Affiliate marketing is commonly confused with referral marketing, as both forms of marketing use third parties to drive sales to the retailer. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers'''' marketing tactics. It is a partnership between two sides - the advertisers, whose goal is to promote their products, and the publishers who are owners of online platforms (affiliates). The affiliate commits to promote the advertiser''''s product or service through a link or a banner ad placed on their website. With the help of existing literature and data sources, this paper attempts to highlight basics of affiliate marketing by determining what exactly is affiliate marketing and how does it works with various examples available in India, with their referral payout structure. The paper suggests that the future of affiliate marketing is to a greater extent affected by the consumer’s perception of affiliate program usefulness and control over it. Therefore in affiliate marketing, the biggest challenge is to get traffic to their website, and then getting them to click on affiliates’ links.