{"id":133154,"date":"2022-08-14T13:05:04","date_gmt":"2022-08-14T13:05:04","guid":{"rendered":"https:\/\/www.similarweb.com\/corp\/?p=133154"},"modified":"2025-03-30T13:21:41","modified_gmt":"2025-03-30T13:21:41","slug":"affiliate-vs-referral","status":"publish","type":"post","link":"https:\/\/www.similarweb.com\/blog\/marketing\/affiliate-marketing\/affiliate-vs-referral\/","title":{"rendered":"Affiliate Marketing vs. Referral Marketing – What\u2019s The Difference?"},"content":{"rendered":"

\u201cI get by with a little help from my friends\u201d. That could be the motto for both referral marketing and affiliate marketing<\/a>. Both concepts leverage good relationships to generate traffic, sales, and better ROI.<\/p>\n

There are many relationships that can be useful for a business: customers, friends, partners, and affiliates. In this article, we\u2019ll review which are relevant for referral marketing vs affiliate marketing. We\u2019ll explain how the two concepts work and what differentiates them, and we\u2019ll throw in some tips and key data points too. So let\u2019s get started.<\/p>\n

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What\u2019s the key difference between referral and affiliate marketing?<\/h2>\n

Affiliate Marketing recompenses successful third-party brand advocacy, while referral marketing rewards existing customers for bringing in their friends.<\/b><\/p>\n

When you look at it this way, they are contrasting concepts. There are advantages and disadvantages to affiliate marketing and referral marketing but they aren\u2019t the same. When you understand how companies benefit differently from each, you’ll be able to choose where and how they can be effective in your marketing strategy<\/a>.<\/p>\n

What is Referral Marketing?<\/h2>\n

Referral marketing is a marketing activity used by companies to incentivize existing customers to invite their connections to become new customers. In simpler words: The company offers a reward to existing customers when they bring in a friend who makes a purchase.<\/p>\n

There’s enormous potential in every happy customer. 92% of consumers<\/b><\/a> trust recommendations from people they know<\/b>. This makes sense. Would you recommend a product you’re not satisfied with? Of course not. It would be embarrassing, and you’d lose people’s trust.<\/p>\n

Marketers have always tried to find ways to tap into this potential, and digital marketing has the tools to help. For example, in the US, 81% of purchasing decisions are influenced by social media posts from someone familiar<\/b>. The simple act of encouraging customers to share an image of what they bought can motivate a friend to do the same.<\/p>\n

Referral marketing in the digital marketing arena<\/h3>\n

Before the internet, you’d simply bring a friend to the neighborhood store where you’ve been going with your mom since you were three. The owner would greet you by name and slip a few lolly-pops into your grocery bag for your kids. He’d give you a wink and shake your friend’s hand after packing her groceries.<\/p>\n

It’s not that simple in the digital sphere (but in some ways simpler). First, you must let people know they can get a reward for bringing in a friend. 91% of people in the US say they would share special offers and deals with family members and friends<\/b>.<\/p>\n

Next, you need a system to trace the new purchaser back to the referrer. This is easily accomplished by providing a linked code. The code is individual to the existing customer, and when the newcomer uses it to purchase, the system recognizes who delivered it and grants the reward.<\/p>\n

The reward can be a discount, a cashback, or a coupon for the next purchase. This way, you earn new customers and encourage existing customers to purchase again.<\/p>\n

Social media has given this type of marketing a fresh boost. It’s super easy to add social share buttons with a referral code. And when someone shares on social media, they reach a much bigger audience than in any other communication form that is usually one-on-one.<\/p>\n

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Interestingly, stats show that 80% of brands run affiliate programs, but only 30% of companies <\/a>have a formalized referral program.<\/p>\n

What is Affiliate Marketing?<\/h2>\n

Affiliate Marketing is a concept that builds on a digital advertising partnership in which one party owns a product, and the other provides the means to promote it. When the promotion yields results, the product owner compensates the publisher.<\/p>\n

The payment can be a percentage of a purchase or a flat fee. Some affiliate programs<\/a> pay a one-time lump sum for a referral, and others prefer recurring monthly payouts. It usually depends on the product type and the brand’s size.<\/p>\n

In a way, affiliate marketing is a form of referral marketing because the affiliate or publisher refers potential customers to the merchant. However, other than typical referral marketing, we are looking at a business relationship.<\/p>\n

Digital marketing has turned affiliate marketing into a billion-dollar industry because it is simple to implement. The vendor provides a link that includes a tracking pixel. This technology enables the tracking of user behavior and conversions.<\/p>\n

Who\u2019s involved in digital affiliate marketing?<\/h3>\n

Originally affiliate marketing was a partnership between businesses. Today, affiliates can be large, medium, or small businesses, but also individuals.<\/p>\n

The very first affiliate program that was open to individuals rather than just businesses was Amazon<\/a>, back in the days when Jeff Bezos only wanted to sell more books online. Making it accessible to the general public completely changed the character of affiliate marketing and made it into what we know today.<\/p>\n

Today, with 900,000 affiliates, Amazon runs one of the biggest affiliate programs in the world.<\/p>\n

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The affiliate industry is full of digital solutions to efficiently run and scale programs.<\/p>\n