Affiliate marketing is a type of advertising in which a firm pays third-party publishers to create traffic or leads to its products and services. Third-party publishers are affiliates, and the commission fee encourages them to promote the company.

Affiliate marketing has grown in popularity as a result of the internet. Amazon (AMZN) popularized the practice by establishing an affiliate marketing program in which websites and bloggers place links to the Amazon page for a reviewed or discussed product in order to get advertising fees if a purchase is made. Affiliate marketing is, in this sense, a pay-for-performance marketing scheme in which the act of selling is outsourced over a large network.

Affiliate marketing predates the Internet, but in the age of digital marketing, analytics and cookies have transformed it into a multibillion-dollar industry. A company that runs an affiliate marketing program can track the links that bring in leads and see how many convert to sales using internal statistics.

An affiliate can help an e-commerce merchant access a larger audience of internet users and shoppers. An affiliate may possess several websites or email marketing lists; the more websites or email lists an affiliate owns, the larger its network. The recruited affiliate then communicates and promotes the e-commerce platform's products to its network. This is accomplished by the affiliate via running banner advertisements, text ads, publishing links on its websites, or sending emails to clients. Advertisements in the form of articles, videos, and images are used by businesses to draw the attention of an audience to a service or product.

Visitors who click on the advertisements or links are taken to the e-commerce site. If customers buy the goods or services, the e-commerce merchant funds the affiliate's account with the agreed-upon commission, ranging from 5% to 10% of the transaction price.