In affiliate marketing, website owners will create promotional material on behalf of advertisers or companies. When the affiliate’s promotional efforts result in a conversion, a commission is rewarded. The commission is money that’s paid to affiliates for every payable action taken by visitors of the affiliate’s website. Commissions are sometimes referred to as a referral fee or finder’s fee.
Typically, the payable action is a sale. When people use the affiliate’s unique link to purchase a product or service, affiliates are given a small percentage of the purchase price or set fee. However, some advertisers also pay a commission for click-throughs, which occur every time the affiliate link is clicked. Companies can also pay for leads, which require the website visitors to fill out a contact form.
Commissions vary based on the product or service that the affiliate is promoting. The terms of the affiliate marketing campaign and details about the commission are generally agreed upon before any promotion is done. This information is included in the final contract to ensure that both parties agree to the commission rate and terms.