Affiliate marketing is a program that gives a percentage of sales to the content creator. There is a great deal of overlap between affiliate and influencer marketing, but influencer marketing defines a social media user’s content influence in a market, where affiliate marketing speaks specifically to how the monetary relationship is managed between retailers and their affiliate content creators and media outlets. While both influencer marketing and affiliate marketing depend on building strong working relationships, affiliate marketing specifically relies on content creators—established individuals who have platforms (blogs, publishing sites, companies, high-value social media) that can position your brand as relevant. Influencer marketing relies on the popularity of the person, specifically.
Most affiliate marketing arrangements are based on a percentage commission–for every sale your business makes through an affiliate link, your affiliate gets a cut. It’s a mutually beneficial dynamic in which both you and your affiliate earn more if your affiliate produces compelling content that prominently directs people to making purchases with you. It also helps content creators determine what type of content to create.
Affiliate marketing is a form of partnership—or “affiliation”—between your brand and an associate platform that provides promotion for you in exchange for a percentage of your sales if a purchase is made on their platform. This is most commonly done through affiliate links, where an affiliate attaches a tracking code to the end of any link they direct toward their partners, but can also be managed using tracking codes, coupons, or portal pages. Affiliate marketing differs from many other forms in that payment is only made when a sale occurs. The majority of non-marketplace affiliate programs (like Amazon and Walmart) are managed via third-party platforms that streamline the management and reporting process.
Determining affiliate rates is most effectively done on a case-by-case basis, but in most cases, it is a good idea to start with flat-rate commissions based on industry, retailer, product, and some other key factors. A popular strategy for determining a commission rate for affiliates is to attach it to their performance, but you can also offer bonuses, VIP commissions for big-ticket sales, and a simple, baseline flat rate. Your rate should be something attractive enough to compel quality affiliates to work with you, but not so high that you will create too much overhead per sale.
Sponsorship arrangements are similar to affiliate marketing in that a brand is providing payment to a second party, but they differ in what is expected in return. Sponsorships tend to be more similar to influencer marketing in that they benefit from the popularity of the individual. Affiliate marketing has a more structured approach in which your affiliate is expected to promote your brand–sponsors tend to benefit from the existing reputation of the individual in less direct ways, like word-of-mouth.