How to Start an Affiliate Marketing Program
How to Start an Affiliate Marketing Program

How to Start an Affiliate Program [Complete Guide]

This guide will teach you how to start an affiliate program from scratch. Our guide is designed for business owners and will answer most of your questions about growing your business by starting an affiliate program.

If you already own an affiliate program, you can jump to the next part of this tutorial: How to promote your affiliate program.

How To Start An Affiliate Marketing Program
How To Start An Affiliate Program

By reading our complete guide on how to start an affiliate program, you will find out:

  • What commission type can you choose from,
  • How to choose an affiliate marketing platform and
  • A step-by-step guide on how to create your affiliate program.

Let us discuss a few ways a merchant should start the affiliate program.

Types of Affiliate Programs – Choosing the right for you

There are various kinds of Affiliate Marketing Programs a merchant can run or an affiliate can join.

These are based on the type of compensation or commission model the merchant follows. Pay-per-sale (PPS) and pay-per-action (PPA) are the most commonly used programs.

1. Pay per Sale (PPS) / Cost per Sale (CPS)

Affiliate Marketing - PayPerSale - PPS
Affiliate Marketing – PayPerSale – PPS

This is the most popular kind of affiliate marketing program. Around 70-80% of the merchants follow PPS as their affiliate payout system. Here, the merchant pays the affiliate a percentage of the price or a fixed amount to sell its product.

The merchant is guaranteed a sale before it goes out to make affiliate commissions. This system makes it very simple for the merchant to calculate profit margins.

Following the previous example, for a 40% profit margin product, keeping a 20% affiliate commission makes it very attractive for the affiliates and gives the merchant a considerable increase in business.

The merchant must also factor in all the upsells planned for the products. A merchant’s PPS percentage can undoubtedly increase, driving 20% of its customers to buy the upsell.

From an affiliate’s perspective, the affiliate must ensure the sale before expecting any payout. Getting a customer to visit the merchant’s site is not enough! If the affiliate pulls off the sale, it receives considerably high commissions. Tracking such a system is more accessible for affiliates and merchants.

2 Pay per Action (PPA) / Cost per Action (CPA)

CPA Marketing Example
CPA Marketing Example

The pay-per-action (PPA) or cost-per-action (CPA) model of payment for affiliates refers to a method where the merchant decides an action based primarily on the prospective customer. The affiliate mainly gathers this information by getting the customer to fill out some form.

An action may also refer to a free trial (or a very minimal amount) given to a prospective user. Once the user tests the product, the merchant may proceed with the main sale and then go along with the upsells.

This method is generally used by merchants who prefer to use their sales efforts (sales pages, website, etc.) to complete or close the sale with a prospective customer.

In this case, the merchant needs information about its product’s conversion rates. For example, if one out of every 25 people visiting the site buys the product, the price of making a sale is 25 x (amount paid per action).

If a merchant pays $0.10 per action, acquiring that customer costs 25 x 0.10 = $2.5. Thus, a merchant can quickly improve conversion rates to utilize the affiliate’s visitors more efficiently.

From the affiliate’s point of view, getting somebody (prospective customer) to fill in the form (the action) ensures the merchant’s payment. Getting a sale out of the customer is then up to the merchant.

An affiliate who can drive that kind of traffic through its already existing sites, blogs, etc., or otherwise would be advised to enter into a CPA affiliate program. The CPA payment amount may vary from product to product, depending on its value for a merchant.

3 Choosing the type of Affiliate Program – Critical!

Affiliate Marketing Programs - Pay Per Sale vs Pay Per Action
Affiliate Marketing Programs – Pay Per Sale vs. Pay Per Action

The affiliate program type you will start is critical for your success. You can make changes later on, but it’s important to track results and update them accordingly.

Some affiliate marketing niches, such as gambling, financial services, dating, magazine subscriptions, and game downloads, work best with the CPA affiliate marketing model. In contrast, informational products work best with pay-per-sale in other niches, like eCommerce.

As a merchant, you should choose an Affiliate Program type that best suits your capabilities and the product you sell.

  • If you are confident you will obtain reasonable conversion rates, apply for a Cost-per-Action Affiliate Program.
  • If you don’t know what works best, use the Pay Sale Affiliate marketing model, as you will pay the affiliate only when he generates a sale. This way, you will not need to pay for leads that do not convert.
  • If you need help, you can hire us, and we will analyze which option is the best for you.

Affiliate software or Affiliate network

Before anything else, you should decide whether to host your affiliate program or run it through an affiliate network. Of course, you can do both, but I suggest you do this when you have already established one of them.

There isn’t any common answer, as affiliate software and affiliate networks have PROs and CONs. In a nutshell, if you want to have more control of the payments, the affiliate program, and the affiliate, you should run your program.

On the other hand, if you start your affiliate program through a network, you will immediately have hundreds or thousands of affiliates ready to promote your product.

As I said earlier, at some point, you can transition from your affiliate to an affiliate network or more. For instance, in the email below, IPVanish announces that its affiliates have decided to migrate from Post Affiliate Pro to Commission Junction.

A software vendor moves its Affiliate Program Move to Affiliate Network
A software vendor moves its Affiliate Program Move to Affiliate Network.

If you are on WordPress, we suggest checking our top 10 recommended affiliate solutions for WordPress and WooCommerce.

Setting Commissions and payment terms

The best way to attract an affiliate or, for that matter, any person is MONEY. Show affiliates the money, and they would do anything to sell the product.

You should do the calculations here carefully. Calculate the expected sales and product profitability increase, taking out affiliate commissions.

Keep in mind that the second variable should be kept comfortably positive.

The payment date of the commissions should include the refund period you offer for your product, if any. Doing this will ensure you will not send the commissions to the affiliate, and the buyer will refund the purchase.

Affiliate Marketing Program Commissions
Affiliate Marketing Program Commissions

If you haven’t decided yet whether you want to run a pay-per-action (PPA) or pay-per-sale (PPS) affiliate program, it’s time to do so.

Are you looking to drive traffic to the site and confident that your sales conversion rates would be better? Then, go in for a pay-per-action affiliate program. If you want to pay the affiliates only once the sale is complete and confident with the profitability, it should go in for a pay-per-sale affiliate program.

Here is a good article on how to set up affiliate commission rates for your affiliate program.

Affiliate contract details

Affiliate contract details are essential for several reasons. The most prominent one is that they will ensure that your program complies with your country’s laws.

The affiliate agreement between you and users will also set the expectations right and prevent you from getting sued. Last, it will help you terminate the agreement with some affiliates if things don’t go well.

Affiliate Program Terms and Conditions
Affiliate Program Terms and Conditions

I strongly suggest consulting a lawyer in your country with affiliate marketing experience. Besides the affiliate program terms and conditions [Example here], you should write the Affiliate program details [example here], Affiliate program FAQ [example here], and GDPR document [example here] if you address affiliates in the European Union.

Another tip is to create a complete guide so that your affiliates have all the information they need at a glance.

Affiliate Marketing Program Guide - Example: SEOPress
Affiliate Marketing Program Guide – Example: SEOPress

Promotional creatives

Setting up the promotional creatives the affiliates will use to promote your product is essential. These must be carefully picked and shared for the program’s success and to keep the affiliate’s convenience and requirements in mind.

It would be best not to wait for the affiliates to request them because that would never happen, and the affiliate would go on to promote another product. Merchants need to know they are marketing themselves to the affiliate and competing with other merchants in the market!

For instance, here are several creatives from Semrush available for their affiliates to promote the product:

Affiliate Marketing Program - Semrush Creatives
Affiliate Marketing Program – Semrush Creatives

Merchant resources are mostly limited to affiliate links to the website and banners. Affiliate links are provided to the affiliates once they log into the system. The merchant must provide banners in all possible sizes and colors, keeping in mind the brand colors (if any).

The generally used banner sizes are 120×90, 234×60,  468×60, 728×90, 120×600, 300×250, and 160×600.

If your product is available in multiple languages, you should upload creatives in all the languages you want to generate sales. This is because the affiliates might have different pages on the website where these plans are presented. Thus, they would wish to separate banners for each of these pages.

Also, don’t limit yourself to banners. You can add free ebooks, email sequences, widgets, etc. Make the lives of affiliates easier, and they will bring more sales.

Payment methods

Before launching the affiliate program, you need to configure one last step: the payment methods you will use to pay the affiliates’ commissions. If you start the affiliate program through an affiliate marketing network, you will send the funds to the affiliate network, and they will pay the affiliates by their methods.

However, if you start your affiliate program, you must choose payment methods carefully.

Each industry has its standard payment methods. For instance, casino industry affiliates expect to be paid in one or several of the following casino payment methods: PayPal, Skrill, Neteller, or cryptocurrencies like Bitcoin.

If you are in the niche of digital products like video courses, WP plugins, and digital marketing services, you should go with PayPal and bank wire for larger payments.

Get inspiration from the competition.

I recommend spending enough time studying your competition well. How do they design their affiliate program, the terms, and payment methods, what promotional creatives they use, and what are the affiliates complaining about so you can improve?

Here is a list of over 65 successful affiliate programs, which you can check to get some ideas for your new affiliate program.

Starting An Affiliate Program FAQ

Here are the most frequent questions we get from our readers about starting an affiliate program:

How to create an affiliate program?

In our complete guide on how to start an affiliate program, we outlined all the steps to take:

  • Decide if you will pay the affiliates for leads (actions) or sales.
  • Install affiliate management software or join an affiliate network.
  • Create the affiliate agreement along with other paperwork.
  • Setup the commissions (rewards) you will offer to affiliates.
  • Create the creatives (banners, email sequences,  the affiliates will use to promote your products.
  • Setup the payment methods you will use to pay the affiliates.
  • Start attracting affiliates.

How much money an affiliate program can make?

Amazon gets 40% of its sales from affiliate marketing under “Amazon Associates” and other third-party entities selling their products. A 40-50% share in sales refers to an increase of almost 100% to the merchant’s current sales. Also, this number increases to around 300%-400% for smaller businesses.

What's the best WordPress affiliate plugin?

There are several affiliate plugins for WordPress, all with good functionalities. I recommend AffiliateWP as it’s the most used one, and affiliates are familiar with it. Besides, it has many modules and integrations to help you connect everything and start fast.


So there you have it—the complete guide on how to start an affiliate program. This is the first part of our trilogy, which will continue with two new guides mandatory for your affiliate program’s success: How to promote your affiliate program to attract affiliates and How to manage your affiliate program effectively. Subscribe to our notification to know first when we release them.

Now, about you. Did you enjoy reading the guide? What’s your takeaway?

Do you have questions? Please let us know in the comments form below. I regularly check them and reply with details.

About Daniel S.

Daniel is the founder of Competico SEO & CI agency and co-owner here at 2005 he helps online business owners to establish a presence online and win the digital race.


  1. Great Article. Its really informative and innovative.

  2. We’re very proud to have already enhanced customer experience who are benefiting from their commissions. you need to know about Yet, we discovered that many of our customers lacked the proper skills to launch successfully and earn commissions quickly and easily.

  3. Thank you so much for your great informative blog. it was so informative for me.

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