A Simple Look at How Affiliate Marketing Works

If you’ve ever searched for ways to , you’ve probably stumbled upon the term affiliate marketing. Maybe you’ve heard it mentioned as one of the best , or perhaps this is the first time you’re seeing it. Either way, it remains one of the most accessible and potentially lucrative ventures out there. It’s profitable, doesn’t require constant hands-on effort, and can be started by almost anyone with a digital platform.

So, what exactly is it? At its core, affiliate marketing is a partnership. It’s an arrangement where a company pays a third party—that’s you—a commission for bringing them sales. For every single purchase that comes from a lead you sent their way, you get a cut. This setup is a cornerstone of modern .

A Quick Look at Its Origins

While it feels like a recent internet phenomenon, affiliate marketing has been around for a while. The person credited with creating the model we know today is William J. Tobin, the founder of PC Flowers & Gifts. His company was the first to launch an affiliate marketing program by partnering with Prodigy Network. He paid the network a commission for every sale they helped generate.

The idea was so effective that Tobin filed for a patent in 1996, which was eventually granted in 2003, cementing his place in history as the first internet marketer. Soon after, other companies took notice. The most notable was Amazon, which launched the first public-facing affiliate program in 1996, called Amazon Associates. To this day, it’s one of the most popular affiliate programs in the world, and its model has been copied by countless other businesses.

As more companies embraced this strategy, a need for middlemen emerged. This led to the creation of affiliate networks, which connect brands with publishers (the affiliates). Two of the earliest and still largest networks, Commission Junction and Clickbank, both opened in 1998. Since its early days, the affiliate marketing industry has exploded, growing into a $12 billion industry by 2017 and showing no signs of slowing down. For anyone with a blog, social media following, or website, not exploring this is like leaving money on the table.

The Key Players in Affiliate Marketing

For this system to work, a few key players have to be involved. Think of it as a machine with several essential parts: the merchant, the affiliate, and the consumer. The affiliate network often plays a supporting role, but these three are the core.

The Merchant

This is the creator or the brand. The merchant has the product or service that needs to be sold. They are the ones who establish the affiliate program, decide on commission rates, and choose who to partner with. The merchant is also responsible for providing their affiliates with unique tracking links and promotional materials, like banners, videos, and other ads. That unique link is crucial because it’s how they track which sales came from which affiliate.

The Affiliate

The affiliate is the promoter—the person or brand that brings customers to the merchant. Your main job is to market the product or service, usually by reviewing it, recommending it, or creating content around it. For anyone , this role is ideal because your earning potential is directly tied to the effort you put into promoting the merchant's offerings.

The Consumer

Nothing happens without the consumer. They are the reason the product exists in the first place. The consumer has a problem to solve or a need to fulfill, and the merchant’s product is the solution. The affiliate’s job is to bridge that gap and convince the consumer that this specific product is the one they should spend their money on.