What is affiliate marketing? Definition, how it works and B2B use

Affiliate marketing is a form of marketing where external partners, the affiliates, promote your product or service and only get paid when their referral leads to a concrete action, usually a sale or a lead. So you do not pay for ad space or reach, but for results. That makes it one of the few channels where the risk sits largely with the promoter and not with you as the advertiser. In this article we explain how it works, show the commission models side by side and give an honest view on where affiliate does and does not fit in B2B.

How affiliate marketing works

Behind every affiliate collaboration sit four roles. Understand those and you understand the model.

• The advertiser (merchant): the company that wants to sell a product or service and is willing to pay a commission for every customer who comes in through a partner.
• The affiliate (publisher): the party that has an audience, for example a blog, newsletter, comparison site or influencer, and puts your offer in the spotlight.
• The customer: the person who clicks the affiliate link and ultimately buys or submits an enquiry.
• The affiliate network: an intermediary platform that handles the technology, tracking and payouts. Think of names like Awin, Daisycon or TradeTracker. Networks are optional: bigger brands sometimes run their own programme.

The connecting link is the tracking. Every affiliate gets a unique link. When someone clicks it, a cookie is placed or a click ID is passed along. If that person completes the desired action within a certain period, the cookie duration, the system attributes that conversion to the right affiliate and the commission follows. The longer the cookie duration, the more sales get credited to the partner. That is exactly where the debate sits too: who gets the credit when a customer comes in through three channels? That is a question of attribution, and it is one of the reasons why you should never judge affiliate in isolation from the rest of your marketing.

Commission models side by side

Not every affiliate agreement pays out in the same way. The three classic models differ in when the commission falls and therefore in who carries the risk.

CPS is the purest performance model: you only pay on revenue. CPL and CPA fit better when the actual deal is not closed online, which in B2B is almost always the case. The flip side: the further the paid action sits from the real revenue, the more sharply you have to guard quality. A programme that pays out on forms invites volume without value. That is why we prefer to steer on qualified enquiries rather than on raw leads, exactly as we do with lead generation in general.

Affiliate in B2C versus B2B: an honest view

Let us be honest: affiliate marketing grew big in B2C. A cashback site, a coupon blog or a review channel fits perfectly with impulsive purchases with a short decision cycle. Someone reads a review, clicks, buys within the hour. The model thrives where the road from click to checkout is short and online.

In B2B that road is rarely short. A purchase runs through several decision makers and often takes months, something we also work out in our piece on B2B content marketing. An affiliate who refers today might only see the deal close half a year later, well beyond most cookie windows. Purely transactional affiliate therefore works with difficulty in complex B2B sales.

Still, the idea does not disappear: it changes shape. In B2B it comes back as:

• Partner programmes: a consultant, integrator or agency refers customers to your software and gets a commission or recurring fee.
• Referral programmes: existing customers or contacts recommend you within their network, a principle known as referral marketing.
• SaaS partner and reseller programmes: think of the way many software companies give a recurring commission to partners who bring in accounts.

Concrete B2B example: say you sell planning software for the construction sector. A pure affiliate link on a comparison blog delivers little, because contractors do not buy impulsively. But a bookkeeping or ERP partner who recommends your tool to their clients, with a fixed commission per signed contract, does bring in qualified enquiries. The same economic logic, but tuned to a longer sales cycle and to partners who know the buyer’s context. That is affiliate thinking applied to B2B, and it fits seamlessly with broader growth marketing.

Common mistakes

• Paying out on clicks or traffic. Traffic is not revenue. Pay for the action that really matters, not for visitors who never become customers.
• Ignoring the cookie duration. A short cookie duration penalises slow buyers, a very long one overvalues affiliates who actually contributed little. Tune it to your real purchase cycle.
• Forgetting attribution. If you judge affiliate in isolation from your other channels, you assign too much or too little credit. Always view it within your whole funnel.
• Not guarding quality. Programmes that pay on forms attract quantity. Without a check on lead quality you are paying for noise.
• Thinking affiliate runs itself. Partners need material, follow-up and a fair payout. A programme you start and forget will fizzle out.

Want to know how affiliate compares to paid channels you steer yourself? Then read our overview on online advertising, or get guidance from a B2B lead generation agency that looks at the whole mix instead of at isolated channels.

For a neutral, broader definition of the term we are happy to point you to the explanation of affiliate marketing on Wikipedia.

Frequently asked questions