A Practical Guide to Affiliate Marketing for New Merchants
How affiliate marketing works in 2000, from tracking links and cookie windows to how commissions get paid, for anyone launching a first program.
Amazon’s Associates program, launched in 1996, proved that a business could turn its own website visitors into a sales force without hiring anyone, just by paying a commission to whoever sent a buyer their way. By 2000 the model has spread well beyond books, and enough businesses are asking us how to set one up that it’s worth walking through the mechanics plainly.
The three parties in every affiliate arrangement
An affiliate program has a merchant (the business selling something), an affiliate (a site owner who promotes it) and increasingly a network that sits between them, like Commission Junction or LinkShare, both of which launched in the last two years specifically to handle the tracking and payment plumbing so merchants and affiliates don’t have to build it themselves.
The merchant sets a commission, usually a percentage of sale for physical goods or a flat fee for signups and leads. The affiliate places a tracking link on their site. The network (or the merchant’s own tracking software, if they’re running it in-house) records which sales came from which affiliate and handles payout.
How tracking works
Every affiliate link contains a unique code identifying that affiliate. When someone clicks it, a cookie gets set in their browser, and if they buy within the program’s tracking window (commonly 30 to 90 days, though it varies by merchant), the sale gets credited to that affiliate even if they clicked the link days earlier and came back on their own.
This matters more than most new affiliates realize: it means an affiliate doesn’t need to convert the visitor immediately. A well-placed link on a review site or a resource page can earn commissions from someone who researches for a week before buying. It also means merchants need to think carefully about cookie duration when setting up a program, since a short window undercounts the affiliate’s actual contribution.
What commission rates look like right now
Physical goods typically run 5 to 15% of sale price. Digital products and software often pay 20 to 40%, since there’s no manufacturing cost eating the margin. Lead-generation programs, insurance quotes, credit applications, subscription signups, usually pay a flat fee per qualified lead rather than a percentage, often somewhere between two and twenty dollars depending on how valuable that lead is.
Setting one up as a merchant
You have two real choices: join a network, which costs a setup fee and takes a cut of transactions but gets you access to thousands of existing affiliates immediately, or run it yourself with tracking software, which is cheaper per-sale but means recruiting every affiliate on your own. For most businesses starting out, a network is worth the cost simply for the recruiting.
Whichever route you take, write clear program terms before you launch: commission rate, cookie duration, what counts as a valid sale and how often affiliates get paid. Affiliates compare terms across programs before committing their site space to yours, and vague terms lose out to specific ones.
Setting one up as an affiliate
The mistake we see most is signing up for every program in a niche and slapping banners everywhere. It performs worse than picking two or three products you’d recommend and writing real content around them, a comparison, a how-to, an honest review, because visitors can tell the difference between a genuine recommendation and a banner farm, and they buy accordingly.
More on Paid Advertising, or browse everything from 2000.
