What is affiliate marketing and how it works?

Affiliate Marketing is simply defined as a form of marketing in which an online seller or a retailer pays someone in the form of a commission for giving or providing some traffic in order to generate or raise its sales or providing something beneficial to him. One important thing to note here is that the online retailer or seller will only pay you when the visitor will be visiting the sellers’ site from your affiliate link only.

Now, let’s understand this in more detail to know what is an affiliate marketing…

Suppose, you are the owner of a blog where you mostly talk about the latest smartphones, laptops, fitness gadgets, etc. You write a review of them based on your personal research and people are just loving your content. And one day, you decided to also put the link of all the gadgets you have reviewed in your article. Now, one of your visitors really liked that product and decided to buy the product. He clicks on the link you have provided in your article and now he lands on the product’s website. He then filled all his details and paid for that product to the seller.

In this whole situation, you are basically acting as a middleman and now the seller will pay you as a commission for getting them a sale from the link you have shared in your blog or some other place. The link from which the user lands on the seller’s site and make the purchase is called ‘an affiliate link’ and you will be referred to as an ‘affiliate’ of that company.

So, basically in simple terms, an affiliate is nothing but a person who recommends a product to someone and if he/she likes it and buys that product or service from that affiliate link, the affiliate will be paid by the company or seller running the affiliate program.

Is an affiliate program same as a referral program?

If you already knew about a referral program, you probably had a question or confusion that if both the affiliate marketing and referral marketing same or not?

If you don’t know about a referral program, don’t worry we will give a brief overview of a referral program.

In a referral form of marketing, the company running the referral program basically uses its existing customers to spread its products and services to others. In return, the company will provide discounts, additional services, free services, free products, special offers etc to them for referring others to use their products and services.

This kind of marketing usually involves tasks like signing up for an account, signing up for a subscription-based service like a newsletter etc.

The company running the referral program can make compulsory for its users that if they want to get a benefit from their referral program, then their referral had to the certain number of tasks like signing up for an account or subscribe to a service or make a purchase. When the referral sent by the referrer performs all the necessary tasks, referrer gets rewarded. Rewards can be in the form of a free service or some additional benefits.

One important thing here to keep in mind is that the person is recommending a service to someone is called as the ‘referrer’ and the person who decides to use that product or service after being recommended from the referrer is called a ‘referral’.

Difference between the two:

Now, since we have already discussed both the affiliate marketing and referral marking, we are in the position to answer your question ‘is referral marketing and affiliate marketing the same?’.

No, the affiliate marketing and referral marketing are not the same. We can answer this question even without knowing anything about them because it’s a common sense that if both the things were same, then what’s the point in using different terms for the same thing?

Now, let’s discuss the technical aspects of both of them that why they are different and what are those things that make them different from each other.

Below are the key points which differ the both:

1. Affiliate marketing involves the participation of an affiliate whom will use the affiliate link of your service or product to generate traffic and hence sales to your business. This type of marketing is common with e-commerce sites, service selling businesses etc.

Whereas, on the other hand, referral marketing involves the involvement of a referrer and a referral. A referrer will refer your product or service to a referral and the referral will buy it if he/she will like it. This type of marketing is common with businesses like an app-based company, subscription-based company etc.

2. The second difference which we would like to discuss is about the reward which an affiliate or a referrer involved in the marketing campaign would get after completing all the requirements of that marketing campaign.

In the case of the affiliate marketing, the affiliate mostly gets a pre-decided amount or a percentage of the total amount of the product he/she had helped the company to sell. The amount of the percentage given on a successful affiliate campaign varies from 5%-10% or closer depending upon the company and the cost of the product sold.

In the case of a referral program, the referrer is not provided with any cash benefits. The referrer is given a special offer or some discount on the purchase of the product from the company that is running that referral program. The referral performs or completes some pre-decided tasks and gets rewarded along with the referrer. So, basically, both the referrer and the referral gets benefited from a successful referral marketing campaign.

3. In the case of affiliate marketing, anyone including the people who are not the actual users or buyers of the company can join its affiliate program.

In case of a referral program, only the actual user can join the referral program.

How you can earn from a referral or an affiliate program?

There are many companies out there who runs the affiliate or referral programs and provides people the opportunity to earn from them. And in return, they will get sales and traffic and it in the end ‘PROFITS’.

Companies like Amazon, Clickbank, Extole, etc runs various affiliate and referral marketing campaigns for other companies and themselves also, where you can simply make an account and start earning.

Conclusion:

In this article, we have discussed everything about affiliate marketing in detail. We have also discussed the differences between referral marketing and affiliate marketing also.

Read More:

1. 4 Steps to Monetize Your Blog Through Affiliate Marketing
2. E-commerce Business and SEO- The Best companions
3. A beginner’s guide to E-commerce business marketing techniques