Simply put, affiliate programs, also called associate programs, are arrangements in which an online merchant Web site pays
affiliate Web sites a commission to send them traffic. These affiliate Web 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. Some arrangements 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.
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.
There are three basic types of affiliate program payment arrangements:
* Pay-per-sale (also 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 (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 don't have to buy anything, and it doesn't matter to the affiliate
what a visitor does once he gets to the merchant's site.
* Pay-per-lead (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.
Additionally, there are a few pay-per-impression affiliate programs. Companies running these programs, also called pay-per-view
programs, pay affiliates based only on the number of visitors who see their banner ad. Usually, this sort of arrangement is
not structured as an affiliate program, but simply as a traditional advertising program. The advantage affiliate programs
have over traditional advertising is that in an affiliate program, an online merchant only pays its affiliates when it gets
a desired result. Traditional advertising, such as the ads you see on TV and a lot of the banner ads on the Internet, is relatively
risky for the advertiser. They spend money on advertising based on a guess of its effectiveness. When an ad brings the company
more money than it spent on that ad, the ad is a success. If the company makes less money than it spent, it has to swallow
that loss. With an affiliate program, an online merchant only pays its affiliates when things are working. Because there's
much less risk to the merchant, it's a lot easier for Web sites to join affiliate programs than it is for them to attract
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
Becoming an Affiliate
Becoming an affiliate is relatively easy. Go to any of our affiliate network sites 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.