Affiliate marketing works by using software to track sales and identify the source that made the sale possible.

The Logistics of Affiliate Marketing. When an advertiser has something to sell - whether cars, electronics, life insurance, shoes, an online training program, books, etc. the advertiser can either create an affiliate program in-house or join an affiliate network. Affiliate networks are often a good choice because they help merchants administer affiliate programs and serve as a trusted liaison between merchants and publishers.
Advertisers create contracts and payment structures for the affiliate publishers who will be promoting the advertiser’s products. The advertiser also creates marketing collateral (re- ferred to as “creative”) which may in- clude landing pages, sales copy, dis- play ads, links, unique phone num- bers, and other promotional tools for affiliates to use on their websites to help them sell products.

The Technology behind Affiliate Marketing

When you, as an affiliate, sign up to promote a particular product for an advertiser, three things happen: 1.You get a publisher ID for each website you will use to promote affiliate products. 2.A unique ad ID is assigned to each of the ads you promote, whether they are display ads or links. These ad IDs help advertisers keep track of which ads are performing best and helps the affiliate program manager to determine which affiliates promoted the ads clicked by prospective customers. 3.Shopper IDs help affiliate networks identify shoppers who either make a purchase, subscribe to a list, ask for more information, or take some other progressive action from your website.
This tracking is done with cookies - lines of code dropped into a site visitor’s web browser when they visit a cookie-enabled site. If you have ever been watching a video on YouTube or a movie on Netflix then navigated away from the video at some point before the video ended, you probably noticed that when you went back to finish watching the video, it picked up playing right where you left off. That’s because a cookie “remembered” what you were doing the last time you were on the site. Cookies are neat little pieces of technology whose primary responsibility is to “smarten” your web engagement by remembering what you do online. Cookies track a visitor’s movements as they explore different websites. They make it possible for you to conduct a Google search on Tony Robbins then have John C. Max-well suddenly start showing up in your Facebook feed. The affiliate marketing industry runs on cookies. The more information a cookie collects, the more insights advertisers and affiliates gain, and the better position they are in to convert visits to leads and leads to sales.
Cookies can work wonders. They can store login info, track user preferences, auto-fill addresses and credit card information, and repeatedly show you ads that are related to your web searches in a marketing process known as retargeting. Most important to affiliate marketers, cookies keep track of the date and time of various transactions and they tell affiliate program managers what happened when a visitor clicked an advertiser’s link and landed on its website. When a vis- itor lands on your affiliate website and takes an action the advertiser wants the visitor to take, you get paid.

How Much Does it Cost to Become an Affiliate?

Affiliate marketing is a low-risk business. As an affiliate, you do not incur any out-of-pocket costs to start marketing products. You do have to invest the time needed to build your website, generate traffic and grow your site’s audience if you want to make money in this business. Affiliate marketing isn’t like traditional advertising. With traditional advertising, brands pay for ad space whether or not the ad performed. In the affiliate business, advertisers only pay when your site successfully converts visitors to leads and sales. You don’t receive any upfront payments just to put a merchant’s display ads on your site. The great thing is when you find a system that helps you successfully generate traffic and consistently make sales, you can automate the process and minimize the time you spend managing your website.

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