Affiliate Marketing: The Other Direct Commission Based System

When affiliate marketing first emerged in e-commerce, affiliates touted a “real” pay for performance advertising system. The development of large networks who tracked the number of sales which occurred as a result of a particular advertisement on a particular website provided the bases for affiliate marketing to emerge (Duffy, 2005). Essentially affiliates post advertisements that are provided from a company on a product or service. Affiliates provide either content that brings potential clients to the site or provides bonuses to consumers if they shop directly through the affiliate site. The affiliate is paid a commission based on the number of “sales” that occur as a result of those who went on to purchase a company product.

Affiliates range from large programs such as Amazon or LinkShare to small blogs on make up or crocheting that provide links to products that fit the content of the blog. However any website could link out to a for-sale site. Say you recommend a book to your distributors; you could link out to Amazon and make a commission on every book that sold as a result of your link. When the affiliate program works, the blogger adds value to the connection to a product. If I have a healthy living blog, and I link out to a health product, my education on how herbs are rated could help sell a product from company A over company B. We will talk more about how to build an affiliate site in the week on Building Your Brand.

It seems like the affiliate system would benefit everyone. Like most “pots at the end of the rainbow”, the gold is not as glittery once you get up close. Some affiliates take advantage of loopholes in tracking and claim “sales” that did not occur (Edelman & Brandi, 2015). Those who want to set up affiliates need to be aware of methods problem affiliates may use such as taking credit for a sale that was going to happen anyway (Edelman & Brandi). If you are an MLM or Direct Selling company, you may want to make certain you understand the potential scams and watch your data to spot problems early. If you are a large company like eBay, you could lose millions of dollars in commissions without any real benefit.

Both distributors and companies can benefit from understanding affiliate marketing and making network connections work for them. Building a community of people who have similar values continues to be a powerful tool to recommend or sell product. MLM.com explained in an earlier article that if you have credibility with your audience, you can and do pass that credibility to another person or product. Affiliate marketing provides another way to connect people and products and services that have value.

Duffy, D.L. (2005). Affiliate marketing and its impact on e-commerce.  Journal of Consumer Marketing, 22(3). 161-163.

Edelman, B. & Brandi, W. (2015). Risk, information, and incentives in online affiliate marketing. Journal of Marketing Research, 52(1). 1-12.