Lesson 1 of 4 · Affiliate foundations
How affiliate marketing works
Follow a referral from useful recommendation to payable commission.
Explain who pays whom, calculate a simple commission and spot why a referral might not pay.
Prerequisites: None. You do not need a website, an account or program approval to complete this lesson.
Research checked 2026-10-02
In this lesson
Affiliate marketing means earning a commission for referring a customer or another qualifying action to a business. As the affiliate, you help someone choose; the program's terms determine whether the referral earns anything. 1
A click is a referral opportunity. It is not automatically a commission. 2
Follow one referral
The publisher is the affiliate creating the recommendation. The merchant sells the product. The reader may become its customer. A network can connect publishers with merchants and handle tracking or payments, but not every program uses one. 1
- Help someone decide
You publish a useful comparison, tutorial or recommendation for a real audience need.
- Send the referral
The reader follows your program-issued affiliate link. Its identifier helps the program attribute the referral. 1
- Complete an eligible action
The reader buys from the merchant or completes the specific action the program rewards. 1
- Check the commission
The program checks attribution and qualification. Refunds, invalid activity or broken promotion rules can affect the reward. 2
- Receive a payout
An approved balance is paid according to the program's timing, minimum balance and payment-method requirements. 2
This is a teaching sequence, not a universal dashboard workflow. A referral window or a tracked purchase does not guarantee payment. Check which referral gets credit, what qualifies and when money becomes payable. 2
One sale, three different amounts
US$100 multiplied by 10 percent equals US$10.
Invented teaching terms: attributed, eligible, paid sale; no refund. Actual rates, calculation bases and payout rules vary.
Hypothetical example: you write a pruning-tool comparison. A reader follows your authorized link and buys a US$100 tool. The imaginary program treats the full US$100 as eligible and pays 10% after approval.
The merchant receives the customer payment. Your commission is US$10; your profit depends on your own costs and taxes. The sale amount, commission and profit are different numbers.
If this example's sale is fully refunded, assume the commission is reversed. Even an approved commission may wait for a payout threshold or scheduled payment date. Real programs can exclude taxes, discounts or other amounts from the calculation base. 2
Check what the program actually rewards
| Reward | The qualifying event to look for |
|---|---|
| Direct sale commission | A customer you refer makes an eligible purchase. The reward may be a percentage or a fixed amount. 1 |
| Qualified-lead reward | Your referral completes the defined lead action. A visit or an incomplete form may not qualify. 1 |
| Second-tier commission | An affiliate you refer generates qualifying sales. Check the calculation base and duration; signup alone is not the same reward. 2,3 |
Not every program offers every model. A performance tier changes your own rate when you meet a target; second tier refers to a separate affiliate-referral relationship. 2,3
Compare the event and conditions before comparing the headline rate. The program-selection lesson turns this into a shortlist checklist.
Start with a useful recommendation
- Solve a reader's problem. Explain who a product suits, its limitations and relevant alternatives.
- Be honest about your experience. Researching a product is different from testing it. Say which you did. 4
- Check the rules first. Confirm approved links and promotion channels, eligible actions, attribution and payout terms.
- Explain a commission relationship clearly. For U.S. audiences, FTC guidance calls for a noticeable explanation close to an applicable recommendation or link. A disclosure hidden behind a policy-page link is not enough by itself. 4
For an actual commission-earning recommendation, an example notice is: “I may earn a commission if you buy through this link.” Use wording that accurately describes your arrangement. Other jurisdictions and individual programs can have additional requirements. 4
Sources and open questions
Official sources checked October 2, 2026. The example's product, rate and amounts are invented for learning, not typical results or an earnings forecast.
- Awin's affiliate marketing FAQ explains publisher, merchant and network roles, tracking and reward models. 1
- Text's partner terms illustrate why attribution, eligible revenue, reversals and withdrawal rules must be checked separately. Its commission help shows a performance-rate tier distinct from second-tier referrals. Its rules are not universal. See the Text and LiveChat profile for current research and unresolved terms. 2,3
- The FTC's endorsement guidance supports the U.S. disclosure and honest-experience guidance above. 4
No program approval, payout or product test is claimed. This lesson teaches the mechanism; your actual agreement controls your referrals.
Put it into practice
Your turn.
Choose an imaginary audience problem and a suitable product. On paper, name the publisher, merchant and reader; describe one useful content idea; state the qualifying action and one reason payment might be delayed or declined.
Then check: does a click alone earn our example’s commission, who receives the US$100, and is US$10 profit?
Check your thinking
A click alone does not qualify: the example needs an attributed, eligible sale. The merchant receives the customer payment; the publisher’s US$10 is commission before their own costs and taxes. Returns can reverse it. An approved amount can still wait for a payout threshold or payment date. Mark unknown real-world terms as unknown.