What is Affiliate Marketing? Here’s How The Pro’s Explain It

In today’s digital world, affiliate marketing offers great chances to earn passive income. This post covers verything from the basics to the latest trends in affiliate marketing.

What is Affiliate Marketing?  

Affiliate marketing is an advertising model in which a business pays third-party marketers or publishers a commission for sales generated from referrals. These third parties are known as affiliates. Make money at any time, from anywhere — even while you sleep. This is the main idea of affiliate marketing. This practice began before the internet. Now, digital marketing, analytics, and cookies have made it a billion-dollar industry.

Businesses running affiliate marketing programs can track the links that bring in leads. Internal analytics reflect how many converts to sales. Metrics such as these decide exactly how much an affiliate is paid. One of the most successful forms of affiliate marketing is generating traffic to a businesses’ website. Other popular approaches include generating leads to the Businesses’ products and services or activating purchases of them.

Commission structures incentivise affiliates to find innovative ways to market the Business. The more visits, leads or sales the affiliate marketer generates, the greater their commission. Affiliate marketing holds exciting potential for entrepreneurs to generate passive income. Developing a thorough understanding of what affiliate marketing is can open new opportunities for anyone to find financial freedom.

How Does Affiliate Marketing Work?

At its simplest, affiliate marketing is “earning money by spreading the word”. Affiliate marketing creates a useful connection. It involves three groups:

• Those who make goods and services.
• The people who buy them.
• The third parties who connect the two.

Imagine someone has baked 20 cakes. He had priced them at R100 each but has no idea how to sell them. He tells 5 of his friends that he will pay them R10 for each cake sold based upon their referral.

The baker is a business, and his friends are affiliate marketers. Each friend tells 4 people who each buy a cake. The business has made R1 800; each friend has made R40, and every customer has a delicious cake. Everybody wins.

Take this basic model, add the internet, scale it exponentially and you have today’s billion-dollar affiliate marketing industry. Let’s say the baker is Amazon. The friend recommending their products is an affiliate marketer. Amazon sells close to around 600 million “cakes” in a year. An astonishing 53% of these transactions come through Amazon affiliate sales alone.

To fully understand how affiliate marketing works read our blog post; How Does Affiliate Marketing Work.

Key Players: Merchants, Affiliates, and Customers

There are three primary role-players in the affiliate marketing industry:

• The merchants who provide their products and services to sell for a commission.
• The affiliate marketers who advertise and promote merchant goods on their platforms and to their audiences in exchange for the commission from referred customers.
• The customers who make purchase via the affiliate.

It’s a symbiotic, dynamic and stimulating environment for those who seek a balanced blend of entrepreneurial zeal, personal freedom and business acumen.

No wonder that gross revenue in the affiliate marketing industry has increased from $4.5 billion (about $14 per person in the US) to $47.3 billion (about $150 per person in the US) between 2015 and 2025. In the same period, online searches for “affiliate marketing” grew by 200%. As more people shop online, this number keeps going up.

Pros & Cons of Affiliate Marketing

Pros:

• Low Startup Costs: You don’t need to create a product or service. You can start with minimal investment, often in the form of a simple website or social media presence.
• Passive Income Potential: Once your affiliate links are set up, you literally earn money while you sleep. Your content can continue to generate sales long after it has been published.
• Flexibility: You can work from anywhere and choose your own hours. This makes it an excellent choice for those seeking a flexible work-life balance.
• Wide Range of Products: You can promote a variety of products and services, allowing you to find niches that interest you and align with your audience.
• Performance-Based Earnings: Your income is directly tied to your performance. The more effective your marketing is, the more you earn.

Cons:

• High Competition: Popular niches can be competitive, making it challenging to stand out enough to attract sufficient traffic.
• Dependence on Affiliate Programs: You rely on the affiliate programs’ terms and conditions, which can change at any time, affecting your income.
• Unpredictable Income: Earnings can fluctuate based on market trends, seasonality, and changes in consumer behavior
• Requires Commitment: Building a successful affiliate marketing business takes time, effort, and consistent content creation.
• Limited Control Over Products: You have no control over the product quality, customer service, or delivery, which can affect your reputation if issues arise.

Does Affiliate Marketing Make Money?

Yes. Affiliate marketing makes money. Today, the global affiliate marketing industry is valued at $47.3 billion. That’s an astonishing R946 billion.

On average, the top 20% of affiliate marketers earn more than R20 million per year. The bottom 20% earn around R400K per year. So, even if you’re nowhere near the major leagues, you’re still earning money to the tune of R30k a month. Those are some healthy figures. Especially given the fact that many start affiliate marketing as a “side hustle” to generate passive income.

Many of these become so successful, they quit their regular jobs to become high-earning full-time affiliate marketers. It’s easy to see why taking up affiliate marketing is such an attractive proposition.

Types of Affiliate Marketing

As is the case with conventional marketing, there is no “one-size-fits-all” type of affiliate marketing. While the industry is a complex one, three types of affiliate marketing feature most prominently.

Influencers, Streamers and Tipsters

Influencer affiliate marketing lets influencers earn money from sales made through their special links or codes. This method helps track sales and revenue from influencer posts, giving useful information about partnerships.

SEO & Blogging

Blogging and vlogging can help you earn passive income through affiliate marketing. Successful blogs can make good money by promoting affiliate products. These affiliates use SEO strategies to improve their blog posts and websites. This helps them show up better in search engine results. By using effective SEO techniques, they can attract the right audience and increase earnings through relevant product recommendations.

Media & Networks

The media and network buyer type of affiliate marketing includes large media buyers, ad networks, and agencies. They use paid promotions to support affiliate offers. Affiliates in this group run PPC (pay-per-click) campaigns, display ads, native ads, and programmatic ad placements. These methods help drive traffic to landing pages.

A Brief History of Affiliate Marketing

Today, we mainly think of affiliate marketing as something that happens online. This is true because most affiliate marketing occurs on the internet. However, earning money through referrals and recommendations is as old as trade itself.

In the Dark Ages, a blacksmith might have paid a soldier a silver coin to praise him to his friends. This would help the blacksmith get more customers. In the Internet Age, the idea is still the same, but the scale has grown a lot. This is because one piece of content can reach a huge audience.

Today, the soldier would not recommend the blacksmith in person. Instead, he would post about it on social media or his website. Depending on his reach, he could instantly connect with many more people. The blacksmith would pay him for every new customer he brought in. If you are a good affiliate marketer, this can lead to significant earnings.

This is why a business with a strong affiliate marketing program can gain great rewards. Skilled affiliate marketers can also earn good money from that business. A good example is Amazon. About 53% of Amazon’s sales come from affiliate marketers. This is why Amazon has such a generous affiliate marketing program.

Amazon is not the only business with an affiliate marketing program. Companies of all sizes and from every industry use affiliate marketing to grow and increase sales.

Affiliate Marketing Trends 2025

The future looks bright for new affiliate marketing entrepreneurs. More brands want cost-effective ways to increase traffic and revenue. As a result, the affiliate marketing industry has grown rapidly in recent years. Like any industry, affiliate marketing faces many trends and technologies. Here, we will look at some of the most important ones.

Artificial Intelligence

AI needs no introduction. In our tech-driven world, the AI revolution has changed many parts of life. Data-driven industries, like affiliate marketing, have helped the most from this fast-evolving technology.

More advanced AI tools make operations smoother, personalise experiences, and improve campaigns. Predictive analytics help us understand consumer behaviour better. This makes it easier to target potential customers.

AI features, like chatbots, improve user experience and increase the chances of conversions. Using AI-powered marketing is not just an option; it is necessary for affiliate marketers.

Automation

Affiliate marketing is often linked to “passive income.” This may suggest “easy money,” but it is not that simple. Running successful affiliate programs requires a lot of effort. Tracking campaigns takes time, so using automation can help. Time is valuable, so let technology handle the hard tasks.

One of the best tools for affiliate marketing is the chatbot. More customers are choosing to interact with chatbots because they respond quickly and are available all the time. Email marketing can also be greatly improved with automation. This boosts your sales without increasing your workload.

Video

People like watching videos more than reading long articles. This is true for online spaces and social media. To get better results from your affiliate marketing, use effective video content in your strategy. Forbes says that 90% of people find product videos helpful when deciding to buy. This means that without good video content, you could miss affiliate sales.

Video can improve your marketing in many ways. A video sales pitch with product details catches the attention of your audience. How-to guides, product reviews, and FAQ videos are also extremely popular. You can set up a video portal to share helpful content about your products or services. YouTube videos can retarget customers who visit your website.

Facebook Live allows you to share your brand videos and reach more potential clients. TikTok and Instagram are also strong platforms where influencers promote products successfully. Making affiliate marketing videos is now easier and cheaper. Free online tools can help you create engaging video content. Using these tools lets you make professional marketing videos quickly and affordably.

Changes in Consumer Behaviour and Market Dynamics

As any marketer knows, consumer behaviour is always changing. Younger groups like Gen Z and millennials are changing how trust is built between consumers and brands. Studies show these groups trust social media influencers more than traditional celebrities or brand endorsements.

For affiliates, this change is a big opportunity. Consumers are more likely to buy based on the recommendations of influencers they trust. This is good news for affiliate marketers who work with influencers or are influencers themselves. These audiences respond well to this type of content and are more likely to make purchases.

Another important trend for affiliate marketers is the growing focus on sustainability, transparency, and ethical practices. Many consumers look for products that match these values. In response, brands are paying more attention to their triple bottom line. For affiliate marketers, promoting eco-friendly and socially responsible brands helps build stronger connections with these consumers.

Influencer marketing is another trend that keeps growing. As mentioned, younger consumers trust influencers, streamers, and tipsters. These individuals are becoming key players in affiliate marketing strategies.

For affiliates, working with influencers or becoming an influencer, yourself is a fantastic way to reach a younger audience. Micro-influencers and nano-influencers—those with smaller but very engaged followings—are especially effective. Their recommendations feel more genuine and less commercial. Brands are starting to see this. Affiliate marketers who team up with influencers can increase their reach and drive more sales.

Another key change in consumer behaviour is that mobile shopping is on the rise. This is especially true for younger consumers. Mobile-first shoppers use their smartphones to browse and make purchases. Affiliate marketers need to make sure their content works well on mobile platforms.

This means having mobile-friendly websites, fast-loading pages, and easy-to-use affiliate links on mobile devices. Using social commerce allows people to buy products directly through social media apps like Instagram and TikTok. This gives affiliates a new way to increase sales.

How to start Affiliate Marketing for Beginners

If you are new to affiliate marketing, follow these six steps to get started. If you are interested in affiliate marketing and want to start, we have a guide for you. Check out our complete guide on How to Start Affiliate Marketing for Beginners.

Step 1: Choose the right niche and products  

Choose a niche that aligns with your passion and has strong market demand for effective marketing.

Step 2: Find affiliate programs to sign up for 

Sign up for affiliate programs through companies or networks like Amazon Associates and ClickBank.

Step 3: Set up an online presence

Create a website, blog, or social media presence to promote products and services to your audience.

Step 4: Create valuable content  

Produce high-quality, unique content that integrates affiliate links naturally with clear calls to action.

Step 5: Drive traffic to your platform 

Use SEO, SEM, and social media marketing to drive traffic to your platform and increase visibility.

Step 6: Track and optimise your traffic and conversions  

Data-driven decisions and performance tracking are crucial for successful affiliate marketing campaigns.

Monitor performance with analytics tools like Google Analytics and SEMrush to optimise strategies.

UTM codes help track traffic sources, enhancing insights into customer behaviour and campaign effectiveness.

Affiliate Marketing Tools

An affiliate dashboard shows your entire affiliate campaign on one screen. It is a key tool for checking all revenue streams and campaign results. Creating a dashboard with the right tools makes tracking performance easy. You can see all the performance statistics right away.

Common tools for your dashboard include:

• Google Analytics 4
• Google Tag Manager
• Google Search Console
• Google Ads
• Meta Ads
• Meta Business Suite
• Meta Pixel

These tools are useful for managing and analysing your online presence. If you are building a website, popular choices are WordPress, SquareSpace, Shopify, GoDaddy, or Host Gator. For email marketing, MailChimp and MailPoet are popular options.

The idea behind affiliate marketing is simple. However, becoming a high-earning professional requires time, effort, and skill.

Affiliate Marketing Case Studies and Success Stories

Real-life examples of successful affiliate marketers

Matt Diggity

Diggity is a leading expert in marketing and runs The Affiliate Lab. This popular resource assists affiliate marketers. It provides effective strategies for ranking, earning money, and selling competitive affiliate websites. Diggity also created Authority Builders. This site focuses on high-quality, natural links to improve your rankings and increase traffic to your site. Many people see Diggity as one of the best SEO affiliate marketers in the past three years.

Jacky Chou

Chou is one of the hottest rising stars in affiliate marketing. He is the founder and CEO of Indexsy. This company focuses on building strong and successful online businesses. In 2024, his affiliate marketing work earned him an impressive R68m. His remarkable success is what makes him a top marketing expert.

Case Study of Affiliate Marketing Success

Influential affiliate marketing blog Adsterra discusses the well-known case of GoBingo. An effective affiliate marketing strategy led to an amazing 236.12% ROI. The right mix of format, niche, and marketing helped achieve remarkable success. Read the full story here for the exciting details of the campaign.

Be sure to visit our blog. It is full of useful advice, tips, and strategies. You can learn how to master affiliate marketing and earn money from passive income. We would love for you to share your experiences and ask questions in the comments section.

Next Up: How Does Affiliate Marketing Work? A Simple Explanation

Enjoyed this post? Don’t stop here—dive into our next article to keep learning, discovering, and growing your affiliate marketing game. We’ve handpicked it just for you to keep the Momentum Going.

Click here: How Does Affiliate Marketing Work? A Simple Explanation

Frequently Asked Questions (FAQs)

Q: What is affiliate marketing?  

A: Affiliate marketing is a performance-based marketing strategy where individuals (affiliates) promote products or services of a business and earn a commission for each sale or action generated through their referral links.

Q: How do I get started with affiliate marketing?  

A: To get started, choose a niche that interests you. Sign up for affiliate programs related to that niche, create a website, blog, vlog or social media presence and start promoting the products or services using your unique affiliate links.

Q: Do I need a website to do affiliate marketing?  

A: While having a website or blog is highly recommended for affiliate marketing, it’s not mandatory. You can also promote affiliate products through social media platforms, email marketing, and other online channels.

Q: How much money can I make with affiliate marketing?  

A: Earnings from affiliate marketing vary widely depending on factors such as the niche; the quality of the content; the amount of traffic you generate and the effectiveness of your marketing strategies. It’s the classic case of “what you put in is what you get out.” Some affiliates earn a few hundred dollars a month while others make six or seven figures annually.