Affiliate marketing is an online marketing strategy in which companies or individuals promote products or services of another business for a commission. It’s different from referrals in several key ways. With referral programs, customers earn rewards for referring other people to the company, typically through a code or link that they provide them. In affiliate marketing, however, businesses work with affiliates—or third-party advertisers—to promote their products or services through the affiliate’s own website or platform.
Unlike referral programs where customers are rewarded when they refer somebody else to the company, the affiliates in an affiliate marketing program make money when someone clicks on their link and makes a purchase. This means that affiliates have to actively promote products and drive traffic to their website in order to generate revenue.
Another key difference between referrals and affiliate marketing is that many referral programs offer rewards as an incentive to refer people. These rewards can range from discounts and free product samples to cashback offers and gift cards. Affiliate programs, by contrast, pay out commissions based on how much sales are generated from their links—so with this type of program there’s no immediate reward for referring people; instead, the money is earned over time as more sales are made through their links.
Lastly, when it comes to tracking performance, referral programs generally track users by IP address while affiliate programs track users based on cookies—this helps identify a visitor’s source so that you can attribute any purchases back to the right affiliate or partner program. This also allows marketers to compare different channels side-by-side and see which one is generating more sales.
Overall, while both strategies can help businesses increase sales and attract new customers online, there are distinct differences between referrals and affiliate marketing that should be considered before deciding which one is right for your business needs.
