What Is Online Affiliate Marketing?

Affiliate Marketing, Explained Simply

The basic idea

Affiliate marketing is like being a commissioned referrer. You tell people about a product or service you believe in. If someone buys because of your recommendation, the company pays you a small thank-you, called a commission.

You've probably seen this offline. A friend says, "You should try my hairdresser," and the salon gives them a discount when you book. Online, it works the same way, except it's tracked by computer.

How it works, step by step

  1. You sign up with a company that has an affiliate program. It's usually free or low cost.
  2. They give you a special link that belongs only to you. Think of it as your personal referral code.
  3. You share that link: in an email, on social media, on a simple website, or even in a text to a friend.
  4. Someone clicks it and buys. The company can see the sale came from your link.
  5. You get paid a commission, usually a percentage of the sale. Some programs pay once, and some pay every month the customer stays.

A simple example

Say a company sells a $20 monthly gardening app and pays affiliates 50%. You tell your gardening club about it, and three people sign up using your link. You'd earn about $10 for each one, so $30. If it's a monthly subscription and they stay, you could earn that each month.

What you actually do all day

Mostly, you share and explain. People buy from someone they trust, so the work is being helpful and honest about what the product does. That might mean writing a short email, posting on Facebook, or answering questions from friends.

What to know before you start

  • Most people earn little or nothing. Results depend on effort, who you can reach, and the product. Beware anyone promising quick or guaranteed money.
  • Pick something you'd actually recommend. If you wouldn't tell a friend about it, don't promote it.
  • You must say you're an affiliate. In the US, the FTC requires you to disclose that you earn a commission when you share your link. A simple line like "I earn a commission if you buy through my link" is enough.
  • Read the fine print first. Check what the product costs you, how and when you're paid, and what counts as a sale.
  • Be careful about up-front costs. Some programs charge to join. Make sure you understand the monthly costs before paying, and look for a refund policy.
  • Watch for pressure to recruit. A real product that customers use is different from a program that mainly pays you for signing up other sellers.

Good questions to ask any program

  • What does it cost me to join, and what do I pay each month?
  • What percentage do I earn, and on what exactly?
  • When and how do I get paid?
  • Is there an official statement of what typical affiliates earn?
  • Can I get my money back if it's not for me?

Starting small

If you're curious, try this: pick one product you already use and like, sign up for its affiliate program if it has one, and tell a few friends or family members who might truly benefit. That teaches you how it works with very little risk.