Affiliate Marketing in Online Advertising: How It Works, Channels, Strategies, and Tools

Affiliate marketing is one of the most effective and cost-efficient ways to advertise your brand online. Over 80% of businesses rely on affiliate programs. Take Amazon as an example—they have over 900,000 partners, and countless brands use affiliates to drive consistent, low-risk growth.

By the end of 2025, affiliate marketing spend is expected to reach $12 billion, demonstrating that this performance-based approach is becoming even more powerful.

Here's how it works: Brands collaborate with creators, publishers, and influencers on channels like blogs, newsletters, and social media. Using tools that track every click and sale, they ensure you only pay for what works.

However, many affiliate programs suffer losses from fraudsters generating fake sales to receive commissions or tracking errors, making it difficult to determine what actually works.

Blockchain-Ads solves these problems through programmatic advertising with blockchain-verified tracking, clear attribution analysis, and robust fraud prevention. Advertisers can reach target audiences across all channels and control each campaign in real-time from a single platform.

In this article, you'll discover how affiliate marketing works, smart strategies worth trying, and what truly provides the control and transparency needed to run successful campaigns.

What is Affiliate Marketing?

Affiliate marketing is a performance-based model where brands partner with affiliates. These could be bloggers, influencers, or media platforms who promote products in exchange for commissions.

Here's how affiliate marketing compares to other online advertising models:

• Affiliate Marketing: Pay only when a conversion occurs (affiliate sales, leads, etc.).
• CPC (Cost Per Click): Pay per click regardless of conversion.
• CPM (Cost Per Thousand Impressions): Pay per 1,000 impressions even if no one engages.
• Flat Fee Advertising: Pay a fixed amount for placement (banners, mentions) regardless of performance.

The biggest advantage of this model is that it helps transfer risk from advertisers to affiliates. So you don't pay for ads that don't work. And that's probably one of the big reasons affiliates continue to grow.

In 2023, affiliate marketing spend in the US was $9.56 billion, and this value is expected to increase to approximately $12 billion by the end of 2025.

As creators and publishers continuously seek monetization methods and brands look for low-risk marketing channels to scale, affiliate programs will continue to fill these gaps.

How Does Affiliate Marketing Work?

Affiliate marketing takes time. This model connects multiple parties working together to promote products or services and share revenue based on results. Simply put, there are brands, partners, intermediary platforms, tools that track everything, and of course customers. Let's see how everything fits together.

Advertisers

Basically, this is a company that wants more affiliate sales or signups. They create an affiliate program and offer commissions. It could be 10% per sale or $15 per lead. Marketing efforts involve setting clear rules, providing promotional materials, and paying when the affiliate marketing business delivers results.

Affiliates

These are individuals or affiliate marketers who promote offers. They could be YouTubers with a niche audience, review sites with SEO traffic, or even cashback apps. Affiliate marketing efforts involve sharing tracking links and earning revenue when someone takes action through them.

Affiliate Networks

These are like intermediaries. Platforms like ShareASale, Impact, or Rakuten connect advertisers with thousands of potential affiliates. Marketing efforts involve handling onboarding, approvals, reporting, and sometimes payments too. Not all programs use them, but they make scaling easier.

Tracking Platforms

This is where technology comes in. Whether it's in-house software or third-party tools like Everflow or Tune, they monitor who sent traffic, what happened, and who should receive credit. This is why someone actually gets fairly compensated.

Tracking typically involves several methods including:

• Cookies: Help store referral information in the user's browser.
• UTM Parameters: Attached to affiliate links to track traffic sources in analytics tools.
• Pixels: Placed on thank you pages and fired when conversions occur.
• Server-to-Server (S2S): A more reliable method that tracks conversions through backend calls.

Remember that first-party tracking (own domain/server) is more accurate and privacy-compliant these days.

Customers

This is the end user. When they click affiliate links, reach the offer, and make purchases or sign up, everyone wins. Customers get products, affiliate marketing businesses earn revenue, and brands get paying customers without having to chase them with ads.

Why Do Businesses Use Affiliate Marketing?

Here's why it's a big deal for most businesses:

Cost-Effectiveness

You don't pay for clicks that don't convert. You only pay affiliate marketers when there's a conversion. This is particularly useful for brands trying to grow without burning upfront capital.

For example, SaaS brands like SEMrush and Shopify scale users mostly using affiliate programs. Instead of gambling on Google Ads, they give affiliates a share of revenue for bringing paid users. It's that simple, clean, and much more predictable.

Reach

It helps expand reach without building from scratch. Affiliates already have audiences. They've built trust. When they talk about your brand, it doesn't feel like advertising—it feels like a recommendation.

Fintech brands like Revolut and eToro appear in niche financial blogs, affiliate marketing website comparisons, YouTube channel descriptions—all thanks to affiliate deals.

Performance-Based Payment

If affiliate marketers don't deliver results, you don't pay. When affiliates earn revenue, you pay a portion of sales you couldn't have made alone.

E-commerce brands especially love this, particularly new brands. Let affiliates do the work while you focus on products and shipping.

Channel Diversity

Most affiliate marketers don't just promote and leave—they stick around. They get to know you, talk to target audiences, test new offers, and become part of your growth engine over time.

What Are the Main Types of Affiliate Marketing?

There's no single way to do affiliate marketing, and that's probably why it's so useful. Of course, depending on affiliate niches, audiences, and platforms, affiliate marketers appear in completely different forms. Here's a breakdown of the main types you'll find:

Content Affiliate Marketing

These affiliates write about what people are already searching for. It could be reviews, tutorials, comparisons, or anything that helps someone make a purchase decision. Most content affiliates are bloggers, niche site owners, or writers with specific expertise.

For example, if you're one of the best affiliate marketers running a personal finance blog, you might compare 'Best Budgeting Apps for 2025' and include fintech tools in your top 3 with tracking links, screenshots, and key feature analysis.

Influencer and Social Affiliate Marketing

You'll find these affiliate marketers live on digital marketing channels like TikTok, YouTube, Instagram, or Reddit. Basically, they create fast, visual, or personal content. Social media marketing could be product routines, testimonials, or how-tos, leaving affiliate links in bios or descriptions.

For example, a skincare influencer might guide through an evening routine in Instagram Stories and casually leave a swipe-up link in bio for discounted face oil.

Coupon and Deal Affiliate Marketing

Coupon affiliates move fast. They focus on volume and urgency. This means limited-time offers, holiday discounts, or flash deals. Most run large coupon or cashback sites that thousands of shoppers check before clicking 'checkout.'

This not only builds deep connections but drives conversions when price matters most. For example, your brand might run a 25% off sale. Within 48 hours, it goes live on RetailMeNot driving traffic through affiliate links creating one-click savings for ready-to-buy shoppers.

Email and Newsletter Affiliates

Email affiliates talk directly to opted-in audiences, which is what makes them so powerful. Whether running tech newsletters or large general-interest lists, these affiliate marketers earn trust by recommending products that match reader needs.

For example, a weekly newsletter like Crypto Toolkit might send a DeFi tools list. Your platform gets listed with tracking links and quick notes on why it's trending. This reaches thousands of engaged readers interested in blockchain products.

Native and Display Affiliate Advertising

Some successful advertisers take the paid media route. Through DSPs like Blockchain-Ads, they buy ad space on websites, then use display or native ads to redirect traffic through affiliate links. Basically useful for brands benefiting from curiosity-driven clicks or products needing explanation before sale.

For example, a native ad about a productivity app appearing as 'This Tool Changed How I Work Remotely' at the end of a Forbes article. The landing page is optimized with affiliate CTAs and trial signups. Running native ad campaigns is easy, and platforms like Blockchain-Ads provide tools to make it happen.

Programmatic and API-Based Affiliate Integration

This works more behind the scenes. Rather than promoting manually, they connect to data feeds, APIs, or automation tools to display offers dynamically.

Example: A hotel comparison site uses your affiliate feed to display real-time rates and availability for accommodations in specific locations. When users book through the site, commissions are tracked through the affiliate API.

Where Does Affiliate Marketing Fit in the Advertising Funnel?

Affiliate marketing can technically appear at all stages of the advertising funnel. However, it works best in the middle and bottom where intent is already forming or fully activated and buyers are closer to making decisions.

Unlike paid awareness campaigns that cast broad, expensive nets, affiliate partners often meet users more precisely and relevantly when they're already in the mindset to act. Let's break it down by stage.

Awareness

Affiliate marketing plays a smaller but valuable role at the top of funnel. This is really when people start exploring categories or recognize problems they want to solve.

Instead of aggressively pushing products, the most successful affiliate marketers here focus on light exposure. Influencer promotions and podcast sponsorships are common tools at this stage. These formats introduce brands without demanding immediate action. The goal? Getting noticed subtly through someone the audience already trusts.

Consideration

This is where affiliate marketing programs really prove their value. Buyers at this stage research, compare options, and weigh pros and cons. Affiliate partners appear with reviews, tutorials, lists, and detailed comparisons. They create valuable content that becomes part of the decision-making process, often ranking in search engines for 'best' or 'vs.' style queries.

Because target audiences are already seeking guidance, timely affiliate content can strongly influence which product they ultimately choose. And since affiliate marketers only get rewarded when converting someone, their incentives naturally align with ensuring information is genuinely helpful.

Conversion

At the bottom of funnel, users are already convinced. They just need a reason to press the checkout button. Here affiliates use coupons, cashback offers, or retargeting affiliate marketing strategies to nudge buyers into action.

These tactics not only drive sales but often prevent cart abandonment and close the loop. It's the stage where affiliate marketing delivers the most measurable ROI: clicks, signups, or sales.

What Platforms Are Used in Affiliate Marketing?

Basically, running a solid affiliate revenue program requires more than registering partners and cranking out a few clicks. You need proper tools that help manage relationships, monitor performance, and scale affiliate marketing campaigns without losing your mind.

Different platforms serve different purposes. Some help connect with affiliate marketers. Others can handle tracking, and some help manage everything in one place. Here's how to break it down:

• Affiliate Networks: Platforms that connect advertisers with large pools of affiliate marketers. Like marketplaces where brands post offers and affiliates apply to promote. Networks can handle tracking, payments, reporting, and often help with compliance too. Examples include CJ, ShareASale, Impact, and PartnerStack.
• Tracking Tools: Performance-based platforms that can handle technical aspects from tracking unique affiliate links and attributing clicks to fraud detection and reporting. If you're managing your own program or working with multiple affiliate marketers, they'll be a big help. Examples include Voluum, Everflow, and Post Affiliate Pro.
• Program Management Platforms: Platforms that give you complete control over affiliate programs without relying on third-party networks. You can easily onboard affiliates, track conversions, manage commissions, and customize the entire experience to your brand. Good options are Tune, Refersion, and Affise.

How to Launch a Successful Affiliate Program

You don't need a big team budget to start an affiliate program. But you do need structure, which means setting things up carefully from the start. Here's how:

• Build the Foundation: Before anything goes live, it's important to figure out what you're offering and who it's for. Are you promoting one product or an entire store? Will you manage this alone or bring in a network or tracking platform to help? Choose technology early and keep it light if you're just starting.

• Choose Commission Structure: You need to decide how affiliates earn. Is it flat payment per sale? Revenue share? Tiered commissions? There's no perfect formula, but it needs to fit your margins and feel valuable to affiliates.

If it feels like a bad deal, they'll ignore it. So keep it clear, competitive, and honestly. And don't hide payment terms—they'll figure it out anyway.

• Recruit Affiliates: Start with the right affiliate marketers, not the loudest ones. Don't just look at follower counts. Start with people who actually talk to target audiences—niche bloggers, YouTubers with relevant content, creators more interested in trust than clicks. You can reach out manually at first with warm DMs instead of cold invite links.
• Set Rules: This step gets skipped too often. You need to specify what's allowed and what's not. Brand bidding, coupon stacking, misleading claims, and questionable traffic sources are prohibited. If there's a gray area, clarify it. Good programs focus on protecting reputation as much as driving affiliate marketing revenue.
• Track Performance: If you can't see what works, you can't grow it. You need to track everything from clicks and conversions to top-performing affiliate marketing partners. Use tracking platforms that are easy to read and use. And test before launch—nothing kills a new program faster than broken affiliate links or missing commissions.

What Are the Benefits and Challenges of Affiliate Advertising?

Affiliate marketing works. But it's not magic, and like everything else in digital marketing, it has advantages and tradeoffs. Here's what you'll face when starting affiliate marketing:

How Does Affiliate Marketing Compare to Other Promotional Models?

Some people tend to use affiliate, referral, and influencer marketing basically as interchangeable. They're not related affiliate marketing strategies, and understanding the differences is important if you're building a strategy.

Each option affects how you track, how you pay, who promotes your brand, and how much control you really have. Here's how each actually breaks down.

Programmatic Advertising vs Affiliate Marketing

Programmatic advertising uses automated technology to buy ad space and reach target audiences accurately and quickly. Through platforms like Blockchain-Ads, advertisers can instantly set up, launch, and manage campaigns across web, mobile, and connected TV using AI-powered optimization and blockchain-verified transparent reporting. Here's how to compare the two:

• Visibility and Control: Affiliate programs rely on external partners to promote brands, offering limited control over where and how offers appear. With programmatic advertising, brands directly target and reach high-value users, delivering ads at key moments for awareness, engagement, and conversion. Blockchain-Ads provides direct, hands-on control over all campaign parameters—targeting, budget, creative, etc.—managed from a unified platform.
  
  
• Tracking and Transparency: In affiliate marketing, tracking every part of the user journey can be challenging, often leading to gaps in performance data. Blockchain-Ads solves this with blockchain-based reporting where every impression, click, and conversion is transparently recorded, audited, and attributed in real-time.
  
  
• Fraud and Brand Safety: Affiliate marketing can be exposed to risks like fake conversions and low-quality traffic. Blockchain-Ads uses built-in fraud prevention, on-chain verification, and human QA to ensure only verified, compliant results and safe brand placements, particularly important for sensitive industries.
  
  
• Scalability: Affiliate programs require ongoing management and relationship building to drive growth. Blockchain-Ads enables instant scaling using AI to optimize and scale reach across all digital channels, making campaign adjustments seamless and efficient.
  
  
• Compliance and Regulated Industries: Regulated sectors like finance, gaming, crypto, CBD, adult, alcohol, and tobacco often require strict compliance and transparent reporting. Blockchain-Ads is designed for these needs, providing verified delivery, granular targeting, and clear audit trails that meet global regulatory requirements.
  
  

Choose affiliate marketing if you want partner-driven conversions and leveraging external audiences. Choose programmatic advertising with Blockchain-Ads if you value real-time control, deep transparency, strict compliance, and the ability to quickly scale campaigns across all channels and regulated markets.

Referral Marketing vs Affiliate Marketing

Referral marketing is when existing customers recommend products to people they know. It could be friends, family, or colleagues. Meanwhile, online affiliate marketing involves third parties with audiences, and their goal is to make money by sending traffic that converts. Here's how to compare the two:

• Intent: Referral marketing is basically rooted in personal experience. The person recommending products is typically a satisfied customer. It's like 'I use this product and you should too.' People doing referrals are friends, siblings, or colleagues. The reason it feels organic is because it is.

On the other hand, online affiliate marketing is about driving conversions and earning commissions. They're not always customers themselves, and their value is in audience reach. You can think of it as word-of-mouth vs performance marketing.

• Use Cases: Referral marketing works well for products people naturally talk about. It could be subscription products, SaaS, and financial apps. Affiliate marketing works better when scaling. Ideal for e-commerce brands, info products, digital marketing tools, or financial platforms needing volume.
• Common Platforms: Referral marketing is typically integrated into products or checkout flows. This is usually done using tools like ReferralCandy and Friendbuy. Affiliate programs are typically run through third-party platforms. It could be Tune, Impact, or ShareASale. These help brands recruit at scale, monitor performance, and automate payments.

So when do you use each? If customers love products and talk about them naturally, referral programs are worth it. Or if you want to reach new audiences, you can try affiliate marketing.

Influencer Marketing vs Affiliate Marketing

Influencer marketing is when brands pay someone to create content promoting products or services. Meanwhile, affiliate marketing only pays partners when they generate traffic or actual results. Here's a breakdown of the key differences.

• Payment Model: Influencer deals are often flat fees. Brands might pay $500 for one reel or $1,000 for a carousel post. Whether the post works doesn't matter—just posting ends it. On the other hand, affiliates earn commissions linked to results. No results, no payment.
• Content Control: Influencer marketing typically involves creative briefs. Brands suggest angles, hashtags, tone, sometimes even scripts. Simply put, influencers must follow brand briefs and guidelines.

With affiliate content, creators have more freedom. They can write blog posts, shoot YouTube reviews, or send emails—all in their own voice. This actually leads to more authentic messaging.

• Lifespan: Influencers often post short-term campaigns that die quickly. Why? TikTok might gain traction for a few days then disappear from feeds. Affiliate content like blogs, videos, and SEO articles can help keep driving traffic and sales for months or even years. It's the difference between spikes and steady flow.
• Platforms: Influencers work well on visual platforms like TikTok, Instagram, and Snapchat. The content they share is short, punchy, and attention-grabbing. On the other hand, affiliates tend to own affiliate websites, run newsletters, or build long-form content on YouTube and blogs. Their goal is to educate, compare, and guide users to decisions—not get likes.

Generally, you get eyes with one strategy and action with another. Smart brands have creators do both affiliate marketing tips. Get reach and performance simultaneously.

Best Practices for Managing Affiliates

Once an affiliate program is running, it's important to keep doing the right things to stay relevant. Note that the best programs don't just attract great partners—they support and motivate them over time. Here's what you need for your affiliate marketing journey in best practices:

• Communication: Staying in touch through regular check-ins is important. Send monthly updates with new products, top-performing landing pages, and fresh content ideas. Depending on scale, you can use Slack groups, newsletters, or one-on-one emails.
• Promotional Materials: Don't make affiliates create content from scratch. Provide solid promotional materials like banners, pre-written email copy, product photos, and actual use cases. Platforms like Canva and Monday.com are excellent for equipping affiliate marketers with creative kits that actually convert.
• Affiliate Scorecards: Know who's driving quality traffic and who's wasting your budget. Create simple scorecards tracking clicks, conversions, revenue, and traffic quality. This helps identify top performers worth investing in and low performers needing coaching or removal.
• Incentive Structures: Keep motivation high with tiered commissions, bonuses for hitting milestones, or exclusive early access to products. The best affiliates stick around when they feel valued and see clear paths to earning more.
• Compliance Monitoring: Regularly audit affiliate activities to ensure they're following program rules. Check for brand bidding violations, misleading claims, or traffic from prohibited sources. Catching issues early protects your brand and maintains program integrity.

Conclusion

Affiliate marketing works when done right—it scales reach, drives conversions, and keeps costs tied to results. But it's not plug-and-play. You need the right partners, clear tracking, solid incentives, and ongoing management to make it sustainable.

The biggest challenge? Trust. You're relying on third parties to represent your brand, and that means tracking accuracy, fraud prevention, and transparent attribution matter more than ever.

That's where Blockchain-Ads comes in. Whether you're running affiliate campaigns or direct programmatic buys, you get blockchain-verified tracking, real-time attribution, and built-in fraud prevention—so you always know what's working and only pay for genuine results.

Ready to run campaigns with full transparency and control? Request access to Blockchain-Ads and start building performance you can actually trust.