What is affiliate marketing and how it works for your business

Affiliate marketing is an effective performance marketing tool that is gaining more and more popularity. In Ukraine, the digital advertising and e-commerce market has recovered after the fall of 2022: according to IAB Ukraine, e-commerce volume in 2023 grew by 138% compared to 2022, and the growth forecast for the coming years is also significant. At the same time, local and international affiliate networks (e.g., Admitad) are already generating significant sales and leads – more than 100 million leads for ~2000 advertisers annually – which confirms the practical value of affiliate channels for Ukrainian businesses.

In this article, we’ll look at what affiliate marketing is, where and how it is used, what strategies bring results, and tips for advertisers and affiliates.

What is affiliate marketing?

Affiliate marketing is a model of online promotion in which a company encourages third-party performers to bring traffic and customers to its website using special affiliate links or promotional codes. As a result, such a performer, i.e. a partner, receives a financial reward in the form of a commission for the targeted user action – a click, subscription, or purchase.

There are usually several parties involved in the process – they form a kind of circular scheme: the advertiser provides the product, the partner advertises and brings customers, and the customer makes a purchase.

This approach, mostly pay-for-performance, is especially appreciated for its transparency and measurable effect.

For example, Jay Baer emphasizes:

In other words, it is the solution of the audience’s problems in exchange for the recommendation of goods or services that ensures customer loyalty and trust. Not overly intrusive advertising.

Where affiliate marketing is used

Affiliate marketing has practically no niche restrictions – it is successfully used wherever there is an online audience. Most often, it is used in e-commerce and information business, as well as in the B2B segment, because there are almost no boundaries for this tool.

Examples of common scenarios:

• YouTube videos: product reviews or unboxings with a mandatory link to the store;
• live webinars: interactive online presentations of products or courses with the ability to get a link during the broadcast;
• banner advertising: placement of graphic ads on relevant websites with high traffic;
• social media: influencers’ posts with recommendations and affiliate links;
• forums and communities: expert posts on thematic platforms with useful tips and a small recommendation through an affiliate link;
• intermediate landing pages: one-page welcome sites that increase conversion, where an affiliate offer is set up before the transition to the main store.

Parties to affiliate marketing

There are usually four main parties involved in an affiliate marketing scheme. Each has a specific role and benefits.

Party	Role and tasks	Benefits
Advertiser	A company or product seller. Forms an offer and allocates a budget for promotion. Risks: investments in marketing and payments to partners.	Attracting new customers, increasing brand awareness, and sales growth.
Publisher	A person or platform that attracts traffic and stimulates conversions. Creates content or advertising for the target audience. Performs marketing tasks on behalf of the advertiser.	Financial rewards (commissions) for each conversion, expanding their own audience through customer referrals.
Client (Traffic Source)	An end user or visitor who follows an affiliate link. Can be attracted through paid or free advertising (SMM, SEO, content).	Receives the desired product or service with full information about the product. The customer takes advantage of the benefits and promotions that he or she learned about thanks to the partner.
Affiliate Network	An intermediary platform between the seller and the partner. It provides access to the offer database, analytics, and technical support (e.g., conversion tracking, assignment of a personal manager).	Earns on the difference between advertiser payments and payments to the partner (part of the commissions for network services).

This division of roles increases marketing efficiency, as everyone focuses resources on their part of the process.

Affiliate marketing strategies that give results

The success of an affiliate program largely depends on the right strategies. Here are the main approaches that really work:

1. High-quality content. The more detailed and useful the brand or partner discloses the product, the easier it is for the audience to trust the recommendations. This applies not only to reviews or comparisons. Practical materials, step-by-step tips, and honest user experience work well. When the focus is on value for the reader, not an attempt to sell immediately, the content gradually builds loyalty and stimulates a natural increase in conversions.
2. Search engine optimization (SEO). Affiliate marketing is virtually impossible to scale without stable organic traffic. Well-thought-out keywords, structured pages, and a technically correct website ensure high visibility on Google, which means that they bring in an interested audience that already intends to find a solution to their needs. In such conditions, affiliate offers work much more effectively.

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3. Social media (SMM). Here, affiliate marketing receives an additional impetus due to the rapid reach and emotional contact with the audience. Short video reviews, live product demonstrations, recommendations in the form of stories – all this helps the brand to get into the user’s information space as naturally as possible. Placing affiliate materials on social media allows to reach new segments and systematically strengthen launches that are already working through SEO and content.
4. Upselling. If an affiliate offers not only the basic product but also more expensive or advanced versions, he or she can increase the average check and the total income. The main thing is to formulate the added value correctly. Not just «the premium version is more expensive,» but «the premium version covers more of your needs.» In this case, the audience better perceives the recommendations, and the affiliate program receives a tangible financial result.
5. Analysis and adaptation. To maintain efficiency and respond quickly to market changes, it is necessary to analyze data on a regular basis. Affiliate marketing is a dynamic system where user behavior can change from week to week. Therefore, it is important to track key indicators, test formats, compare different channels, and focus resources on those tools that have the greatest impact. Successful projects always work on the principle of constant adaptation.
6. Involvement of influencers and opinion leaders. In affiliate programs, this is one of the most powerful ways to build trust and reach new audiences. When a recommendation comes from a person who is already trusted by thousands or tens of thousands of subscribers, it significantly enhances the effect of standard channels. In addition, influencers create content that is easily consumed, which is the format that works best on social media.

Pros and cons of affiliate marketing

Affiliate marketing has both obvious advantages and real risks. A full understanding of both sides helps businesses make informed decisions and set up processes correctly. Let’s consider the strengths and weaknesses of the model from the perspective of three key participants: the seller, the partner, and the client.

For the seller, the main advantage of the affiliate model is the ability to scale sales at relatively controlled costs. You pay mainly for results, so advertising budgets are spent more efficiently: every hryvnia is spent on getting a lead or sale, not on abstract impressions. Partners open access to new audiences and channels that would be more expensive or difficult for the brand to develop on its own. In addition, the affiliate system allows you to quickly test different markets and offers. The advertiser sees which formats and approaches work best and responds to these signals with flexible commercial policies. As a result, the right affiliate program can become a stable source of sales and significantly increase marketing profitability.

At the same time, sellers should be aware of several limitations:

• The model increases the risk of dependence on external partners: when a large volume of sales comes through a few top partners, any changes in them (departure, change of conditions, or technical problems) instantly affect revenue;
• commission payments reduce the margin per unit of goods, and this should be taken into account when pricing;
• the seller loses some control over communication: some partners may present the product in a distorted or incorrect way, which creates reputational risks;
• technical and operational problems such as tracking inaccuracies, delays in accrual and payment, and attribution disputes will require additional resources for administration and audit.

Being a partner also has its advantages:

• low entry threshold;
• the ability to monetize your own audience or traffic;
• generate income without creating your own product.

Affiliates can work flexibly, combine several offers, and diversify sources of income. For many, this is a way to scale earnings with relatively small initial investments in content or traffic.

However, the partner is characterized by instability and operational risks. Commissions can fluctuate, payments can be delayed, and conversion tracking can be incorrectly recorded due to technical failures or manipulations. Affiliates depend on the advertiser’s policy (commission amount, cookie window, refund conditions) and risk losing income if these conditions change. In addition, the competitive environment often requires investments in traffic, tools, and time to create high-quality content, which means that «no investment» is rare in practice.

For the client, affiliate marketing brings convenience and additional information value: reviews, comparisons, case studies, and personalized recommendations help to make an informed choice.

However, there are nuances here as well. First, the recommendation may be biased if the partner is focused solely on commission and is not interested in long-term audience trust. Secondly, customers sometimes encounter opaque intermediary pages or confusing terms of promotions, which creates a negative buying experience. Also, the methods of tracking and processing personal data used must comply with privacy standards; otherwise, it threatens both customer trust and legal consequences for all parties.

Types of affiliate marketing

There are two main areas of affiliate marketing that seem to be similar but differ in goals, mechanics, and the role of participants. Let us consider them.

Referral marketing

Referral marketing is a strategy aimed at organic growth through existing customers. The idea is that loyal customers are offered incentives for referrals – discounts, bonuses, points, or other privileges that they and the new customers they invite can use in your service or store. As a result, a chain of recommendations is formed: a satisfied customer brings a friend, the friend buys and can become the next referral.

Referral programs are beneficial because they usually generate higher quality traffic at a lower cost per acquisition: people trust the recommendations of their friends. At the same time, their scale is often limited by the size and engagement of your existing customer base: if you don’t already have a large pool of satisfied users, a referral program alone won’t create dramatic growth. To be successful, it is important that the product solves a real user problem and has obvious value – then people will be willing to share the recommendation.

Affiliate marketing

Affiliate marketing involves cooperation with external partners who are not necessarily your customers. These are publishers, bloggers, comparison sites, influencers, coupon and media networks that promote your offer through their channels. Unlike referrals, affiliates invest their own resources – time, content, paid traffic – and are rewarded depending on the result (sale, lead, etc.). Their income is directly related to the effectiveness of their activities, so they consciously take marketing risks.

The main advantage of the affiliate approach is the potential for rapid growth and wide geographic or thematic expansion. But at the same time, managing an affiliate network requires resources: traffic quality control, partner relationship management, fraud protection, and thorough ROI analytics.

How affiliate marketing works

Let’s take a closer look at the stages of affiliate marketing.

1. Preparatory stage: goals and offers.

It starts with a clear definition of the goal (leads, sales, subscriptions), KPIs (CAC, CR, LTV), and commercial model (CPA/CPL/CPC/CPM or hybrid). At this step, an attractive offer for partners is formed: the amount of commission, cookie window, performance bonuses, promotional materials. A good offer should be easy to understand and technically feasible.

2. Search and selection of partners.

The search is carried out in relevant channels: thematic websites, bloggers, influencers, media buying agencies, affiliate networks. The selection is based on quantitative and qualitative criteria such as audience relevance, engagement rates, traffic sources, reputation, and history of results. At this stage, it is worth conducting a short test collaboration before scaling up.

3. Technical integration and tracking.

You need to set up tracking mechanisms: affiliate links with UTM tags, pixels, cookies, server-to-server integrations, or APIs with CRM. It is important to run a test run to make sure that conversions are correctly attributed and conversion data reaches the analytics system. At the same time, a section with static materials for the partner is set up, i.e. banners, landing pages, files with sample texts.

4. Campaign launch and support.

The partner launches his or her campaigns. The advertiser provides support: instructions, promotional creatives, responses to inquiries, and regular updates on changes to the offer. Feedback in the first weeks of launch is important to quickly correct hypotheses.

5. Monitoring, validation, and anti-fraud.

It is necessary to constantly monitor the following indicators: traffic, conversion at the partner level, percentage of returns, average check, CAC. At the same time, you need tools for detecting anomalies such as sharp traffic spikes, too low average checks, and suspicious IPs. If problems are detected, it is worth applying a temporary block, conducting an investigation, and resolving disputed cases.

6. Payouts and reporting.

Clearly defined payment terms reduce conflicts. The reporting system should be transparent: partners receive regular reports, advertisers – detailed analytics on offers.

7. Optimization and scaling.

Analysis of the results gives tips:

• • which channels work better
  • where to increase the commission;
  • what creatives to change.

After a stable positive ROI, it is worth scaling successful areas, while diversifying the partner base to reduce the risk of concentration.

How to get started with affiliate marketing

For advertisers, launching the program should be done gradually and with a strategic approach. The main steps at the initial stage:

• set up analytics and tracking. First of all, connect web analytics systems and use UTM tags for affiliates. This will allow you to track traffic sources and conversions for each partner;
• search for trusted partners. Choose reliable performers: it is better to start with affiliate networks (aggregators) where affiliates are checked than to trust unfamiliar offers. This reduces the risk of fraud;
• start with a small number of partners. At the start, it is best to work with a few trusted partners focused on your target audience. If you involve too many partners at once, it will be difficult to evaluate the effectiveness of each one without a special department.

This way, you can evaluate the results, customize communication, and adjust your strategy if necessary.

How to become a partner

If you want to earn money as an affiliate, start with a clear choice of channel and niche. Evaluate where your audience is and what formats work best for you. It can be a blog, YouTube, Instagram, TikTok, Pinterest, or email newsletter – and focus on one topic to gradually build expertise and trust of subscribers.

Next, find affiliate programs and offers that match your chosen niche and carefully check their terms and conditions:

• commission amount
• cookie duration;
• regularity of payments;
• advertiser’s reputation.

Be responsible when choosing products. Start with those products and services that you have personally tested or are confident in terms of quality and benefit to the audience. A recommendation should look natural in the context of your content – this is the only way it will inspire trust and bring stable conversions.

The basis of the work is valuable content. Instead of a direct «sale,» create useful reviews, step-by-step guides, comparisons, and use cases. Show what specific problem the product solves, how to use it, and when it makes sense. This will drive more motivated and interested traffic.

Don’t forget about analytics: regularly track the results of affiliate links, compare the effectiveness of materials and channels, analyze what generates conversions and what only drives traffic. Based on this data, optimize your approaches by changing content formats, adjusting creatives, and reallocating resources to the most effective sources.

The best affiliate networks

Reliable affiliate networks help to find offers and automate interaction with partners. Let us consider the most famous ones.

Amazon Associates

One of the largest affiliate programs in the world with access to millions of products in all categories. The strong point is the trust in the Amazon brand and high conversion rates due to recognition. Affiliates have a huge selection of products available to them, but commissions are relatively low (up to 10%), which is especially noticeable in competitive niches.

CJ Affiliate (Commission Junction)

A global affiliate network with thousands of advertisers, a user-friendly campaign management interface, and advanced analytics. It is often used by partners from the CIS countries due to a wide range of international offers and stable payments. The platform is suitable for both newcomers and experienced affiliates working with large brands.

ShareASale (Awin)

A platform that has become part of the Awin network and gained access to even more offers. It offers a simple system of joining affiliate programs and is popular among bloggers and content platforms, especially in the areas of e-commerce, finance, and household goods. It is known for its transparent policy and stability.

Impact

A modern ecosystem for managing affiliate programs with a focus on technology. It offers tools for tracking, attribution, audience segmentation, and optimization of affiliate performance. Often chosen by large international brands and teams that need flexible control and powerful analytics.

ClickBank

A platform that specializes in digital products: courses, software, subscriptions, trainings. It is known for its high commissions (50-75%), which makes it attractive for partners in the niches of educational products. It has a wide range of categories and is well suited for those who work through content marketing or email promotion.

Rakuten Advertising

A global network with a long history that cooperates with major global brands. It is characterized by careful moderation and sometimes a high entry threshold for partners, but it provides high quality offers and stable payments. It is suitable for those who work with the premium audience or large e-commerce partners.

How to create a product and promote it through a partnership

For advertisers, the main advantage of the affiliate model is the absence of the need for their own sales department. All marketing and promotion functions are taken care of by a network of affiliates: webmasters, bloggers, and opinion leaders. However, for an affiliate program to be effective, you need to prepare a high-quality product and set up the program correctly.

Examples of affiliate projects on Instagram

Instagram is widely used for affiliate campaigns. Here are some common formats:

Branded stories with unboxing

A blogger receives a gift from a brand and posts stories with unboxing and commentary. This kind of native recommendation is especially effective when the blogger is already known in a narrow niche.

Specialized advertising posts

An influencer creates a post with studio photos or videos of a product, describes its benefits in detail, and adds an affiliate link to the description. High quality content increases the trust of the audience.

Native recommendations

Bloggers organically embed ads into regular posts or answers to questions. It is difficult to immediately notice ads here, so users perceive the information more trustingly.

For example, a well-known influencer can talk about a new gadget in a story and compare it in detail with its analogues in the next post. The description always contains a link to the store where you can buy this model. This approach generates direct traffic to the product, and the advertiser pays a commission only for the actual purchase.

How to increase the average earnings from an affiliate program

To gradually increase the average earnings from an affiliate program, you need to act systematically. First, diversify your channels – don’t rely on the website alone, work with social media, email newsletters, guest posts, and other traffic sources to increase the reach of potential customers. Secondly, analyze your performance regularly – track which materials and channels generate conversions, cut off weak areas, and scale up those that work. Thirdly, be flexible and follow trends: new content formats, algorithm changes, and advertising tools change the market, and quick adaptation gives you a competitive advantage. Finally, remember to be patient and gradual: a stable income is built by experimentation, optimization, and constant work with the audience.

Taken together, these approaches can not only increase the average income from an affiliate program but also make it a reliable growth channel. Affiliate marketing is not a way to get rich quick, but an investment in a smart, consistent strategy. If you focus on customer value, test and optimize approaches, the advertiser will get sales, the partner will get a stable income, and the consumer will get a useful solution.