Affiliate Marketing is a web-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts.

Affiliate marketing is also the name of the industry where a number of different types of companies and individuals are performing this form of internet marketing, including affiliate networks, affiliate management companies and in-house affiliate managers, specialized 3rd party vendors, and various types of affiliates/publishers who promote the products and services of their partners.

Affiliate marketing overlaps with other internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, email marketing and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques like publishing reviews of products or services offered by a partner.

In simplistic terms, therefore, affiliate marketing is the practice of driving traffic from one site to another in return for reward.

Right now, affiliate marketing is very much the staple diet of adult, gaming and retail sites across the web, but it is rapidly extending its reach into other vertical markets like mobile phones and finance, which are, incidentally, the highest-spending categories in global online marketing.

The affiliate marketing eco-system

Affiliate marketing is still treated by many as a bit of a dark art within the overall marketing mix. Many brands are wary of the potential for misrepresentation and seek reassurances on a range of issues, including security, fraud and brand bidding.

‘Brand bidding’ is the term used to describe the practice of affiliates buying keywords on PPC programmes relating directly to brands or trademarks, with the sole objective of driving traffic towards the brand site and generating income for the affiliate. Many marketers want to maintain control over their own brand names, believing that this is, in essence, their traffic to begin with and that affiliates or other partners should stay away from these particular keywords and focus on more ‘long-tail’ keyword phrases to drive traffic. In other words, some marketers don’t want to find themselves competing with affiliate partners in the SERPs.

Others are more enthusiastic about affiliate marketing and regard it as an integral part of their overall online marketing operations. On the plus side, affiliate marketing offers you a ready-made sales force operating on a reward or commission-only basis – in an age when marketers continuously seek ways to offset risk this surely has to be worth investigating, right?

On the negative side there are plenty of challenges surrounding measurement, and a lack of clear communication channels between affiliates and brands. For example, say a customer clicks on a special offer on an affiliate site, only to discover on arriving at the brand site that the offer has already expired – that’s bad news for the affiliate and for the brand, because both lose revenue potential, but more seriously they also alienate a customer, perhaps for good (and, remember, online consumers are highly accomplished when it comes to letting their peers know about bad online experiences).

Today things are starting to hot up on the affiliate front. Early in 2008 Time Warner’s AOL acquired affiliate network, and in the travel sector Expedia-owned TripAdvisor acquired Holidays Watchdog, deals that demonstrate how seriously investors are treating the whole affiliate business model.

But who are these people?

Meet your affiliates:

The most basic affiliates are individuals (or companies run by individuals) or larger organizations who leverage their web properties to suck traffic from around the web and then push that traffic out to brand sites in return for commission. A click on an affiliate site can pay handsomely for high-value transactions. One web hosting company, for example, pays its affiliates up to $600 for new business. More traditional affiliates, such as poker rooms and casinos, pay up to $400 for a new account and a decent share of all revenue earned too. So there’s plenty of incentive.

Affiliates may be considered by some as the bottom feeders in the affiliate ecosystem, but they are a vital component in achieving any sort of scale through investment in the affiliate marketing channel. You should look after your affiliates as well as you’d look after your own sales force. Equally, the age-old adage ‘Be wary of strangers bearing gifts’ applies, and you should make sure you have controls and measures in place to monitor your affiliates: there is no point in signing up 100 affiliates who are unchecked, unmotivated and unproductive. Moving up a notch, you have what are known as super-affiliates. These would typically include price comparison sites like and as well as loyalty sites like the Irish-owned (the term ‘on the pig’s back’ is derived from an old Gaelic expression that essentially means someone is ‘on to something good’).

Super-affiliates do pretty much the same thing as affiliates, but on a much larger scale. Companies like E-conversions, for example, operate as super-affiliates for major brands such as Dell, British Gas and SKY in the UK market.

One example we encountered at the 2008 Internet World show in London was the US-owned Affiliate Response Network; their proposition is very straightforward. Once you are set up as a client and they conduct some initial testing on search terms (to find out what keywords pull relevant, targeted traffic) they connect your brand to a high-performing online network of affiliates focused on getting results. They will work closely with you to assess the optimal channels to pull targeted traffic: this could be e-mail, search, display, emerging media and so on. Typical models of business they support include cost per lead, cost per sale, etc. The network also provides clients with real-time tracking and reporting systems, an essential ingredient in understanding the power of affiliate marketing and also in allowing marketers to get a more accurate picture of which digital marketing elements really work for them.

So who lives in this ecosystem? Consumers, clients, affiliates, super-affiliates, affiliate networks and not forgetting, of course, Google and the search engines (which sounds suspiciously like a dodgy 1970s rock band). Depending on your view of the world, Google with its distributed AdSense pay-per-click model is the biggest affiliate marketing player of them all. Then again, in the words of the great Jerry Reitman, former head of direct marketing worldwide for Leo Burnett’s, ‘at the end of the day. . . it’s all advertising’.