How Do Affiliate Programs Work? (In-Depth Explanation)

I was sitting in front of my computer and was wondering about writing something beginner-friendly to my readers interested in affiliate marketing.

And you know what happened? Well, nothing special but I thought why not explain how affiliate programs work and other crucial bits.

In this post, you will learn what are affiliate programs, how affiliate programs work, how to generate income via affiliate programs, some good affiliate programs to join, the pros and cons of affiliate programs, and a lot of really cool stuff.

With that said, let’s not waste time stretching the introduction, get things going, and understand everything in a better way.

Make sure you read this post till the very end because ‘affiliate programs’ play an extremely important role in this business model.

As a matter of fact, the business model of affiliate marketing would not have been possible without affiliate marketing! So, let’s do it!

What Is An Affiliate Program?

An affiliate program is a setup where a company or vendor provides affiliates with unique affiliate links, tracking, statistics, and resources to promote affiliate products for better marketing.

Affiliates can join these affiliate programs after the company approves their applications and start promoting links (affiliate offers/products) to generate commissions.

In more than simple terms, you can think of an affiliate program as a platform or arrangement where affiliate marketers get all the resources to be able to market a vendor’s products and earn commissions whenever they generate a sale.

How Do Affiliate Programs Work?

So, first I’ll cover everything theoretically and then we’ll move on to the practical stuff (with examples).

As you already know affiliate programs are arrangements which interest affiliates can join as partners with the company’s permission and promote/market products for money, here’s how the whole process looks like:

  • Step 1: A company hosts an affiliate program
  • Step 2: Affiliates get to join the program
  • Step 3: The company approves or rejects affiliates’ applications
  • Step 4: Affiliates get their affiliate links and start promoting
  • Step 5: Commissions are paid to affiliates

You’ve gone through the steps, right?

But you know what’s extremely interesting about this process, all of these steps or things don’t happen outside the affiliate program! All of this happens in the affiliate program itself.

Well, if you are a little bit confused, I’ll explain everything in-depth in the upcoming paragraphs…

Step 1: A Company Hosts An Affiliate Program

In the overall process of how affiliate programs work, a company needs to have/host an affiliate program. I mean, that’s quite obvious!

Now, an affiliate program can be hosted on a pre-existing website, an affiliate software, or an affiliate network.

Generally, companies host their affiliate programs on their official coded, WordPress, and Shopify websites or affiliate networks but there are no standards to it. It can be hosted on third-party affiliate software as well.

Just, for example, there are affiliate networks like JVZoo and ClickBank, and there is software like Post Affiliate Pro that allows companies to create or run affiliate programs.

Step 2: Affiliates Join The Program

After the company has set up an affiliate program, now they will want affiliates to join the program so that the products can be promoted/marketed.

So, what the company does is that it attracts affiliate marketers via different marketing strategies like Facebook ads, email marketing, blogging, etc.

When the company runs promotional campaigns, affiliates get to know about the program and they start showing interest in the company for being partners (affiliate partner).

Step 3: Affiliate Application Approval

Once affiliates start to submit applications to partner with a company, the company’s affiliate management team takes a look at each profile and then decides whether or not to approve the application.

Now there can be a lot of cases where affiliates can instant approval but if we talk about how a ‘real’ affiliate program works, an application review holds extremely high importance.

By the way, if you are interested, click here to check out my list of the best instant approval affiliate programs.

Step 4: Affiliates Get Links For Promotions

Once a particular application is accepted, the affiliate will be provided unique tracking links, promotional items such as banners, guides, tutorials, and extra bonuses to begin marketing the company’s products.

Yes, it’s as simple as that. Nothing complicated at all. You just grab your affiliate link available inside the affiliate program and share it with an audience for them to visit product pages.

Step 5: Commissions Are Paid

Now that an affiliate starts promoting products and services, whenever someone clicks his affiliate link and makes a purchase, he will earn a nifty commission for that.

The commission can range anywhere from a couple of cents to thousands of dollars, which is fantastic!

If you like to earn big money, be sure to check out this post where I have shared some of the best high ticket affiliate programs that pay huge commissions!

Well, that’s pretty much it! This is how an affiliate program functions or works in the business model of affiliate marketing.

But guess what?

I’ll share how affiliate programs work with a graphic as well as an example for those of you who want to understand things perfectly:

So, an affiliate program could be explained as a simple arrangement where an individual joins a company to promote its products to people, promotes them, get sales, earn commissions, and at the same time, helps the company acquire new customers for free!

Here’s a visual explanation of what I just said…

Also, here’s a real example of an affiliate program in action:

To help you understand how an affiliate program looks like in action, I’m taking an example of a popular email marketing company called AWeber.

So, as you can see below, this company has an affiliate program that interested individuals can join;

Functioning of affiliate programs

All you are going to want to do is fill in the application and then go through the signup process.

Once you become an AWeber affiliate (by the way, AWeber is an email marketing tool), you can grab your affiliate links and promotional material to promote AWeber links to people who would be interested in buying the same.

Now, whenever people will click your affiliate links and purchase AWeber’s subscription, you will earn a 30% recurring commission for that!

Cool, right? Well, that’s what an affiliate program is all about. I hope I was able to explain it to you.

How Do Affiliate Programs Generate Revenue?

Well, I won’t go ahead and write another article on this silly question but still, my job is to answer people’s questions…so here you go:

Affiliate programs help companies/vendors get more sales in exchange for a commission (a small cut of the sale) paid to affiliate marketers. This is a win-win situation for both affiliates and companies because companies get free leads/sales and affiliates get to earn commissions for sending customs.

And that is how affiliate programs help businesses and business people generate revenue. A lot of times it happens that once a customer purchases certain products from a company, they become a permanent customer and companies get to meet super high LTVs (lifetime value of a customer).

What Are Some Good Affiliate Programs?

Well, there are thousands and thousands of ‘good’ affiliate programs you can join but here are some great ones you need to check out:

Pros Of Affiliate Programs

  • A great way to scale a brand
  • A great way to spread awareness
  • A perfect setup for affiliates to generate income
  • Easy to manage a lot of things
  • A phenomenally creative way of generating income that promotes online marketing to conservatives

Cons Of Affiliate Programs

  • A long application process (sometimes)
  • Minimum payment threshold to meet (a lot of times)
  • Hard to find companies with non-competitive and high-converting products that offer affiliate programs

In Conclusion

This was my sweet little post where I tried my best to explain to you what affiliate programs are and how do they work or function as well as generate revenue.

Remember I said that affiliate marketing isn’t possible in the introduction of this post? Now I guess you know the reason why I said that!

If you know that reason, do let me know in the comments section below, and also, check out the most common questions asked about affiliate programs by reading the FAQ section down below.

[FAQs] Frequently Asked Questions

Can you make money with affiliate programs?

The answer is yes. You can make money with affiliate programs but only if you promote the products via the right strategies and get sales.

Are affiliate programs profitable?

Affiliate programs can definitely be profitable if you go after an in-demand yet non-competitive product/niche. On the other hand, if you go after a competitive niche, you are going to want to put in a lot of work to be able to make a profit.

Are affiliate programs worth it?

Affiliate programs are not only worth it but also a structural or fundamental part of the affiliate marketing business model. You can’t do affiliate marketing without affiliate programs.

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