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.
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 programmers 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).