Definition

Affiliate marketing is a type of marketing model in which an external entity (e.g. blogger, YouTuber, influencer) promotes a product or service, in return receiving a commission for each generated sale, registration or other customer activity that is the subject of the contract. 

Trivia 

1. Affiliate marketing is considered a key part of modern digital marketing. The annual value of global investment in the industry is GBP 12 billion per year.
2. Website loading time plays a very important role in affiliate marketing. If it takes more than 3 seconds to enter a website, it will most likely result in 40% potential customers leaving. 
3. The most profitable sector in 2023 according to Influencer Marketing Hub was the health and well-being market, its value was approximately $4 billion. 

Information

The affiliate model may consist of three or four components. It is at the beginning of the affiliate chain sales company offering products or services that meet the needs of a potential customer. The company makes a partnership offer to affiliate, which may be a person or institution providing content thematically related to the product or service being sold. Another optional link is: network affiliate, i.e. an external unit that operates the affiliation management system (on the Polish market these include Adtraction, Convertiser, and Trade Doubler). The last element of the model is the target group, i.e customers purchasing a product or service by clicking on an affiliate link. 

The basic ways of measuring affiliation results and the resulting remuneration include monitoring the number of sales, clicks and leads (i.e. contact details left by a potential customer). Affiliates' earnings depend on many factors, among which the types of products or services promoted, their value and the commission rate play a special role. 

Affiliate marketing owes its popularity to a number of benefits it brings. Attractive for an affiliate are: the possibility of generating passive income, low costs and therefore low risk, flexibility in selecting the promoted product or service and no need to provide customer support in the sales process. The selling company, in turn, gains a ready base of potential customers in the form of an affiliate's audience, which can often be a group with specific interests (e.g. a trainer gathering people who go to the gym). Moreover, the trust that recipients have in the affiliate is extended to the products and services it promotes. 

There are also some risks associated with affiliate marketing. The main threat is that the product does not match the affiliate's business profile and that the affiliate promotes offers that, despite thematic matching, should not be promoted due to poor quality. In the first case, there is a risk that the recipient of the content created by the affiliate will not be the person to whom the promoted product is dedicated. The second type of problem, resulting from poor product quality, may bring short-term profits to the affiliate, but in the long run it will result in a loss of credibility and trust among recipients.

Summary

Affiliate marketing is a popular method of promoting a product or service. It can be effective and financially attractive for both the selling company and the affiliate, because the company pays only for the effectiveness, the measure of which (i.e. click, sale or lead) is the subject of the contract, while the affiliate gains the opportunity to obtain almost passive income. It should be remembered that there is a thematic connection between the affiliate's business profile and the offer it promotes, and that the promotion of low-quality products and services results in a loss of credibility and trust among recipients. 

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