Any business owner or entrepreneur knows that a brand cannot succeed without marketing, but it often requires a lot of time, energy, and money to get your product or service in front of people.

However, social media has changed the game, becoming a valuable tool for business. One highly effective online strategy is affiliate marketing, through which companies allow content creators—the affiliates—to push their products to their online followers.

The history of affiliate marketing

William J. Tobin, known as the world’s first internet marketer, is credited with starting affiliate marketing in 1989. Tobin created an e-commerce site for his business, PC Flowers and Gifts, and launched the Prodigy Network, a marketing model that allowed those in the network to receive a small portion of every sale generated through it. By 1995, there were 2,500 affiliates in the Prodigy Network that were generating around $6 million annually for Tobin’s business.

A year later, Tobin applied for the patent for his marketing strategy, but other businesses had already started using the model—one being Amazon, whose Associates Program had launched that same year. Amazon was the first major company to utilize affiliate marketing; its program allowed people anywhere to promote its products, which at the time were just books, movies, and music. Affiliates could share links to these products on their own websites and receive a kickback from any sales made through those links.

Amazon’s public marketing model brought affiliate marketing into the mainstream and paved the way for the creation of more affiliate marketing programs and, soon after, affiliate networks. These are sites where small businesses pay a fee to join and have their products advertised to affiliates, who then advertise them to potential customers.

Affiliate marketing has since become a key part of business—and to a higher degree than even Tobin could have imagined. Today, more than 80 percent of brands have an affiliate marketing program to help generate leads and increase sales numbers.

How affiliate marketing works

At its most basic, affiliate marketing follows this process: A business allows affiliates to promote its products or services online to their followers via personalized links, which potential consumers can then use to purchase those products or services. When a sale is made through an affiliate’s unique link, they receive a commission, typically a fixed percentage of the final sale. This means that businesses aren’t paying partners until after they have made a sale for them. It’s a win for both since they’re each making money from the process without much up-front cost.

Affiliates are responsible for getting a business’s product or service in front of potential customers. They do this by increasing traffic to it and spreading brand awareness through various online platforms. “As an affiliate, you’re like the liaison between the product and the consumer,” says Jess Zion, an affiliate for six companies who now educates her more than 180,000 TikTok (@makemoneywith_jess) and Instagram (@themarketingmama02) followers on the marketing strategy.

However, not just anyone can become an affiliate for any business. Some companies hand select their affiliates, often via online applications, based on who they think fits best with their brand and vision. On the positive side, there’s really no cap on how many affiliates a business can have at one time. “You can have as many people as you want putting your product in front of your target audience,” says Zion. Similarly, affiliates can promote however many companies and products they are approved for.

There are three main types of affiliate marketing: unattached, involved, and related. Unattached affiliate marketing utilizes affiliates who haven’t used the product or service before, meaning they can’t make claims about the quality. Conversely, with involved affiliate marketing, the affiliate has a history of using the product or service and is now recommending that other consumers use it as well. Related affiliate marketing falls somewhere in the middle: the affiliate may not have previously used the product or service, but they have a connection to its niche or audience, allowing them to use their expertise to promote it. Businesses and affiliates can choose the route that works best for their specific purposes, tailoring the strategy to the brand’s products or services.

Why affiliate marketing is beneficial

Ultimately, affiliate marketing has the potential to generate more leads for businesses, which, in turn, can increase sales. Affiliates can work from any social platform, enabling brands to be seen by a relatively large network of potential customers. “With social media having the presence it does these days, and considering the sheer number of hours people spend scrolling on platforms like TikTok, Instagram, and Pinterest, companies can have numerous people promoting their products directly in front of a high volume of their target consumer,” Zion explains.

Given this, the affiliate marketing model often offers a greater potential for sales than more traditional routes. For example, content may go viral, which can translate to more sales for businesses. If an affiliate has a video that gets thousands of views, the number of possible sales rises exponentially. “Let’s just say, if your affiliate is making content that converts, that’s a lot of product sales for your business,” says Zion.

As an industry, affiliate marketing reached a worth of $17 billion this year, exceeding the previously expected amount of $12 billion. There’s virtually no limit to the potential sales increases that businesses could see when they develop an affiliate program that attracts content creators who can then attract more consumers to the brand. “Affiliate marketing is the future of digital marketing,” Zion states. “It’s just the world we live in, and all businesses should be taking full advantage.”

TAKE ACTION:
Examine the success of your current marketing strategies, and determine if your business could benefit from starting an affiliate program or joining an affiliate network.