Affiliate Marketing

Affiliate marketing is a kind of paid recommendation. A provider, say an online shop, promises: whoever brings me customers gets a share of the revenue. Whoever brings these customers can be a website, a YouTube channel, or a newsletter. So it’s clear where a customer came from, the partner uses a special link with a built-in identifier. If someone clicks it and buys something, the sale is credited to the partner. They receive a commission, i.e. a fixed percentage or amount per sale.

Advertising that only costs money after the sale

Classic advertising is a risk for the provider. A billboard or an ad banner costs money regardless of whether anyone buys afterward. With affiliate marketing, this is reversed. The provider only pays once a result is delivered. That’s why it’s also called performance-based advertising.

For small providers this is attractive because no advertising budget is needed upfront. For people who publish content on the internet, it’s one of the simplest sources of income. A blog about bicycles can link to products and earn a share from every helmet sold. Large programs like Amazon's have millions of such partners.

However, the system has a well-known weak point. Anyone who only earns from sales has an incentive to portray products as better than they are. That’s why German law requires that paid links be recognizable as advertising. Notices like “ad link” or “advertisement” under videos and articles exist precisely for this reason.

From click to commission

Technically, every affiliate link contains an identifier. It tells the shop which partner sent the visitor. Usually, a small file is stored in the visitor’s browser for this purpose, a so-called cookie. If they buy within a set period, often 24 hours to 30 days, the sale counts for the partner. Once the period expires, the claim lapses.

The billing is rarely handled by the provider itself. In between, there are usually networks, i.e. platforms that bundle many programs, count clicks, and pay out commissions. Well-known examples are Awin or Tradedoubler. For partners this is convenient, because they don’t have to negotiate contracts with each shop individually.

Payment isn’t always per sale. In some programs, a sign-up is enough, for instance for an account or a newsletter. These models are called pay per sale and pay per lead. A lead here is just a prospect who left contact details, not yet a buyer. Commissions range from a few percent for electronics up to high double-digit amounts for insurance or financial products.

Comparison portals, creators, and AI chatbots

You encounter affiliate marketing every day without noticing it. Comparison portals for electricity, loans, or hotels finance themselves almost entirely this way. Test reports with “View offer” buttons and product links in video descriptions also belong to this category. In the business press this is relevant because some companies derive their entire revenue from such commissions.

What’s new is the connection to AI. Chatbots now answer questions that previously would have led to Google and then to a comparison portal. If no one clicks on links anymore, the business model of many websites collapses. At the same time, providers of AI assistants are themselves testing whether to equip product recommendations with commission links.

A common misconception is to equate affiliate marketing with influencer advertising. An influencer often receives a fixed sum for a post, regardless of success. With the affiliate model, however, payment depends on the measurable outcome. In practice, both forms are frequently combined.