a blogger who writes about weddings will become an affiliate for a florist, a catering business or a photography studio specialized in weddings). It is advisable not to provide advertisements for more than two business of the same trade (because it diminishes the value of each of them as well as the credibility of the affiliate). The affiliate includes adverticles and texts related to the products or services which are advertised in an effort to influence visitors and increase the chances of them becoming buyers. Sometimes this process is morally legitimate and truthful but most of the time the affiliates have (well or not so well) hidden agendas – making as much profit as they can.
Ideally, affiliate marketing provides a critical and valuable description of product and services, guiding potential buyers to something worth spending money on. The merchant profits from the sell, the customer profits with the purchase and the affiliate profits as a guide. However, in the infinite marketing platform which is the Internet it would be foolish to believe such approach is widely accepted – most of the content is made as adverticles, that is, the advertisement formulates the content not vice versa.