What is affiliate marketing?

In the exciting yet unregulated 1990s internet, it was fairly easy to generate income from websites.

Online advertising was a relatively new concept, with horrors like flashing banner ads and content-obscuring hover ads retaining a degree of novelty.

However, consumers quickly (and understandably) tired of webpages peppered with garish and often irrelevant adverts.

Ad blockers rapidly rose to prominence, advertising click-through rates collapsed, and many websites had to seek alternative funding methods to pay for their content and operating costs.

Affiliate marketing was one such solution. It’s currently estimated to be worth $17 billion, and this global valuation is increasing all the time.

But what is affiliate marketing? How does work, and why should you approach it with caution?

I’ve had my ‘fil

Affiliate marketing offers website owners a relatively discreet way to generate revenue streams without resorting to pop-up or banner adverts.

It describes a process where websites – the affiliates – earn commission by promoting a third party’s products or services on their own platform.

Imagine a scenario where Company A wants to sell Product B. Website C offers to review Product B, incorporating a link to Company A’s website into its review.

When Consumer D reads Website C’s review of Product B and likes the sound of it, they click a hyperlink which takes them directly to Company A’s ecommerce purchase page.

Conversion tracking tools record the fact Consumer D arrived from Website C. If the transaction is completed, Company A automatically pays Website C a commission.

Company A has made a sale it might otherwise not have achieved, while Website C earns money for its role in sourcing a new customer.

It doesn’t necessarily require a sale – affiliates may be paid per lead they generate, after each clickthrough to a client website, once an app is installed or after software is purchased.

Affiliates could share links/adverts on websites, through their social media accounts, in proprietary apps or across any environment where their customers are also present.

Affiliates might be an individual, a media outlet, an industry specialist, an influencer or simply a website owner looking to generate some passive income.

Similarly, clients range from vendors and importers to manufacturers and service providers.

A credible affiliate should have some link or connection to the client’s industry – an athlete testing trainers or a DIY expert reviewing tools – to generate the requisite aura of authority.

Is this reputable?

There’s nothing illegal – or even immoral – about a website promoting products or services it gains a commission from.

However, it does call into question the legitimacy of any content relating to that product.

Was Product B reviewed/advertised/tested because it’s among the best items in this sector? Or was it chosen ahead of superior rivals because Company A offers affiliate payments?

Furthermore, since Website C only makes money in response to consumers doing something tangible, it’s clearly in their interest to be enthusiastic about Product B.

That might lead to positive attributes being accentuated and exaggerated, or drawbacks being discreetly overlooked.

In other words, a 9 out of 10 rating might be aimed at Company A rather than Consumer D, which is the antithesis of online review websites which strive for impartiality.

To protect consumers against being misled, affiliate marketing should be highlighted with a phrase like “please note we may earn an affiliate commission if you buy through links on our site”.

However, these notices often appear in a small font at the bottom of the page. They could easily be missed by people skimming through content or not understanding the affiliate process.

Internet content has to be paid for somehow, so check whether affiliate marketing is involved prior to placing your trust in online reviews or product/service comparisons…