Affiliate marketing is a form of performance-based advertising. Whereas with traditional advertising buy – say the magazine – advertisers pay up front fee to put their message and they will make money, with performance-based advertising advertisers pay no advance fees for the placement.
Affiliate marketing connects content publishers and merchants who work in the relevant niche markets, often through an affiliate network. You can get more information on affiliate marketing through Affiliate Dove.
An 'affiliate' is just a fancy name for anyone who publishes content. Affiliates can have many types of platforms – a social networking site, a blog, an e-mail newsletter – anything really.
The affiliate creates compelling content to drive traffic to their site. They embed relevant advertisements on their site, either directly in the content or adjacent to it. If the affiliate is compelling, users will click on the offers displayed on their sites. If the user takes the merchant's desired action, the affiliate receives a commission.
The affiliates generate content to drive users to the affiliate's site and convince them to click on the merchant's offer. When the user takes the merchant's desired action – purchases a product applies for a credit card, signs-up for an e-mail newsletter – the merchant pays a commission to the affiliate.