Affiliate marketing: pay partners only for results and set commissions your margin can carry
Pay affiliates for sales and leads, check which orders are truly extra, and make sure every partner discloses the commission.
In this topic: Marketing 12
Affiliates work on commission. That stays cheap only if you choose carefully what you pay for.
How affiliate marketing works, how it differs by sector, which disclosure rules apply to affiliates and influencers, and how to set commissions your margin can carry.
What is affiliate marketing and how does it work?
Affiliate marketing is performance-based advertising: you pay partners only when a visitor they send does something you defined, usually a sale or a lead. Those partners, called affiliates or publishers, can be review sites, bloggers, newsletter writers, comparison and voucher-code sites, cashback sites, video creators or businesses that serve the same customers as you. Paying only for results sounds risk-free. It is not, because the risk moves to the definition of a result: which sales count, which customers would have bought anyway, and what happens with returns.
Many programmes run through an affiliate network, such as Awin, CJ or Impact, which tracks clicks and sales, pays affiliates and gives you access to many publishers. You can also run a programme yourself with affiliate software or a feature of your shop system. The example below is in euros; the logic works in any currency.
- 01
The affiliate places your link or code
In a review, video, newsletter or comparison table, with a personal tracking ID.
- 02
A visitor clicks and buys
The sale is matched to the affiliate through the link, a cookie or a code, within the cookie window: the period in which a sale still counts.
- 03
You validate
After the return or cancellation period you approve or reject each sale.
- 04
Commission is paid
The network pays the affiliate and charges you the commission plus its own fee.
Common commission models are cost per sale (a percentage or fixed amount per order), cost per lead (a fixed amount per qualified enquiry or trial), cost per new customer, and hybrids with a fixed fee for a prominent placement.
Goals, costs, advantages and disadvantages
Businesses use affiliates for three goals: reaching new audiences through voices they trust, adding sales on a pay-per-result basis, and keeping customers through cashback and loyalty sites. The costs are more than the commission. Count the network's set-up and service fees, which may be charged on top of each commission, the work of building tracking into your site, creative material and codes, and the time to recruit, approve and check affiliates.
| In your favour | Against you |
|---|---|
| You pay for results rather than for impressions | You may pay for sales you would have made anyway |
| Access to audiences you could not reach alone | Dependence on third parties and their traffic |
| Costs move with sales, which helps cash flow | Quality of affiliates varies; some use aggressive or misleading tactics |
| Trusted reviewers can explain complex products | Their mistakes damage your reputation, and you share legal responsibility |
Affiliate marketing by sector
| Sector | Typical affiliates | Pay for | Watch out |
|---|---|---|---|
| Hospitality and travel | Travel blogs, local guides, booking and comparison sites | Bookings, after the stay or visit | Cancellations and no-shows |
| Retail and web shops | Review sites, voucher and cashback sites, creators | Validated sales after the return period | Voucher sites catching buyers who were already at checkout |
| Business services and software | Business review sites, consultants, accountants, trade newsletters | Qualified leads, trials or paid subscriptions | Long sales cycles; define "qualified" in writing |
| Personal services, such as coaching, training and wellness | Bloggers, podcasts, course platforms, communities | Bookings or paid sign-ups | Claims about health or results must be provable |
| Manufacturers and technology brands | Product reviewers, video creators, comparison sites | Sales, often through retailers' programmes | Reviews must disclose free products and commission |
How to set affiliate commissions against your margin
A commission rate copied from a competitor tells you nothing about your own margins. Work from your contribution: what an order leaves after product cost and fulfilment. Then correct for orders that would have come anyway.
Contribution per order = order value - product cost - shipping, packaging and payment costs
Affiliate cost per order = commission + network fee on that commission
Cost per extra order = affiliate cost per order / share of affiliate orders that would not have happened without the affiliate
Ilona Varga runs Northfold Outdoor, a web shop for hiking gear. An average order is €125 excluding VAT. Gross margin is 40%, or €50; shipping, packaging and payment cost €10, leaving €40 contribution. She pays affiliates 8% (€10) and her network adds a fee of 20% of the commission (€2): €12 per validated order. After six months she compares affiliate orders with her customer database and checks how many clicks came from people who were already in the checkout.
| Affiliate type | Validated orders | Cost | Share truly extra | Extra orders | Cost per extra order |
|---|---|---|---|---|---|
| Hiking blogs and review sites | 300 | €3,600 | 80% | 240 | €15 |
| Video creators with codes | 150 | €1,800 | 60% | 90 | €20 |
| Voucher-code and cashback sites | 400 | €4,800 | 25% | 100 | €48 |
| Total | 850 | €10,200 | 430 | €23.72 |
Fictitious Firmfocus example. Amounts exclude VAT; returned orders are rejected during validation and carry no commission. The share of truly extra orders is Ilona's estimate from new-customer data and checkout behaviour.
Blogs and creators bring extra orders well within the €40 contribution. Voucher and cashback sites cost €48 per extra order, more than a first order earns. Ilona responds in three ways.
- Pay by customer type: 10% on orders from new customers, 3% on existing customers.
- Exclusive codes only: voucher sites get codes that work for first orders only, so they cannot intercept her regulars.
- Validation equals the return period: no commission is approved before the return window closes.
Disclosure rules for affiliates and influencers
The principle is the same in the US, the UK and the EU: readers must recognise advertising as advertising at a glance, before they act on it, and the brand stays responsible for what its affiliates publish. Wording and enforcement differ.
| Market | What applies |
|---|---|
| United States | The FTC Endorsement Guides, revised in 2023, call for a clear and conspicuous disclosure, and the closer it is to the recommendation the better. Consumers may not understand "affiliate link"; wording such as "I get commissions for purchases made through links in this post" works better. Advertisers need reasonable programmes to train and monitor their network (source: US Federal Trade Commission, July 2025). |
| United Kingdom | Under rule 2.1 of the CAP Code, affiliate content is advertising and must be obviously identifiable, for example with "Ad" upfront; the ASA found "affiliate" alone not widely understood, and the brand keeps responsibility (source: Advertising Standards Authority, March 2023). The CMA counts commission as an incentive and says tagging a brand or using codes or affiliate links is not enough (source: Competition and Markets Authority, September 2025). The CMA can now decide breaches itself and fine up to 10% of global turnover (source: Competition and Markets Authority, April 2025). |
| European Union | Under the Unfair Commercial Practices Directive, hiding commercial intent is misleading (Article 7(2)) and falsely posing as a consumer is banned (Annex I, point 22), whether or not the trader supplies the product (source: European Commission, December 2021). The Commission's influencer legal hub lists affiliate marketing among advertising that must be disclosed (source: European Commission, October 2026). France, for example, requires "publicité" or "collaboration commerciale" or an equivalent label that is clear and legible, names the brand, and applies when the influencer receives a percentage on sales (source: French Ministry of the Economy, October 2026). |
- Your programme terms: require disclosure in every country where affiliates publish, with approved wording.
- Local rules: check the consumer authority and advertising standards body in each target market.
- Monitoring: search regularly for what affiliates publish and act on misleading claims.
- Tracking: affiliate cookies are not strictly necessary, so in the EU and the UK they need consent; see online marketing campaign.
Small programme vs larger programme
Small web shop or service business
Start with a handful of hand-picked partners: bloggers, complementary businesses, a trade association. A fixed commission per new customer, written terms and a simple tool in your shop system are enough. Talk to each partner; the relationship matters more than the software.
Larger brand with a network
Tiered commissions by customer type and product margin, fraud monitoring, a ban on affiliates bidding on your brand name in search ads, regular checks of disclosures, and tests that compare regions or periods with and without affiliates to measure what they really add.
Pitfalls in affiliate marketing
- Paying for existing demand: voucher sites and brand-name bidding claim sales that were already happening.
- Commission on returns: a validation period shorter than your return window.
- Vague terms: no definition of a qualified lead, the cookie window or what happens when several channels touched the sale.
- Fraud: fake leads, or cookie stuffing, where tracking cookies are dropped without a real click.
- Ignoring disclosure: regulators hold the brand responsible too.
Affiliates are one channel in your online marketing campaign and part of digital marketing. Before setting rates, check your margins with set your price, and if you sell online, see start an online store. All topics are on the Marketing page.
How does affiliate marketing work for a small business?
How much commission should I pay affiliates?
Do affiliates have to disclose that they earn a commission?
Is affiliate marketing the same as influencer marketing?
Sources
- US Federal Trade Commission: Endorsement Guides, what people are asking (July 2025)
- Advertising Standards Authority: Online affiliate marketing (March 2023)
- Competition and Markets Authority: Social media endorsements, being transparent with your followers (September 2025)
- Competition and Markets Authority: New consumer protection regime comes into force (April 2025)
- European Commission: Guidance on the Unfair Commercial Practices Directive (December 2021)
- European Commission: Influencer legal hub (October 2026)
- French Ministry of the Economy: Influencers, what are my duties? (October 2026)
Maak gebruik van onze ondernemerstools en de laatste branche-informatie
Verkrijg direct toegang tot alle stappen, downloads en tools voor ondernemers.
- Toegang tot de meest actuele bedrijfstakcijfers
- Ondernemingsplan online tool — schrijf en download naar MS Word
- Download tools en templates voor ondernemers
- Vergelijk en bewaar uw eigen cijfers met het branchegemiddelde