Affiliate Marketing is a performance-based marketing strategy where businesses reward external partners (affiliates) for driving traffic or sales through their promotional efforts. Affiliates earn commissions for each sale, lead, or action generated through their unique tracking links, creating a cost-effective way to expand reach without upfront advertising costs.

It's paying for results, not promises.

Why It Matters

Traditional advertising requires upfront payment with uncertain returns. Spend £10,000 on ads, hope they work, cross fingers. Affiliate marketing flips this model: you only pay when affiliates deliver actual results. No sale, no payment. No risk of wasted ad spend on campaigns that don't convert.

The global affiliate marketing industry is worth over £10 billion annually and growing at 10%+ yearly. Brands like Amazon built massive revenue streams through affiliate programmes. It works because incentives align perfectly; affiliates only earn when you earn.

How It Works

You create an affiliate programme with commission structure. Affiliates join and receive unique tracking links. They promote your products through blogs, social media, email lists, YouTube, or websites. When someone clicks their link and makes a purchase, the tracking system records it. You pay the affiliate their agreed commission. Simple.

Example: Beauty brand offers 10% commission. Beauty blogger writes review, includes affiliate link. Reader clicks through, buys £50 of products. Blogger earns £5, brand gains £45 (minus product costs). Both win.

Commission Models

Pay-per-sale (PPS): Affiliate earns percentage of sale value. Most common model. Typical rates: 5-30% depending on industry and margins.

Pay-per-lead (PPL): Affiliate earns fixed amount for each qualified lead—email signup, form completion, trial registration. Common for services or high-ticket items. Typical rates: £5-50 per lead.

Pay-per-click (PPC): Affiliate earns per click regardless of conversion. Rare now due to fraud potential and click-through rate manipulation.

Tiered commissions: Higher commissions for affiliates driving more sales. Encourages top performers. Example: 10% for first £1,000 monthly sales, 15% for £1,000-5,000, 20% above £5,000.

Recurring commissions: For subscription businesses, pay affiliates monthly as long as referred customer remains subscribed. Incentivises quality over quantity.

Types of Affiliates

Content creators write blog posts, reviews, tutorials, or comparison articles. They build trust with audiences, making recommendations carry weight. High-quality traffic, good conversion rates, but requires patience to scale.

Influencers leverage social media followings to promote products. Instagram, TikTok, YouTube, Twitter. Can drive massive traffic quickly but varies widely in quality. Micro-influencers (10k-100k followers) often convert better than mega-influencers.

Coupon and deal sites attract bargain hunters. High volume, lower margins, price-sensitive customers. Examples: Honey, RetailMeNot, HotUKDeals.

Review and comparison sites help consumers make purchasing decisions. "Best running shoes 2025" or "iPhone vs Samsung". High purchase intent traffic. Examples: Wirecutter, TechRadar.

Email marketers promote to subscriber lists. Can be very effective if list is engaged and relevant. Risk of spam if affiliates aren't selective about what they promote.

Loyalty and cashback sites offer customers percentage back on purchases. Examples: TopCashback, Quidco. High volume, repeat customers, but eats into margins.

Setting Up Your Programme

Define commission structure based on margins and customer lifetime value. If average order value is £80 with 40% margin, you could offer 10-15% commission (£8-12) and still be profitable.

Choose affiliate platform: self-hosted (more control, more technical) or network (easier setup, existing affiliate base). Popular networks: Awin, CJ Affiliate, ShareASale, Amazon Associates, Impact.

Create promotional materials: banners, product images, copy templates, discount codes. Make it easy for affiliates to promote effectively.

Set terms and conditions—: cookie duration (how long after click you'll credit sale—typically 30-90 days), payment schedule (monthly, NET 30), prohibited practices (no brand bidding on paid search, no spam).

Recruit affiliates actively. Don't just open programme and wait. Reach out to relevant bloggers, influencers, content creators in your niche. Explain why your products suit their audience.

Managing Affiliates

Approve applications carefully. Not every applicant is suitable. Review their website quality, traffic levels, content relevance, and audience fit. Reject spammy or low-quality sites that damage your brand.

Provide support. Top-performing affiliates need product information, promotional strategies, and responsive communication. Treat them as partners, not just traffic sources.

Monitor for fraud. Cookie stuffing, fake leads, trademark bidding, stolen credit cards. Use affiliate tracking software with fraud detection. Review suspicious patterns—affiliate suddenly drives 10× normal traffic with 0% conversion suggests click fraud.

Optimise performance. Identify top performers and give them exclusive offers, higher commissions, or early product access. Find bottom performers and help them improve or remove them.

Communicate regularly. Monthly newsletters with new products, promotional opportunities, performance updates. Share what's working for other affiliates. Keep them engaged.

Pros and Cons

Advantages:

• Pay only for results, not exposure

• Scalable: more affiliates mean more reach

• Access to established audiences

• Cost-effective compared to paid ads

• Builds brand awareness even without sales

Challenges:

• Finding quality affiliates takes time

• Margin erosion from commissions

• Less control over how products are promoted

• Potential brand damage from low-quality affiliates

• Tracking and attribution complexity

• Fraud risk if not monitored

Integration with Fulfilment

Affiliate marketing affects warehouse operations. Sudden traffic spike from successful affiliate promotion can strain inventory and fulfilment capacity. Demand forecasting must account for promotional activity.

Coordinate with your 3PL or warehouse team before major affiliate campaigns. Ensure stock levels support expected demand increase. Nothing worse than driving sales you can't fulfil—disappoints customers and wastes affiliate effort.

Track affiliate performance by fulfilment metrics too. Do affiliate customers have higher return rates? Different average order values? This data informs which affiliates to prioritise.

Measuring Success

Conversion rate: Percentage of clicks converting to sales. Industry average: 1-3%. Below 1% suggests targeting issues or poor product-market fit.

Average order value: What affiliates' customers spend. Higher AOV means better commissions without higher commission rates.

Return on ad spend (ROAS): Revenue generated per pound spent on commissions. Target: 5:1 minimum (£5 revenue per £1 commission).

Customer acquisition cost (CAC): Total affiliate costs divided by new customers acquired. Compare to customer lifetime value, if CAC exceeds LTV, you're losing money long-term.

Incremental revenue: Are affiliates driving new sales or just getting paid for sales that would've happened anyway? Difficult to measure but critical for programme ROI.

Getting Started

Calculate how much you can afford to pay per sale based on margins and operational costs. Don't just guess—actual profitability matters.

Research competitors' affiliate programmes. What commissions do they offer? What terms? This sets market expectations.

Choose platform matching your technical capability and budget. Networks are easier but take percentage of commissions. Self-hosted gives more control but requires technical setup.

Create quality promotional materials. Professional banners, compelling copy, accurate product information. Make affiliates' jobs easier.

Start small: recruit 10-20 quality affiliates, learn what works, then scale. Don't launch with hundreds of unknown affiliates. Quality over quantity always.

Affiliate marketing isn't passive income despite what gurus claim. It requires active management, relationship building, fraud monitoring, and continuous optimisation. Done well, it's powerful growth channel. Done poorly, it's expensive waste of time.

The brands succeeding with affiliates treat them as partners, not just commission recipients. Build relationships, provide value, communicate openly, and everyone wins.