The Meaning of Affiliate Marketing

Affiliate Program Essentials
Affiliate programs agreements (usually entered to online) which a merchant website pays affiliate Web sites a commission to send them traffic. These affiliate sites post links to the merchant site and are paid according to a particular agreement. This agreement is usually based on the number of people the affiliate sends to the merchant's site, or the number of people they send who buy something or perform some other action. Like buying something or filling out a form.

Some affiliate contracts pay according to the number of people who visit the page containing their merchant site's banner advertisement. Basically, if a link on an affiliate site brings the merchant site traffic or money, the merchant site pays the affiliate site according to their agreement. Recruiting affiliates is an excellent way to sell products online, but it can also be a cheap and effective marketing strategy; it's a good way to get the word out about your site. Affiliate programs have made it easy to almost any product you want without inventory or shipping overhead.

There are at least three parties in an affiliate program transaction:

* The customer
* The affiliate site
* The merchant site

In 1996, Jeff Bezos, CEO and founder of Amazon.com, popularized this idea as an Internet marketing strategy. Amazon.com attracts affiliates to post links to individual books for sale on Amazon.com, or for Amazon.com in general, by promising them a percentage of the profits if someone clicks on the link and then purchases books or other items. The affiliate helps make the sale, but Amazon.com does everything else: They take the order, collect the money and ship the book to the customer. With over 500,000 affiliate Web sites now participating, Amazon.com's program is a resounding success.

Over the past few years, affiliate programs have grown enormously in popularity, taking many interesting forms. For many Web sites that don't deal much in e-commerce (selling products or services online) themselves, functioning as an affiliate is a good way to participate in e-commerce.

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How to Get Involved in Affiliate Programs
If you are interested in getting involved in affiliate programs, the first thing you have to do is decide whether you want to become an affiliate, want to acquire affiliates, or both. If you run an e-commerce site and would like to increase your sales, you might want to start your own affiliate program. If you run a small content site as a hobby and would simply like to bring in a little money to cover production costs, joining a few programs as an affiliate would be a good option. Your best option depends on what aspects of affiliate programs could best serve your site and how much you are willing to spend.

Becoming an Affiliate
Becoming an affiliate is relatively easy. Go to an affiliate network site and fill out an online application to become a member. The application will ask for some personal information (name, address, payment method) and information on your site (URL, name, and description of content) and will have you agree to a service agreement. Most affiliate networks are completely free for affiliates.

If the affiliate network approves your application, you can begin picking affiliate programs that interest you. Because so many affiliate programs are free to the affiliate, it's probably in your best interest to steer clear of programs with a charge. Once you've chosen some affiliate programs, the online merchants running these programs will have the opportunity to review your site. If they approve you, the affiliate network will walk you through the process of posting the appropriate links, which come directly from the network's site. They will also establish payment arrangements with you. Because the amount of money you earn per action can be extremely small, most affiliate networks have a set minimum payout amount. This means you won't receive a check until the total money owed you reaches a certain amount. After you have set all this up and the affiliate network has explained its system to you, you can get back to work on your Web site's content and wait for your money to come in. (from How Stuff Works)

These days, it's remarkably easy to set up your own Web site. If you have a computer connected to the Internet, you can simply go to a site such as GeoCities or AOL and use their ready-made Web design templates to construct a simple personal page. These sites will give you a URL, store the content of your page and slap on some advertisements. Just like that, in an hour or two, your page is on the Web!

But what if you want to take your site to the next level? If you have a content-driven Web site, how can you make money off your traffic? If you are an online merchant, how can you get people to your site to buy your products? One popular option that serves both of these functions is an affiliate program. From How Stuff Works

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There are 3 common types of affiliate program payment arrangements:

* Pay-per-sale (sometimes called cost-per-sale): Amazon.com's affiliate program is an example of a pay-per-sale arrangement. In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some merchant Web sites, like Amazon.com, pay the affiliate a percentage of the sale and others pay a fixed amount per sale.

* Pay-per-click (sometimes called cost-per-click): In these programs, the merchant site pays the affiliate based on the number of visitors who click on the link to come to the merchant's site. They does not to purchase anything, and it doesn't matter to the affiliate what a visitor does once he gets to the merchant's site.

* Pay-per-lead (sometimes called cost-per-lead): Companies with these programs pay their affiliates based on the number of visitors they refer who sign up as leads. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.

There are a number of other arrangements as well. Basically, a company could set up an affiliate program based on any action that would benefit them, and then pay their affiliates based on the number of customers the affiliates send them who perform that action.

There are a couple of very popular variations on these basic payment plans:

* Two-tier programs:These affiliate programs have a structure similar to multilevel marketing organizations (also known as "network marketing") such as Amway or Avon, which profit through commission sales and sales recruitment. In addition to receiving commissions based on sales, clicks or leads stemming from their own site, affiliates in these programs also receive a commission based on the activity of affiliate sites they refer to the merchant site.

* Residual Programs: Affiliates in these programs can keep making money off a visitor they send to the site if the visitor continues to purchase goods or services from the merchant site. Many online merchants who receive regular payments from their customers (such as monthly service fees) run this sort of affiliate program. (From How Stuff Works)