How Affiliate Marketing Works (Explained in Simple Terms)

If you've ever wondered how people make money online without creating their own products, affiliate marketing is probably the answer. It's one of the most straightforward ways to earn income on the internet, yet many people find it confusing at first.

Let me break it down in the simplest terms possible. By the end of this article, you'll understand exactly how affiliate marketing works, who gets paid, and whether it's a viable income strategy for you.

What Is Affiliate Marketing in Simple Words?

Affiliate marketing is essentially getting paid to recommend products or services. That's it. No complicated jargon needed.

Think about it like this: when you tell a friend about a great restaurant and they go there because of your recommendation, the restaurant benefits from your word-of-mouth marketing. In affiliate marketing, you do the same thing online—but you get paid a commission when someone makes a purchase through your recommendation.

The Four Key Players in Affiliate Marketing

To understand how affiliate marketing actually works, you need to know the four main players in every transaction:

1. The Merchant (Product Creator): This is the company or individual who created the product or service. They want more sales and are willing to pay commissions to people who bring them customers. Examples: Amazon, Shopify, ClickBank vendors.

2. The Affiliate (You): The marketer who promotes the merchant's products. You're the bridge between the product and potential customers. You don't need to create anything, handle shipping, or deal with customer service.

3. The Customer: The person who clicks your affiliate link and makes a purchase. They pay the same price whether they buy through your link or directly—the commission comes from the merchant's profit margin.

4. The Affiliate Network (Optional): Sometimes there's a middleman platform like ShareASale or CJ Affiliate that connects merchants with affiliates, handles tracking, and processes payments. Not all affiliate programs use networks—some companies run their own programs directly.

How Does Affiliate Marketing Work Step by Step?

Let's walk through the exact process from start to finish:

Step 1: Join an Affiliate Program
You find a product or service you want to promote and sign up for their affiliate program. This is usually free. After approval, you receive a unique affiliate link or tracking code.

Step 2: Get Your Unique Tracking Link
This link contains a special code that identifies you as the referrer. It looks something like: example.com/product?affiliate=yourname123

Step 3: Promote the Product
You share your affiliate link through your chosen platform—blog, YouTube, social media, email list, or paid ads. You create content that helps people understand why the product is valuable.

Step 4: Someone Clicks Your Link
When a potential customer clicks your affiliate link, a tracking cookie is placed in their browser. This cookie has an expiration date (anywhere from 24 hours to 90 days, depending on the program).

Step 5: The Customer Makes a Purchase
If the person buys the product before the cookie expires, the sale is attributed to you through the tracking system.

Step 6: You Earn a Commission
The merchant verifies the sale, and you earn a commission. This could be a percentage of the sale (5-50%) or a fixed amount per sale (like $50 per signup).

Step 7: Get Paid
Once you reach the minimum payout threshold (often $50-100), the network or merchant sends you payment via PayPal, direct deposit, or check.

Different Commission Structures Explained

Not all affiliate programs pay the same way. Understanding commission structures helps you choose the most profitable programs:

• Pay Per Sale (PPS): You earn a percentage or fixed amount when someone buys. Most common structure. Example: 10% of a $100 sale = $10 commission.
• Pay Per Lead (PPL): You get paid when someone signs up, even if they don't buy. Example: $2 for every email subscriber you refer.
• Pay Per Click (PPC): Rare in affiliate marketing. You earn small amounts just for sending traffic, regardless of sales.
• Recurring Commissions: The holy grail. You earn ongoing commissions as long as the customer stays subscribed. Example: 30% monthly commission on a $50/month software subscription.

Can You Start Affiliate Marketing With No Money?

Yes, absolutely. This is one of the biggest advantages of affiliate marketing—the barrier to entry is incredibly low.

Here's what you can do with zero budget:

• Start a free blog on Medium or WordPress.com
• Create content on YouTube (free to start)
• Build an audience on TikTok, Instagram, or Pinterest
• Join free affiliate programs (most are free to join)
• Leverage SEO for organic traffic instead of paid ads

That said, investing even a small amount ($10-50/month) can accelerate your progress significantly. A domain name, basic hosting, or a simple email marketing tool can make a big difference.

What You'll Actually Need (Time Investment):

While monetary investment is optional, time investment is mandatory. Expect to spend 10-20 hours per week for the first few months creating content, learning strategies, and building an audience. The good news? Once you build momentum, affiliate income can become increasingly passive.

How to Earn $100 Per Day Through Affiliate Marketing

This is one of the most searched questions, so let's address it with realistic math:

To earn $100/day ($3,000/month), you need to reverse-engineer the numbers:

Breaking it down into actionable steps:

• Months 1-3: Focus on creating 30-50 pieces of quality content and building traffic (don't expect $100/day yet)
• Months 4-6: Optimize your top-performing content, build backlinks, and scale what's working (might hit $10-30/day)
• Months 7-12: Compound growth kicks in, traffic increases, and you refine your conversion strategy (realistic timeframe to hit $100/day)

Most people who claim to make $100/day quickly are either lying, got extremely lucky, or are selling you a course on how to do it. Real, sustainable affiliate income takes time to build.

What Are the Risks of Affiliate Marketing?

Let's be honest—affiliate marketing isn't all sunshine and passive income. Here are the real risks you should know about:

Which Affiliate Programs Are Best for Beginners?

The "best" program depends on your niche and audience, but here are beginner-friendly options:

Amazon Associates: Easy to join, promotes millions of products, but low commissions (1-10%). Great for learning the ropes.

ShareASale: Massive network with programs in every niche. Good commission rates and reliable payments.

ClickBank: Digital products with high commissions (50-75%), but product quality varies wildly.

CJ Affiliate: Works with major brands, professional interface, higher approval standards.

Individual Company Programs: Many companies run their own programs (Shopify, Bluehost, ConvertKit). Often pay better than networks.

The Reality Check: How Long Until You Make Money?

If you're looking for honest timelines, here's what to expect based on effort level:

Low effort (5 hours/week): 6-12 months to first commission, 12-24 months to consistent income

Medium effort (15 hours/week): 3-6 months to first commission, 6-12 months to $500-1000/month

High effort (30+ hours/week): 1-3 months to first commission, 6-9 months to $1000+/month

These are averages. Some people get lucky and see faster results. Others take longer. The key variable is strategy, not just effort. Working smart beats working hard.