How Affiliate Programs Work

Filed in archive General on January 28, 2010

Affiliate commissions are the heart of an affiliate marketer's income and there are many types of commission structures you may come across depending on the affiliate program you're involved in.

First, there is no set rule about how high a percentage commission a merchant can offer you. It can be as low as 1% or as high as 100%. Most merchants, though, will set the percentage at a level that is attractive to potential affiliates. Also, it is important to note that your commissions may be based on a per sale basis or on total sales.

Some merchants skip all of this and go with a flat-rate commission. For example, a merchant might decide to pay a flat-rate of $50 on sales of all products priced from $75-$150. Now, you might be wondering exactly how a merchant tracks your referrals and knows to credit you with a sale?



The key to your commissions is your affiliate link.

The easiest way to explain this is to take you through a real world example. Think about all of the websites that you visit on a daily basis. Whenever you go to Ebay, for example, you type in http://www.ebay.com/ , right? This is just a "direct link."

Now, imagine that a friend of yours if an affiliate of Ebay. If you typed in http://www.ebay.com/ or clicked on a plain link, there would be no way for Ebay's affiliate program to know that your friend referred you.

Why?
Because the link just takes you directly to the site, and doesn't contain any special, personally identifying information about who referred you.

Now, let's say that your friend gave you his affiliate link to Ebay instead. It might look something like this:

http://www.ebay.com/affid?=123456789

The above link is just an example I made up, but it's good enough to show you what's going on here. See the affid?= part of the URL? It indicates an affiliate referral. The number series of "123456789" represent your friend's actual "affiliate ID" in this hypothetical scenario. Once you click that link, the affiliate ID is noted by the affiliate program where your friend's name is associated uniquely with his affiliateID.

Affiliates links come in many lengths and formats, and you'll find they vary from merchant to merchant depending on the software solution they use to run their affiliate programs.

Clickbank for example, formats all affiliate links like this:

http://affid.merchantname.hop.clickbank.net/

The "affid" part of the URL gets replaced with your unique affiliate ID, while the "merchant name" is replaced with the unique ID of the merchant. Clickbank is an interesting case because it is actually a payment processor for multiple, different merchants. Hence, the "merchant name" portion of your affiliate link will change depending on which merchant/product you're promoting.