Imagine for a second that Mandy has a moderately successful online business. Her business is doing okay, but she wishes she could bring in more business and more sales. Mandy would like to expand, get bigger office space, and perhaps even some additional storage space for her shipping needs, but unfortunately, she doesn't have the cash coming in to pay for these extras. Her online advertising and marketing programs have gone well, and they are bringing in more customers, but she want to take her business to the next level.
Mandy is already advertising effectively, but she could spend more money for advertising. This may bring in the returns she needs, but advertising is expensive, and she may not have the cash on hand for something that extensive. What she really needs is a sales staff, someone who understands her products and is willing to sell them to multiple sources for her. Of course, if Mandy doesn't have the cash for advertising, she probably doesn't have the cash to hire someone to do sales for her. Imagine, though, that she could hire a sales staff to work for her, but only pay them when they make a sale? While this would be a ridiculous notion for a physical retail store location, Mandy can get away with this sales scheme online. This is called affiliate marketing.
Affiliate marketing is dependent on three different parties that all work together in a way that benefits each party. These parties are the buyer, the merchant, and the affiliate. Buyers are normal, everyday people who are looking for and purchasing the products they want from various online stores. Buyers have a certain expectation. They want a quality product, but they also want to get that product at the lowest possible price. The wide variety of buyers means that many different types and niches of stores can operate successfully online.
Next is the merchant, the person actually doing all the online retailing. The merchant sells the products or services, maintains the website, maintains the inventory, ships the product, and is the one trying to attract customers to his or her site. The merchant will sell his or her products and might also have an online marketing or advertising scheme to compliment the store and bring in customers. The merchant also has an affiliate marketing program that brings affiliates into the fold to help sell the products or services for the site.
The affiliate is the last piece of this puzzle. The affiliate has an agreement with the merchant to help sell the merchant's products or services. These products and services can be almost anything, and don't necessarily have to be a tangible product. A couple of examples are website memberships or software programs which users can directly download to their computer. The affiliates use their marketing genius, time, and experience to sell these products. The affiliates may keep websites of various types, host email lists, or any number of other techniques to drive visitors and make sales.
For all of this trouble, the affiliate gets a commission off of the sales he or she generates. The amount of this commission is usually determined by the merchant and affiliate when they make a mutual agreement. For example, the affiliate might receive a 20% commission for each sale. So, for every sale generated by the affiliate, the affiliate will get 20% of that purchase for themselves, paid to them by the merchant. So if affiliate sells 0 worth of product and affiliate B sells 0 worth, they would get a commission of and 0 respectively.
Much like cost per impression advertising, affiliate marketing very little to do with keywords and search engines specifically, but is a way that websites can market themselves and make more money through other channels. If a website wished to start an affiliate marketing program, they might then want to try to optimize the site according to affiliate and sales keywords as well as any other keywords that applies to the site. Some websites set up completely different websites for the purpose of attracting affiliates. Webmaster who use affiliate marketing will also want to use SEO techniques in order to drive up visitors to their pages, as the more visitors that come, the greater the return on affiliate marketing programs which the webmaster has joined.