How Does Affiliate marketing works explained in simple English 2020

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Have you ever considered yourself to be an affiliate marketer?

Have you ever thought of leaving the 9 hours grinding and to start work from home and make more than twice the salary while you asleep?

If your answer is yes, You must know about what is affiliate marketing and how does affiliate marketing works?

According to Google Trends, between September 2016 and September 2017 search interest in the term “affiliate marketing” has risen by 30% and now September 2019 is more than 89%.

let’s dive right in.


What is affiliate marketing?

Affiliate marketing is the process of earning commissions for marketing another person’s or company’s products.

 It is a performance-based marketing program

The merchant or the advertiser pays Commission for the affiliate if they deliver a specific result. 

The first affiliate program is launched by Amazon’s associates program in 1996.


Who is involved in Affiliate Marketing?



An Affiliate merchant is a business owner or business who wants to increase sales, traffic and brand awareness through online advertising via Affiliate network or affiliate websites.

Affiliate Network

Sometimes bigger businesses use Affiliate networks for marketing purposes. 

Affiliate networks charge the merchants a membership fee and also take an additional commission on top of the total commission payable to the affiliate typically 30% each month 


Marketers are the affiliates like yourself. Affiliates subscribe to affiliate programs.

Affiliates drive web traffic from one website to another and are paid a commission per visit or per sale.


Consumers are the clients or the person who visits the merchant’s website through an affiliate link.



Affiliate marketing works via spreading the responsibilities of product marketing and introduction across parties, it manages to leverage the skills of a selection of individuals for an extra powerful marketing strategy at the same time as presenting contributors with a proportion of the earnings.

Affiliate marketing works by sharing the merchant’s product with the consumers for some commission in means of banner ads, shareable links, coupons, etc, which will be covered later in this post.

How affiliate marketing works infographics

Step by step simple explanation of how affiliate marketing works?

  1. Merchants may run their own affiliate program or use an affiliate network to drive traffic to their website or sales of their product through ads and links, using affiliates.
  2. Affiliates subscribe to merchant’s affiliate program for free and get access to their affiliate marketing tools. Marketing tools are nothing but the ads of the merchant’s products in the form of text links, static banner ads, flash banner ads, and video ads.
  3. This marketing tool contains a unique link code called an affiliate link.
  4. Affiliates use this link to promote the products in various platforms such as free space on their website, sharing through social media such as Facebook, Instagram, Pinterest, communities and Q&A sites, etc.
  5. Affiliate’s friends or readers click on the links and get forwarded to the merchant’s site.
  6. Merchant uses a special cookie called affiliate cookie for each affiliate and the cookie will be saved for a certain amount of days on the customer’s computer.
  7. When your referral makes a purchase, the merchant checks for the unique affiliate cookie on their computer.
  8. When the merchant’s system detects the affiliate cookie, it logs a sale for that affiliate.
  9.  Then affiliate gets paid his commission amount for his referral.

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Now you know how does affiliate marketing works, If you want to be in affiliate marketing, you might want to know some acronyms.

Allifiliate marketing acronyms.

we have listed out some of the affiliate marketing acronyms that are used most often with a short description of each of them.


  1. Algo: Algo is short for the algorithm, which “is a sequence of instructions or a set of rules that are followed to complete a task.” (BBC)
  2. Ad: Refers to the advertisement. Maybe in the form of text, banner, Flash, video, or any other method that is displayed on the Internet.

  3. AOV: AOV is the average order value. A metric that reflects the average value of a purchase. Calculated by dividing the total value of orders within a given period of time by the number of orders.

  4. AW: AW is the Affiliate Window. The United Kingdom’s first and largest affiliate network, owned by Digital Window Ltd.

  5. AM: Most commonly refers to an affiliate manager. Affiliates are assigned affiliate managers who provide them with support regarding new offers, payouts, lookalike audiences, and more.

  6. Autosub: Refers to automatic subscriptions. This is a billing scheme where the customer is billed in a recurring fashion.


  1. B2B: Business-to-Business
  2. BH: Refers to black hat marketing. Black hat marketing uses more deceptive marketing tactics, such as making unrealistic claims. Black hat marketing is more common in certain verticals, like the casino, Nutra, and adult.
  3. Biz Dev: Biz dev is short for business development, which refers to pursuing strategic business opportunities.
  4. Biz Op or Bizopp: This refers to business opportunity offers, for example, offers to promote working from home.
  5. Bot: Refers to the robot. A software application that crawls the Internet with the purpose of indexing websites and web pages.


  1. CAC: Refers to the customer acquisition cost. The cost associated with convincing a website visitor to become a customer for your product/service.

  2. CBD: Refers to Cannabidiol, which is a compound found in cannabis. It accounts for approximately 40% of the plant’s extract.
  3. COD: COD refers to Cash-On-Delivery. This is a payment method where the customer only pays upon delivery of a product as opposed to paying in advance.  
  4. CPA: CPA refers to Cost-Per-Action, which is a payment model in which a person or business is paid after a specific action is performed by the client. For example, with a CPA model, an affiliate promoting sweepstakes offer will get paid after a user fills in their personal information to enter for the giveaway.
  5. CPC: CPC means Cost-Per-Click, which is another payment model used in online marketing. With the CPC model, marketers are paid when customers click on an ad or link and are redirected to a particular product or service website.
  6. CPE: CPE refers to Cost-Per-Engagement. CPE is a payment model that is based on the level of user engagement. For example, with a CPE model, an affiliate might only be paid when an individual spends over 10 seconds on a landing page.
  7. CPI: CPI refers to Cost-Per-Install, which is a payment model that is specific to mobile traffic. With this model, a marketer will only be paid when the user installs an app on their phone.
  8. CPL: CPL is the short form for Cost-Per-Lead. With this payment model, marketers are paid when a user signs up or fills in their personal information to learn more about an offer. For example, an affiliate promoting solar panels will be paid when a person fills in their personal information in order to receive more information about the offer.
  9. CPM: CPM refers to Cost-Per-Thousand, which is a pricing model based on the cost per 1000 impressions on a web page.
  10. CPS: This refers to Cost-Per-Sale, which simply means that a marketer is paid based on the number of sales they close.  
  11. CTR: CTR means Click Through Rate, which is determined by the number of individuals who click a particular link vs. the number of individuals who see the web page, or advertisement.  


  1. DCB: This refers to Direct Carrier Billing. DCB is a form of billing where a purchase is charged directly to a customer’s phone bill.
  2. DSP: DSP stands for the ‘Demand-Side Platform’. This allows advertisers to purchase traffic from ad exchanges.  


  1. Ecom: Ecom is short for E-commerce, which refers to physical products being sold online.
  2. ED: ED refers to erectile dysfunction. Some of the most popular Nutra products are ED products.


  1. GDN: GDN is the acronym for Google Display Network, which is a part of Google AdWords. Using GDN, businesses can place display advertisements on several websites.
  2. GDPR: GDPR refers to the General Data Protection Regulation. GDPR is a piece of legislation regarding data protection for citizens of the European Union.
  3. Geo: Geos are locations (country, cities). Geos are important for affiliates to consider when they are setting up their campaigns and identifying their target audiences.


  1. KPI: KPI stands for key performance indicators. A KPI is used to measure a company’s performance and how well they are reaching their key objectives.


  1. Leadgen: Leadgen refers to lead generation, which is the process of developing customer interest and inquiry in a given product or service.


  1. MID: MID is the acronym for the merchant ID number. A MID is a unique code that payment processors provide a business with prior to a merchant processing a credit card.


  1. Nutra: Nutra refers to nutraceutical products, which is one of the biggest affiliate verticals. Some examples of Nutra products are diet pills and ED products.


  1. OPM: Refers to the outsourced program manager. Affiliate manager who performs program management outside the company’s premises or on an outsourced basis. The less frequently used abbreviations include OAM and APM. Most frequently abbreviated as OPM.


  1. Pop: Pop is a short form word for popup/popover and popunder traffic.
  2. PPE: PPE stands for page post engagement on Facebook. PPE is when a user engages with your page by performing an action, such as liking a post or commenting on a photo.
  3. PPV: PPV Also sometimes abbreviated as “CPV” (for “cost per view”), this advertising model presupposes the advertiser paying every time their website is viewed by a visitor. Due to the frequent use of pop-up windows, generated by adware installed on the end-user computer, most mainstream affiliate networks prohibit affiliate linking from PPV traffic.
  4. Push: Push is the shortened term for push notification, which is a notification that appears on people’s desktop screens or on their mobile phone screens. People need to subscribe to push notifications to receive them.
  5. PPCall: abbreviated as pay per call. A marketing payment model where remuneration is due only when qualifying calls are received by the advertiser.

  6. PPL: Refers to pay per lead. An Internet marketing model in which payment is due only when qualifying leads are received by the advertiser.

  7. PPS: PPS is pay per sale. An Internet marketing model in which payment is due only when qualifying sales are received by the advertiser/merchant.


  1. ROI: ROI refers to the return on investment. Your ROI is calculated by dividing your profits by associated costs (Profit/Cost).
  2. RPM: RPM stands for revenue per mille. This is your approximate earnings per 1000 impressions. It is calculated “by dividing your estimated earnings by the number of page views, impressions or queries that you received, then multiplying by 1000.” (Google)


  1. SEO: SEO refers to search engine optimization, which is essentially how high you rank on search engines. SEO determines your website’s visibility online.
  2. SOI: SOI refers to a single opt-in. With single opt-in, people can simply insert their email addresses to opt-into an email subscription without having to confirm their email address afterward.
  3. SSP: SSP stands for the supply-side platform, which is a platform that allows publishers to sell digital ad impressions. (MarTechToday)
  4. Sweeps: Short for sweepstakes offers, Sweeps are contests where a winner is chosen and awarded a prize. For example, an affiliate might promote sweeps offer to win a new iPhone. To enter the contest, users would fill in their personal information.


  1. TOS: TOS stands for Terms of Service, which are the conditions that someone agrees to in order to use a service.


  1. UA: UA refers to user acquisition, which is the process of gaining more users for your service or product.  


  1. WH: WH refers to white hat marketing. White hat marketing is done by the book. It involves being transparent with customers, and as such affiliates who run white hat offers to avoid legal trouble.

This is how you get paid as an affiliate marketer even when you sleep.

please comment below what affiliate program you use and how much percentage commission you receive from it.

Now you know how does affiliate marketing works and its time to implement and make some real passive income.

Learn more ways to earn passive income while you sleep.

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