Affiliate Networks are the glue.

An Affiliate Network, is a company who is dedicated to connecting merchants with affiliates and tracking all of the sales, leads, commissions etc as well as managing the branding links, banners, videos etc for the merchants.

A merchant doesn’t NEED to implement an Affiliate Network to manage there Affiliate Program, but unless you want the extra cost of hiring an Affiliate Manager at $100k per year, then you are better off utilising an Affiliate Network, for no cost or a small annual fee (usually less than $1000 per year).

Affiliate Networks are Worldwide

There are literally hundreds of Affiliate Networks all around the world, but the majority are based in the United States, UK & Canada, with Australia swiftly moving closer to the front of the pack, but we still haven’t quite hit the boom yet, understandably.

Here in Australia we have a handful of companies who really know what they are doing and are usually always open to new merchants and new affiliates.

How the Affiliate Networks Work

If you are a business wishing to take advantage of all of the benefits by running an affiliate program, then understanding how the Affiliate Network’s work will help you make a decision.

Let’s illustrate it with a completely hypothetical example:

Jane** from Baobab Clothing had a VERY profitable summer. She sold loads of clothes and gifts at the local artisan markets and online and met lots of amazing customers along the way. HOWEVER, winter is starting to set in and less and less people are shopping in retail centres/markets and more people are staying indoors and shopping online.

Jane’s main source of traffic to her website is through her Facebook page and from her physical customers – which costs her next to nothing from her marketing budget. But, she is experiencing less and less traffic as there are no new customers (mainly repeat customers), so it’s going to be a long winter, by the looks of things.

So she decides to implement an Affiliate Marketing Program. She has decided to go with Commission Factory because she likes that they are in Australia and the user interface is easy to use because she likes to manage things online, herself. She signs up, follows the instructions with regards to creatives (ie banners, links etc), her program goes live and she continues sourcing new products for her online store, while Commission Factory takes over and works on getting her more traffic and ultimately more sales.

Commission Factory is now MANAGING her Affiliate Program. They send out an email to ALL of their Affiliates whom have signed up via the website, informing them that there is a NEW MERCHANT listed. There are many Commission Factory Affiliates who blog about/have websites dedicated to the exact same products that Jane sells with Baobab Clothing.

The Relationship Begins with a Click.

Those Affiliates apply for a RELATIONSHIP between themselves and Baobab Clothing and Jane then chooses which of those Affiliates and their websites are appropriate to endorse/sell her products.

The APPROVED Affiliates then send her traffic – and they do this by writing blog posts, articles, send out emails and/or newsletters showcasing some of Jane’s products, redirecting them to her store. This is done via the creatives such as banners which Jane provided Commission Factory. The affiliates receive an individual code which identifies them as the traffic source/affiliate and it is recorded via cookies from their online activities.

Some of that traffic then become customers by purchasing products from Baobab Clothing then the bloggers get paid a commission (Jane decided they should get 10% of each sale) and Jane fulfils the order as she would normally, and all of the T & C’s of sale etc belong to Jane – not the blogger’s – then the blogger’s job is done until they write another post/newsletter endorsing Jane’s products.

The Blogger Gets Paid.

The blogger (the affiliate) provided the traffic and subsequent sale for a small commission, and Jane (the merchant) provided the service and the small commission.

Jane continues the relationship with the clients and the blogger receives a commission from that ongoing relationship, depending on how long the cookies are active for. 

Commission Factory provided the relationship via their in-house software and continues to track the cookies for a pre-determined amount of time (usually 60-90 days or unlimited if you’re a legendary merchant!)

Next: How Does Affiliate Marketing Work?

After That: What Are The Benefits of Affiliate Marketing?

** Disclaimer: Jane is not her real name and this scenario is completely hypothetical for the purpose of demonstrating how affiliate networks work.