What does an affiliate revenue model entail?

An affiliate revenue model is a marketing strategy where companies earn commissions by promoting and directing customers to the products or services of other businesses. In this model, a company becomes an affiliate and receives a referral fee for each sale or lead generated through its promotional efforts.

This method leverages the affiliate’s customer base and marketing channels to extend the reach of the seller's products, thereby generating additional sales through referrals. The only payment to the affiliate occurs when there is a successful transaction, making this model performance-based and cost-effective for the companies paying the affiliates.

While other models involve direct sales or business-to-business transactions, the essence of the affiliate model focuses specifically on generating leads or sales for another business through referrals, which is why this choice accurately defines it.