Affiliate Marketing: How It Works and How to Start

You don't have to win every customer yourself. You can hand part of that work to partners – content sites, creators, newsletter owners and complementary businesses – and pay them only when they deliver a result. That is the idea behind affiliate marketing.

On paper it looks like the perfect deal: no ad budget burned on impressions, and you only pay for a sale or a lead. In practice, an affiliate programme takes real work: clear terms, accurate tracking, fraud protection and partners who actually understand your product. Without those, you end up with fake leads, commissions on sales that would have happened anyway and partners who damage your brand.

In this guide we cover:

• what affiliate marketing is and who takes part;
• how tracking works and which payment models exist;
• the benefits, the risks and how to reduce them;
• when to run your own programme and when to join an affiliate network;
• how to launch a programme step by step, and which rules on disclosure, consent and privacy you need to respect.

What affiliate marketing is

Affiliate marketing is a way of promoting your business in which outside partners promote your product or service, and you pay them for a result agreed in advance: a sale, a lead, a sign-up, an app install or, occasionally, a click.

The key difference from ordinary advertising is who carries the risk. When you run a campaign on Google or Meta, you pay for impressions or clicks whether or not anyone buys. In affiliate marketing much of that risk moves to the partner: they invest their time, their content and sometimes their own ad budget, and they only get paid when the result actually happens.

A simple example: a blogger who writes about photography gear recommends an online lens shop and adds a personal link. When a reader clicks that link and buys, the blogger earns a percentage of the order. The shop paid nothing for the article itself – only for the sales it brought in.

The model is well established worldwide. Amazon Associates, Amazon's affiliate programme, is one of the best-known examples, and many review and comparison sites earn most of their revenue from commissions like these. But affiliate marketing is not only for giants. It also works for small online shops, SaaS companies, online courses and service providers – accountants, lawyers and consultants who receive referrals from complementary businesses.

How affiliate marketing works

The three players

Most programmes involve three parties:

• The advertiser (merchant). The business with a product or service that is willing to pay for new customers.
• The affiliate (publisher). A person or company that promotes the product through their own channels: a content site, a blog, a newsletter, a YouTube channel, an Instagram or TikTok account, a community or paid ads.
• The affiliate network or platform. A technology intermediary that provides tracking, connects advertisers with affiliates, calculates commissions and handles payouts. Sometimes this third party is simply software that the business runs itself.

One customer's journey

A typical flow looks like this:

1. The affiliate joins the programme and receives a personal link with a unique ID, and often a personal coupon code as well.

2. They publish the link in their content or in a campaign.

3. A visitor clicks the link and lands on your website. The tracking system stores the affiliate ID, usually in a cookie and on the server.

4. If the visitor completes the target action within the agreed attribution window (for example, 30 days), the conversion is credited to the affiliate.

5. After a validation period – for instance, once the cancellation and returns period has passed – the commission is approved and paid.

Why tracking is the heart of the programme

If tracking is inaccurate, the whole programme runs on guesswork. Browsers such as Safari and Firefox restrict cookies and cross-site tracking, and ad blockers stop some scripts from loading. That is why serious programmes never rely on a browser cookie alone. They combine server-side tracking (often called postback or S2S), personal coupon codes that identify the affiliate even without a link, and storing the affiliate ID on the order itself or on the lead record in your CRM.

Affiliate payment models

The payment model defines exactly what you pay for, so it shapes both the kind of affiliates you attract and the kind of traffic you get.

Pay per sale (CPS)

The most common model. The affiliate receives a percentage of the order value or a fixed amount for every sale. For the advertiser it is the safest option: you only pay on money that has actually come in. Commission levels vary a lot by industry and margin. On low-margin products they are often just a few per cent; on digital products, subscriptions and high-value services they can be much higher.

Pay per lead (CPL)

The affiliate earns a fixed fee for every person who submits a form. This model suits industries with a long sales cycle: B2B services, real estate, insurance, education and professional services. Its weakness is well known: low-quality leads are easy to generate. So define up front what counts as a valid lead – for example, a phone number that answers, a location you actually serve and an enquiry that is not a duplicate.

Pay per action (CPA)

An umbrella term for paying on any defined action: a sign-up, an app install, a trial start or a booked meeting. Strictly speaking, CPS and CPL are both special cases of CPA.

Revenue share (RevShare)

The affiliate receives a percentage of the revenue from a customer for as long as that customer keeps paying. This model is common in subscription software (SaaS) and monthly services. It encourages affiliates to bring in customers who stay, not just customers who buy once.

Other models

• Pay per click (CPC). The affiliate earns a small amount for every visit. It is highly vulnerable to fraud, so it is rarely used.
• Cost per thousand impressions (CPM) or a flat fee for a period. These are closer to sponsorship and traditional advertising than to affiliate marketing.
• Two-tier programmes. Affiliates also earn commission on sales made by affiliates they recruited. Use them with care: they sometimes attract people who focus on recruiting affiliates rather than winning customers.

You can also combine models: a small fee for a verified lead plus a bonus for a closed deal. Base the decision on your unit economics. Work out how much you can pay for a new customer and still make a profit, and what an average customer is worth to you over time. That way, a generous commission becomes a calculated decision rather than a gamble.

Benefits and risks of affiliate marketing

The benefits

• You pay for results. This is the main advantage. Your budget is tied directly to sales or leads rather than to impressions.
• Traffic that comes with trust. An audience that trusts the affiliate arrives with a recommendation already in hand, so it is usually closer to a decision.
• Reach in hard-to-access channels. Communities, newsletters and niche content sites where your own ads would not be received in the same way.
• Content that keeps working. A good review on a partner's site can bring in customers for months or even years, while also strengthening your presence in Google and in AI-powered search engines.

The risks

• Fraud. This is the biggest problem in the industry. Dishonest affiliates generate clicks and leads with bots, fill in forms with fake details, drop cookies without the visitor ever clicking the link (cookie stuffing) or place orders themselves through their own link.
• "Stealing" customers who were already on their way. An affiliate who bids on your brand name in Google Ads, or a coupon site that intercepts shoppers just before checkout, will earn commission on a sale that would have happened without them.
• Reputational damage. An affiliate who promotes you on a dubious site, sends spam or makes promises you can't keep harms your brand.
• Ongoing oversight. An affiliate programme is not "set and forget". You need to analyse data, check traffic sources, approve commissions and keep talking to your partners.

How to reduce the risks

• Written programme terms. Define which channels are allowed and which are not, whether brand bidding in search ads is permitted, how sponsored content must be labelled and what happens when the rules are broken.
• A validation period. Don't pay commission until the cancellation and returns period has passed and you have checked that the lead is genuine.
• Monitoring and alerts. Look for anomalies: a sudden spike in leads, an implausible conversion rate, many leads from the same IP address or forms completed within seconds.
• Form protection. reCAPTCHA or Cloudflare Turnstile, phone or email verification and duplicate checks before a lead reaches your CRM.
• Start small. Open the programme to a small group of vetted affiliates first, and only then expand.

Channels affiliates use to promote products

Content and SEO

Review sites, comparisons and how-to guides are the classic channel. The affiliate writes useful content, ranks it in Google and recommends the product within the text. It is a slow channel, but a stable one. Google asks publishers to mark paid and affiliate links with the rel="sponsored" attribute, as explained in the Google Search Central guidelines. It is worth making this a requirement in your programme terms.

Creators and social media

Creators on YouTube, Instagram, TikTok and podcasts bring audiences that trust them. Here it is especially important to label commercial partnerships clearly – for example, with the Paid partnership label on Meta platforms. We cover this in detail in our guide to native advertising and sponsored content.

Newsletters and communities

An affiliate with a mailing list or an active community in your niche can deliver excellent results – as long as the audience is genuinely relevant. A B2B product won't sell in a student community, however large it is.

Paid advertising

Some affiliates buy traffic themselves on Google, Meta or TikTok and profit from the gap between their costs and the commission. That is legitimate, but it needs clear rules. Many businesses ban affiliates from bidding on brand keywords, so that they don't drive up the cost per click in the business's own campaigns or earn commission on customers who were already searching for the brand by name.

Coupons, cashback and rewards programmes

Coupon sites, cashback apps and employee or membership rewards programmes bring volume, but often also customers who would have bought anyway. If you work with them, consider a lower commission or dedicated codes that are not published everywhere.

Business-to-business partnerships

This is the channel that suits small businesses and service providers best: an interior designer recommending a contractor, an accountant referring a client to a financial adviser, a marketing agency passing a project to a development studio. A structured referral programme, with a personal link and a known commission, turns occasional recommendations into a measurable sales channel.

Across all channels, give your affiliates ready-made materials: banners in different sizes, product images, copy they can use, coupon codes and a product feed for online shops. The easier you are to promote, the more affiliates will do it.

In-house programme or affiliate network

There are two ways to run affiliate marketing: manage your own programme with a plugin or dedicated software, or join an existing affiliate network.

Your own programme

Today almost nobody builds an affiliate system from scratch. There are ready-made tools for every platform: WordPress and WooCommerce plugins such as AffiliateWP, affiliate apps for Shopify, and cloud platforms such as Rewardful, Tapfiliate or PartnerStack, which are particularly well suited to subscription software. These tools handle affiliate sign-ups, links, tracking, commission calculations and reporting.

The advantages: full control over terms, design and data, a direct relationship with your affiliates and no network fee. The drawbacks: you are responsible for recruiting affiliates, checking traffic quality, handling payouts and connecting the system to your website, your payment provider and your CRM.

An in-house programme makes sense when you already have a recognised product, a loyal audience, natural partners (happy customers, complementary businesses) and someone on the team who can manage it.

An affiliate network

International affiliate networks such as Awin, CJ, Impact.com and Rakuten Advertising are ready-made marketplaces: advertisers publish an offer, affiliates choose it, and the network provides tracking, reporting and payouts. Some networks also filter out invalid traffic.

The advantages: a relatively fast launch, access to a large pool of affiliates and ready infrastructure. The drawbacks: network fees or subscription costs, less control, and some industries that are not accepted or are restricted on certain networks.

For businesses selling to an international audience, a network is often a good place to start. For businesses that mainly serve a local market – and especially for service providers – your own referral programme with a small number of high-quality partners often works better than a large network.

How to launch an affiliate programme in 8 steps

1. Define your goal and metrics

What do you want: sales, leads, sign-ups or entry into a new market? Choose one primary metric and a few supporting ones, such as cost per acquisition, share of valid leads, revenue from affiliate sales and return rate.

2. Work out how much you can pay

Start with your own numbers: margin, average order value, customer lifetime value and customer acquisition cost in other channels. Our guide to key metrics for an online store explains how to calculate most of them.

3. Write an offer for affiliates

A good offer answers every question an affiliate will have: what the product is and who it is for, what the commission is, how long the attribution window lasts, when and how you pay, which channels are allowed and which materials they will receive.

4. Draft the terms and agreement

Advertising rules, disclosure requirements, prohibitions (spam, brand bidding, unsuitable sites), the validation period, reversal of commissions on cancelled orders and your right to end the relationship. It is worth having a lawyer review the document.

5. Set up tracking

This is the most technical and most important step. You need to connect the affiliate system to your website and to the checkout or form flow, store the affiliate ID on the order and on the lead in your CRM, add UTM parameters so that traffic shows up correctly in GA4, and check that conversions are not counted twice alongside your Meta and Google pixels. We explain how to bring every source into a single picture in our guide to end-to-end marketing analytics.

6. Prepare materials

Banners, images, copy in several languages if your audience is diverse, coupon codes and dedicated landing pages. A good landing page – fast and clear – improves conversion for every affiliate.

7. Recruit affiliates

Start with people who already know you: happy customers, suppliers, complementary businesses and creators who already mention you. Reach out to them personally, and add an "Affiliate programme" page with a sign-up form to your website.

8. Manage and improve

Review the data regularly, approve commissions on time, give affiliates feedback and updates, and run affiliate promotions – for example, a higher commission for a limited period or a bonus for your most active partners. Affiliates value on-time payments and fast support just as much as a high commission.

Disclosure, consent and privacy: what to keep in mind

The rules below are a general overview, not legal advice. Requirements differ between countries, so check the details with a lawyer in the markets where you operate.

Disclosure

Consumer protection law across the EU prohibits misleading practices, including advertising disguised as independent content. A recommendation presented as a neutral opinion when the author is actually being paid can be treated as hidden advertising. Platforms require labelling too: Meta, YouTube and TikTok all ask creators to mark sponsored content. If you also target customers in the United States, the FTC requires clear disclosure of any material connection between an influencer and a brand. Your basic requirement for affiliates should be simple: state clearly that the content is a commercial partnership or contains affiliate links.

Email and messaging consent

Affiliates who send promotional messages by email, SMS or messaging apps must follow the EU ePrivacy rules and their national implementations. In general terms, that means prior consent for marketing messages (with limited exceptions for existing customers), a clearly identified sender and an easy way to unsubscribe. Responsibility can extend beyond the sender to the business being promoted, so ban unsolicited messaging explicitly in your affiliate agreement.

Privacy and GDPR

When you share data about leads or customers with affiliates – for example, to approve a commission – the GDPR applies. Share only what is strictly necessary: an order ID and a status are usually enough, rather than a name and phone number. Make sure your privacy policy and cookie consent cover affiliate tracking, and agree in the contract how each party handles personal data.

Your website is half the job

The affiliate brings the visitor, but your website closes the deal. A slow site, an overly long form or an unclear landing page will drag down conversion, and your best affiliates will move to another programme. Most traffic today arrives on mobile, so speed, a prominent contact or chat button, a short form and accessibility all matter – the European Accessibility Act now applies to many online shops and services in the EU. If your audience speaks several languages, prepare landing pages in those languages rather than just translating the banners. For ideas on offers that make visitors leave their details, see our guide to lead magnets.

How RJL Studio helps you launch an affiliate programme

At RJL Studio we build the infrastructure an affiliate programme depends on: fast landing pages in Webflow, WordPress or Wix, integration of the affiliate platform with your website and payment provider, storing the affiliate ID on every lead in your CRM, tracking in GA4 and in the Meta and Google pixels without double counting, and form protection against fake leads. We automate the repetitive work – lead approval, status updates and affiliate reports – with n8n, Make and Zapier.

Planning to launch an affiliate programme or fix the tracking in an existing one? Read about our campaigns and social media marketing services and our automation and integration services, or get in touch and we'll get back to you.

Frequently asked questions

What is the difference between affiliate marketing and influencer marketing?

In influencer marketing you usually pay a fixed fee for a post or video, regardless of the outcome. In affiliate marketing you pay for a measurable result: a sale, a lead or a sign-up. Many businesses combine the two – a small base fee for the creator plus a commission on every sale made through their link or coupon code.

How much commission should I pay affiliates?

There is no single right number. The commission depends on your margin, your customer lifetime value and the terms competitors in your niche offer. Calculate in advance how much you can pay for a new customer and still make a profit, and leave room for bonuses for your best affiliates.

Is affiliate marketing suitable for a small business?

Yes, especially in the form of a referral programme: a handful of complementary businesses and happy customers who receive a personal link and a known commission. It is inexpensive to run and works for service providers as well as online shops.

How do I know an affiliate really brought in the customer?

Through a personal tracking link, a personal coupon code and server-side tracking. The affiliate ID is stored on the order or the lead, and the commission is approved after a validation period. When tracking is set up properly, you can see at any moment which affiliate each customer came from.

Can affiliates bid on my brand name in Google Ads?

Only if you allow it. Most programmes prohibit it, because such an affiliate competes with your own campaigns and earns commission on customers who were already searching for you by name. Put the ban in your programme terms and check the search results for your brand name from time to time.