As a business owner or entrepreneur, one of your main goals is to use marketing to reach potential customers. A brand cannot succeed without marketing, and it often requires a lot of time, energy, and money to get your product or service in front of people. But social media has changed the game and has become a valuable tool for businesses. 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, who is 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, 2,500 affiliates in the Prodigy Network were generating around $6 million annually for Tobin’s business.

A year later, Tobin filed for the patent for his marketing strategy, but other businesses had already started using the model—one being Amazon, which launched its Associates Program that same year. Amazon was the first major company to utilize affiliate marketing, but its program allowed people anywhere to promote its products, which at the time were just books. Those in the Associates Program shared links to the products on their own websites and received a kickback from the sales made through their unique 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 affiliate networks, sites where small businesses pay a fee to join and have their products advertised to affiliates, who then advertise the products to potential customers.

This is still the practice of affiliate marketing today—but 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 works like this: a business allows affiliates to promote its products or services online to their followers via personalized links that potential consumers can then use to purchase those products or services.

When a sale is made through the unique link, affiliates receive a commission, which is typically a fixed percentage of the final sale. This means that businesses aren’t paying affiliates until after they have made a sale for the company. It’s a win for both brands and affiliates since they’re making money from the process without much upfront cost.

The affiliates are responsible for getting the product in front of potential customers. Affiliates spread brand awareness and increase traffic to a business’s product or service 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 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 choose their affiliates, often via online applications, a process that allows them to pick who they think fits best with their brand and vision. In addition, there’s 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. In involved affiliate marketing, the affiliate has a close connection to the product or service, with the affiliate having used it before and now recommending that other consumers use it as well. Related affiliate marketing relies upon the expertise of the affiliate to promote products to their audience. They don’t necessarily have to have used the product or service but rather have a personal or professional connection to 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, allowing brands to be seen by a relatively large network of potential customers. “With social media having the presence it does these days and 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 their target consumer,” Zion explains.

With a strategic collection of affiliates pushing a product or service online, there’s often a greater potential for sales through this marketing model than more traditional routes. For example, content may go viral, which can translate to more sales for businesses. If there’s an affiliate with a video that gets thousands of views, the potential for 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 is expected to reach a worth of $12-$17 billion in 2023. There’s virtually no limit on the potential sales increases that businesses could see when they develop an affiliate program that attracts affiliates, who then attract more consumers for the business. “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.