Affiliate marketing involves a merchant paying a commission to other online entities, known as affiliates, for referring new business to the merchant's website. Affiliate marketing is performance-based, which means affiliates only get paid when their promotional efforts actually result in a transaction.
Affiliates can be any manner of site, but generally they tend to be bloggers or other content sites related to the merchant’s industry.
Affiliates work to introduce their visitors to the merchant’s brand. They might write a post about a new product or promotion on the merchant’s site, feature banner ads on their site that drive people to the merchant’s site, or offer visitors a special coupon code. If people come from that affiliate’s site and make a purchase, that affiliate gets paid.
One of the reasons affiliate marketing can provide a higher ROI than other channels is because it’s performance-based. Merchants only pay for actual customers, not just visits. This gives affiliate marketing a big advantage over other channels, such as PPC, where it’s easy to spend a ton of money on clicks without producing any actual conversions.