Affiliate Marketing: What It Is and How It Works

Affiliate marketing generates over $17 billion annually worldwide (Statista, 2025). Yet it remains one of the most poorly optimized channels for the majority of ecommerce businesses.

If you've ever heard the word affiliate in a digital marketing context and weren't entirely sure what it entails, this article will give you a complete overview: from the fundamentals to how to measure whether it's actually driving incremental conversions for your business.

What is affiliate marketing

Affiliate marketing is a performance-based acquisition model. A company (the advertiser) pays a commission to a third party (the affiliate) every time they generate a specific action: a sale, a lead, a download or a qualified click.

The concept is simple: you only pay for results. But execution has nuances that make the difference between a profitable channel and an attribution black hole.

The 3 players in the ecosystem

Player	Role	Example
Advertiser (merchant)	Offers the product/service and pays the commission	A fashion ecommerce store
Affiliate (publisher)	Promotes the offer and drives qualified traffic	A review blog, an influencer
Affiliate network	Connects advertisers and affiliates, manages tracking and payments	Awin, TradeDoubler, CJ Affiliate

In some cases, the affiliate network is replaced by an in-house program managed internally with tools like PartnerStack or Refersion.

Commission models: CPA, CPS, CPL and more

Not all affiliate programs work the same way. The commission model defines when and how much the advertiser pays:

CPA (Cost per Acquisition)

The affiliate earns a commission when the user completes a defined action (registration, subscription, first purchase). It's the most flexible model and the most widespread in digital services.

CPS (Cost per Sale)

The affiliate earns a percentage or fixed amount for each completed sale. Typical in ecommerce. Amazon Associates popularized this model with commissions ranging from 1% to 10% depending on the category.

CPL (Cost per Lead)

The affiliate earns a fee for each qualified lead generated (form completed, demo requested). Widely used in B2B and SaaS.

CPC (Cost per Click)

The affiliate earns a fee for each click redirected to the advertiser. Less common today because it doesn't guarantee traffic quality, but still used in price comparison sites.

Revenue Share

The affiliate receives a recurring percentage of the revenue generated by the customer over a set period (or for life). Common in SaaS with subscription models.

Model	Payment trigger	Advertiser risk	Best for
CPA	Specific action	Low	Digital services
CPS	Completed sale	Very low	Ecommerce
CPL	Qualified lead	Medium	B2B, SaaS
CPC	Click	High	Price comparators
Revenue Share	Recurring revenue	Low	SaaS, subscriptions

Top affiliate platforms

Global affiliate networks

Awin: the largest European network, with over 25,000 active advertisers. Strong in retail, travel and finance.
CJ Affiliate (Commission Junction): one of the longest-running networks, with global presence and advanced reporting tools.
TradeDoubler: particularly strong in the Nordic and European markets.
Rakuten Advertising: a premium network with brands like Nike, Sephora and Best Buy.
ShareASale: acquired by Awin, very popular in English-speaking markets for specific niches.

Platforms for in-house programs

PartnerStack: geared toward B2B SaaS with full partner management.
Refersion: native Shopify integration, ideal for ecommerce.
Impact: enterprise platform with advanced partnership automation.

Advantages of affiliate marketing

1. Pay for performance Unlike traditional paid media, you don't take on investment risk without a return. You only pay when a conversion happens.

2. Scalability You can work with hundreds of affiliates simultaneously, each with their own audience and distribution channel.

3. Channel diversification Affiliates operate across blogs, YouTube, newsletters, social media and comparison sites. You reach audiences you wouldn't reach on your own.

4. Predictable acquisition cost By setting the commission upfront, you can precisely calculate your CAC (customer acquisition cost) for this channel.

Disadvantages and risks

1. Affiliate fraud Cookie stuffing, unauthorized brand bidding or incentivized traffic are practices that can inflate costs without delivering real value. Affiliate networks invest in detection, but it's not foolproof.

2. Conversion cannibalization A coupon affiliate that intercepts the user right before checkout isn't generating incremental demand — they're capturing a sale you were already going to close. This is the most common problem and the hardest to solve.

3. Attribution complexity Did the affiliate, the email campaign or the retargeting ad generate the sale? Without a solid attribution model, it's impossible to know which channel is actually adding value.

4. Intensive management Recruiting quality affiliates, negotiating terms, approving content and monitoring compliance requires dedication. It's not a "set and forget" channel.

How to measure affiliate conversion

This is where most programs fail. Measuring gross sales attributed to affiliates isn't enough. You need to answer one key question: are those conversions incremental?

Essential metrics

Metric	What it measures	Why it matters
Conversion rate per affiliate	% of clicks that end in a sale	Identifies quality affiliates vs. empty volume
Real cost per acquisition	Commission paid / net sales (excluding returns)	Gross CPA can hide a very different reality
Incrementality	Sales that would NOT have happened without the affiliate	The ultimate metric for evaluating the channel
Customer Lifetime Value	Total value of customers acquired via affiliates	An affiliate may generate low-value customers
Return rate	% of sales that end in a return	Some affiliates drive impulse purchases with high return rates

How to measure incrementality

The most rigorous approach is to run an incrementality test: expose a control group (with no affiliate exposure) and compare conversion rates. If the exposed group converts significantly more, the contribution is incremental.

Another approach is to analyze the complete customer journey. If the affiliate is the first touchpoint and the user hadn't previously interacted with your brand, the probability of incrementality is high. If the affiliate appears as the last click after multiple interactions with your brand, you're probably paying for a conversion that was already yours.

Affiliates and CRO: the invisible connection

Conversion optimization doesn't end on your website. If an affiliate sends qualified traffic to a landing page with a 1% conversion rate, the problem isn't the affiliate — it's your user experience.

Working on the CRO of landing pages that receive affiliate traffic can multiply the channel's performance without increasing commission spend.

Affiliate marketing can be a powerful acquisition channel when managed rigorously. But without incrementality measurement, fraud control and post-click experience optimization, it can easily become a cost disguised as an investment.

If you want to optimize your website's conversions, whether for affiliate traffic or any other channel, at Boost we specialize in data-driven optimization. You can also run a quick diagnostic with Scan&Boost.

— Adrià Vidal