Understanding the Affiliate Marketing Model

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Affiliate marketing involves four components that fit into a basic model:

Merchants with a product or service to sell.
Publishers (also known as affiliates) who work to sell a merchant's product or service.
Consumers who wish to purchase a product or service.
Affiliate networks that help affiliate merchants and publishers.

The first component is the merchant all b2c data included have who creates the product or service. Your startup is the merchant who has a new product or service to sell. Merchants can be large, established companies, startups, or anything in between.

Publishers sell the products
The second component of the model is the publisher who promotes the merchant's product. Typically, the publisher has an established affiliate business or is a social media influencer. Like merchants, publishers can be of any size. But either way, they must have a large following to help themselves and other merchants.

Consumers buy the products
The third component is the consumer, who is expected to buy what the merchant is selling. To achieve this goal, the publisher must attract the consumer and encourage him or her to buy. Many publishers tell the consumer that they are selling a product for a merchant, especially since the FTC requires them to disclose the relationship with the merchant.

Networks connect merchants and publishers
Finally, the affiliate marketing model may include a network. Many merchants and publishers connect through affiliate marketing networks.

Publishers can choose merchants, and affiliate networks typically take a small percentage of sales made through the relationships they create. If you get into networks, you may need to set a budget so you don't get carried away by too many opportunities.