Affiliate Marketing Definition:
Affiliate marketing is performance-based marketing in which a business rewards one affiliate for each successful purchase from a customer brought by the affiliate's own marketing efforts.
There are three sides of an actual affiliate equation: Product Seller (merchant), the Affiliate, and the Customer. Both merchant and affiliate benefit from the idea of sharing revenue. The merchant offers the affiliate a win-win relationship when merchant can increase sales while the affiliate gets a reward in the form of a commission.
1. The merchant: Sometimes known as the seller, creator, vendor or retailer,... is the one who creates the products. From a solo entrepreneur to a big brand, anyone could be the merchant in the affiliate model. The purpose of a merchant joining an Affiliate marketing model is to advertise their products to customers in order to increase their revenue.
2. Affiliate: Also known as Publisher or Influencer. An Affiliate can range from a single person to an enterprise, from a professional affiliate, a social media influencer, to a customer who makes a purchase on the merchant's website. The Affiliate's main role is to attract and convince potential customers of the value of merchant's products.
There are various ways. through multiple sales channels that an affiliate can promote a merchant's website. They can run ads on Facebook, share a post on Social media, embed a link on their website, run an email marketing campaign or discuss on suitable forum,... the list goes on.
3. Customer: Customers are the key of every business, their activity decides the success of a business. Thanks to affiliate promotion activities, potential customers can approach a merchant's product easier. Orders
made by a customer through an affiliate's marketing actions become referral orders, which is the base that is used to calculate the affiliate's commissions.