How Does Affiliate Marketing Work?

All of us have heard about Affiliate Marketing sometime or the other, but most of us still don’t know how it works.  It is probably the simplest form of business ever.  Everything is in black and white, you show the results and you get paid, as simple as that.  There are a few basic things one needs to know before getting into Affiliate Marketing.  That is exactly what we will be seeing here.

In the world of Affiliate Marketing, an affiliate is one who places the link to the clients’ product or website on his/her own website.  And the one who owns the product is known as the merchant.  The merchant gives you a link to one of his products, where the customers have to click in order to purchase the product.  This link will have a special ID which is unique and it refers you.  So when the link is placed in your site, someone clicks it and is directed to the merchant’s site.  The merchant will recognize the special ID and track it back to you and will place a cookie on the customer’s computer.  So, even if the customer doesn’t buy the product right then, if he/she buys it later, the merchant’s site will recognize the cookie and there by paying you the commission.  It is that simple.

Did you read my previous post Affiliate Marketing for Beginners, it has some great points to kick off your affiliate marketing career and it focused on the entry level segment. In any case just take a look at that post and leave comments and feedback’s for me to answer to your queries.

Now that we know what Affiliate Marketing is, how do we go about starting to make money from it?  Firstly, we need a website which is already running and has a decent amount of traffic.  Then we register in one of many affiliate networks that can be easily found in the internet.  Few famous networks are Commission Junction, Trade Doubler,  Linkshare, Affiliate Venture Group, etc.  We can get the merchant’s links here and place them in our website along with an article which tells the customer about the product that we are marketing.

The merchant keeps a database of all his affiliates and every time a customer purchases the product, the respective affiliate is sent an e-mail, just to keep them updated with their progress.  The commission is usually paid in a monthly cycle.

The commission is decided by the merchant at the time of giving the links.  Few merchants give a flat rate commission like for example, whatever the product is, the affiliate gets $10 per sale.  Another common practice is a percentage of the total cost of the product, for example, if the product costs $100 and the affiliate commission is 15%, then the affiliate gets $15.  But it changes with the cost price of the product.

All these pieces of information and jargon’s might seem a little hectic in the beginning.  But once you set foot and play along for some time and get a hang of it, it will all be crystal clear.  Without understanding the basics, one cannot prosper in this field; leave alone your marketing skills.  One needs to understand each and everything to get favorable results.  All the hassles one puts up with will all be worth it, when it works.

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About the Author


Ricky Ahuja is the serving as the VP of Marketing for and provides strategic corporate and functional marketing consulting services to early stage companies.


  1. An excellent intro to the world of affiliate marketing. There are lots of things to consider and to learn, but it’s a good idea to keep it nice and simple to begin with and take it step-by-step.

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