How Affiliate Marketing works ?

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Within this example a ‘advertiser’ is an online advertiser with a transactional website where you can buy products or services. An ‘affiliate’ is an online publisher or partner who has access to traffic.
Publishers are traditionally website owners who can send traffic, via links to your site. They do this on the basis that any sales generated from this traffic will earn them an agreed commission. This reward model is commonly known as Cost Per Action (CPA) and is more transparent and accountable than the older Cost Per Click (CPC) model.
There are many different publisher types to work with and these relationships are facilitated by an advertiser joining the network and using the promotional tools available- these are owned by the publishers. In every case the publisher takes the risk of sending you traffic at no cost to you as you only have to reward them if their traffic completes a purchase- therefore, advertisers only pay out on results.
[b]A consumer visits a publisher’s website (for example a shopping portal or directory)
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The customer finds a product (or retailer) and clicks the link to be taken to the advertiser’s site to review or purchase the product (this click-through stores a network cookie on their PC).*
The customer completes the sale online. Tracking software records the key purchase data such as sale amount, IP, date and time, etc and reports this to Affiliate Window. The customer journey has now concluded.
The advertiser is able to allow a period of ‘grace’ to consider the sale complete and pays commission due to the publisher for sales generated.
THE VALUE OF PUBLISHER MARKETING
Britons spent a record £14.7 billion over the web last year – up 35 per cent, or nearly ten times the rate of growth of the total retail market. The number of people who bought goods online also increased by 24.7 per cent to 22.6 million, research shows.
And they are spending over the internet more regularly – an average of 16.9 times last year, up from 14.2 times in 2006. Cheaper broadband and better availability of the service also lead to the increases, analysts Verdict Research claimed.
Spokesman Malcolm Pinkerton said “As the cost of broadband falls, consumers become accustomed to internet shopping and retailers continue to enhance their online propositions, the channel will find itself extremely well placed to capitalize on the falling consumer confidence and lower levels of disposable income currently impacting the retail market”.
Affiliate marketing in the UK grew by 25% during 2008, taking the total value of online sales generated by this channel for that year to £3.82 billion*. The same report found that UK advertisers involved in publisher marketing drive 12% of their online sales via this channel and that despite the recession the publisher marketing industry is on course to be worth well over £4bn by the end of 2009.

In light of these statistics and predictions it is clear that publisher marketing should form part of an integrated and successful digital marketing strategy.