Affiliate marketing is a performance-based marketing strategy where an individual or business (the affiliate) promotes products or services of another company (the merchant) and earns a commission for each successful referral or sale made through their unique affiliate link. Here's a detailed explanation of how affiliate marketing works:

1. Affiliate Selection: The merchant identifies potential affiliates who have an audience or platform that aligns with their target market. These affiliates can be bloggers, influencers, content creators, or even individuals with a large social media following.

2. Affiliate Registration: Interested affiliates sign up for the affiliate program provided by the merchant. They typically need to provide their contact details and information about their platform or audience size.

3. Affiliate Link Generation: Upon approval, the affiliate receives a unique affiliate link or a tracking code. This link contains the affiliate's unique identifier, allowing the merchant to track and attribute sales or referrals back to the affiliate.

4. Promotion: The affiliate promotes the merchant's products or services through various channels, such as their website, blog, social media accounts, email newsletters, or YouTube videos. They may write reviews, create tutorials, share discount codes, or simply recommend the products to their audience.

5. Tracking and Attribution: When a potential customer clicks on the affiliate link, a cookie is stored on their device, which helps track their browsing activity and purchases. This cookie usually has a specific expiration period, typically ranging from 24 hours to 30 days. If the customer makes a purchase within this period, the affiliate is credited with the referral.

6. Conversion and Commission: If the customer completes a purchase or desired action (e.g., signing up for a service), the affiliate is eligible for a commission. The commission structure can vary, but it is usually a percentage of the sale value. For example, if an affiliate promotes a $100 product and the commission rate is 10%, they would earn $10 for each successful referral.

7. Payment: The merchant tracks the affiliate's referrals and calculates the earned commissions. Payments are typically made on a predetermined schedule, such as monthly or quarterly, either through direct bank transfers, PayPal, or other payment methods agreed upon by the affiliate and the merchant.

Example: Let's say a fashion blogger signs up as an affiliate for an online clothing retailer. They write a blog post reviewing the retailer's latest collection and include their unique affiliate link within the post. A reader clicks on the link, browses the retailer's website, and eventually makes a purchase. The affiliate is then credited with the referral, and they earn a commission based on the sale value.

References:

• Pat Flynn's Smart Passive Income: https://www.smartpassiveincome.com/affiliate-marketing-strategies/
• Neil Patel's Affiliate Marketing Guide: https://neilpatel.com/what-is-affiliate-marketing/