Online Affiliate Marketing is a revenue sharing venture between a website owner and an online merchant. The website owner will place advertisements on his websites to either help sell the merchant’s products or to send potential customers to the merchant’s website, all in exchange for a share of the profits.

Affiliate Marketing Program
An affiliate marketing program is sometimes called an affiliate program, but also may be referred to as a pay-for-performance program or an associate program. An affiliate program is a marketing tool for the e-business that operates it, called merchant or advertiser and a source of revenue for the e-business that participates in it, called an affiliate or associate or publisher.

There are three ways to earn money through affiliate marketing:
1) Pay per Click or Cost-per-click affiliate programs: Every time a potential customer leaves the affiliate website by “clicking” on the link leading to the merchant’s website, a certain amount of money is deposited in the affiliate’s account. This amount can be pennies or dollars depending on the product and amount of the commission.
2) Pay per Lead or Cost-per-lead affiliate programs: The merchant pays the affiliate a set fee for each visitor who clicks through and takes and action at the merchant’s site, such as completing an online survey, registering at the site, or opting-in to receive e-mail.
3) Pay per Sale or Cost-per-sale affiliate programs: Every time a sale is made as a result of advertising on the affiliate’s website, a percentage, or commission, is deposited into the affiliate’s account.

The Amazon Story
The world’s biggest bookstore has one of the most successful examples of an affiliate program (called their associate program). Amazon now has well over 1 million affiliates! That is over 1 million websites actively promoting their products every single second of every single day. Amazon generates over 40% of its revenue through its affiliates program. That is over $3 billion in revenue every single year! As another (somewhat humble by comparison) example, Zeald generates over 50% of its revenue using its own unique affiliates program. Admittedly, not quite billions of dollars but that is definitely millions of dollars of revenue every single year.

Thousands of diverse e-businesses operate affiliate programs: E.g. barnes&nobale, dell,1-800-flowers, rackspace managed hosting etc.

Affiliate Programs as a Marketing Tool
The two major Advantages to merchant
1. Tie marketing effort directly to a lead or sales.
2. The merchant pays only for results.
The two major Advantages to affiliate
1. Additional source of revenue for affiliate who also sells products/services
2. Primary source of revenue for affiliate who offers entertainment or information
Two Approaches to Operating a Successful Affiliate Marketing
1. Acquire a huge and affiliate membership. e.g. The Amazon associates programs have over 1 million members as diverse as:
- RVPart – Sells parts for recreational vehicles and motor homes.
- Dilbert – Site for view cartoons, play games, send electronic greeting cards etc
- Books for Managers – Site for business reviews and lists of the currant top-selling business-related books provided by Business week, The New York Times, the Wall Street Journal, USA Today, and other publications.
- HaperCollins – Its site to promote its authors and their books. However, like many book publishers. HaperCollins sells its books through bookstores and not directly to the public.
2. Acquire a smaller number of highly effective affiliates that have a high volume of website traffic and offer web page content, products and services that are directly related to the merchant’s products and services.

Affiliate Programs as a Revenue Source
Participating in an affiliate program and then getting the most out of your participation involves:
- Selecting the appropriate merchant and affiliate program for your e-business
- Understand the terms of the affiliate agreement
- Add custom links to merchant’s site from affiliate Web pages
- Build traffic at affiliate site to increase click-troughs to merchant site.

Top 10 Tips for Choosing the Affiliate Program That Is Right for You
1. You have to identify a product or service for which there is a need. The product should be such that you would love and enjoy promoting it. You could start by searching for “Affiliate Programs” in the Search Engines.
2. The product or service should be relevant to your website.
3. It is always wise to join an affiliate program that is long standing, safe and secure and has a good reputation in the Internet world. This can be easily verified from the Better Business Bureau or other similar organizations. Visits to Forums and Discussion Groups will also provide you with a lot of useful information.
4. Most affiliate program providers provide a commission of 5% to 50%. The commission you earn for the sale of a product is your main income. So while choosing an affiliate program you should study the commission paid out and decide on a program that pays at least 35% for you to run your business successfully.
5. There should be a proper tracking system in place to record all the clicks and sales made through the text links and banners placed on your website, e-mails and other advertisements.
6. One important factor that is often overlooked is the “hits per sale ratio”. This indicates the number of hits that have to be made to a Text Link or Banner to generate a sale. This will give you an idea as to how much traffic is needed before a sale is made.
7. How often are commissions paid? This is another important matter that should be considered. Most reputed organizations pay their affiliates monthly or when they accumulate a minimum commission of $50 to $ 100 or as indicated by you. You should avoid any program that requires too many sales to reach the minimum amount.
8. Affiliate Programs are generally single tier or two tiers. A single tier program pays you for whatever business you have generated. On the other hand a two tier program pays you for the business you have generated and also a commission for the sales generated by a sub- affiliate, you have sponsored. A two tier program is always advantageous.
9. Long standing reputed organizations provide a whole range of tools and resources such as Banners, Text Links, Brochures, Websites and training for their affiliates. When choosing look out for such organizations because they certainly make life much easier and helps you grow your home based business.
10. Finally, you must read and understand the agreement before you join as an affiliate even if it happens to be the best organization in the world.

Understanding the Affiliate Agreement
The affiliate agreement created by the merchant and agreed by the affiliate, defines all aspects of the affiliate program and typically includes:
- Types of Web sites merchant will accept into the affiliate program
- Types of links allowed and guidelines regarding their use.
- Schedule and payments terms of fees and commissions
- Terms of usage of merchant logo, name and web content
- Technical specification that your web site must meet, if any
- Restrictions on types of content that may appear on affiliate sites
- Requirements for compliance with all government laws, ordinances, rules, and regulations.

Affiliate Tracking Systems
- Allow merchant to control how it credits click-throughs
- Monitor window of time in which affiliate can get credit for a click-through
- Record and store affiliate information
- Provide commission/fee reports

Affiliate management networks
An affiliate management network is a third-party entity that recruits affiliates, manages the registration process, tracks and properly credits all of the fee and commissions and arranges for payment. In return for these services, the affiliate management network collects from the merchant a percentage of each referral transaction’s fee or commission-perhaps as much 30 percent.

Well-established affiliate management networks: Example: Commission Junction, LinkShare [2]

Affiliate tracking technologies
To achieve this we develop a strategic online relationship with advertisers to improve the creation, management, and analysis of online marketing and sales activities. These activities are supported by a scalable and reliable tracking technology. Keeping track of the click-throughs and properly crediting the affiliates is a complex programming task. Companies such as BeFree and ClickTrade sell software that automatically monitors and credits all followed links resulting in a sale. Note that ClickTrade was acquired by Microsoft and is now co-branded as part of Microsoft bCentral.

Some tracking technologies are following:
- Custom links containing affiliate information or affiliate and merchant information
- Tracking cookies
- Third-party tracking software
- Application service provider tracking service
- Sub Domain tracking
- Database record matching.

Affiliate Marketing Risks and Challenges
Affiliate marketing is not without certain risks and challenges primarily form unethical affiliates and the negative perceptions online consumers have about tracking technologies.

Unethical Affiliates
- Cookie stuffing – Multiple cookies placed on visitor’s hard drive during a single visitor affiliate site.
- Spyware – General term used to describe software that has been installed on a personal computer without the owner’s permission, its unknowingly download and install spyware when you download games, screensavers, freeware utilities and so forth.
- Parasiteware – Redirects affiliate links and Replaces content of existing tracking cookies
- Spammers – Merchant is responsible if affiliates use spam to promote sites
- Negative perception of tracking cookies – Many consumers install and use blocking software which includes Block tracking cookies and Delete tracking cookies.

Why Affiliate Marketing Is Profitable for E-Business
If you have been considering an affiliate marketing venture, there are some very good reasons why you should go with this method of generating recurring revenue. Here are some of the ways that affiliate marketing can be a lucrative means of creating income that will be stable and allow you to grow exposure over time.
- One of the first advantages of affiliate marketing for the new entrepreneur is that the startup cost is very low. Most companies that offer affiliate marketing programs do not require any type of monetary investment on the part of the affiliate.
- The second expenses are limited to what you have to pay to connect with the Internet, the software you may need to load on your computer, and a web site where the ads associated with the affiliate marketing program can be placed. With web site hosting such an inexpensive service these days, setting up your own web site for the affiliate ads will be a breeze.
- Another reason that affiliate marketing is such a moneymaker is the fact that there are so many different types of ways to set up the program. You can go with the pay per click option, which works out great when it comes to promoting special offers. Ads that lead to product review sites often are a way to allow product users to go through your portal and leave comments on the items they purchase.

First Thing’s First-Avoid These Silly Affiliate Marketing Mistakes!
While affiliate marketing is a great way to earn a living, the fact is that many people become discouraged and drop out of programs. In many instances, the failure to be successful with affiliate marketing has to do with making a few simple mistakes. Here are some examples of those mistakes and why they should be avoided.
- A low-quality website with no original content and tossing in some affiliate links. While it is certainly true that you need to have a web site up and running in order to participate in an affiliate program, there is also the need to apply some effort to getting the word out about your site. Otherwise, the chances of people visiting your web site and clicking on one of the links are pretty slim.
- Another mistake many affiliate partners make is not choosing products that have some relevance to the content of your web site.
- Keeping your site content and the ads more or less relevant to one another will make it easier to generate revenue, and not fail as an affiliate marketer. Now, this may seem intuitive – but many make this mistake in subtle ways (i.e. they mismatch their customers with products).
- One final mistake that many affiliate marketers make is not sprucing up their web sites from time to time. Keeping the content fresh is one way of building and keeping a loyal reading audience because keeping the same old look and the same old text with nothing new to entice people back is a sure way to limit your chances at being a successful affiliate marketer. The fact is that you do have to proactively promote your site, keep the content fresh, and make sure the ads have some connection to the subject matter of your site.

What You Need Before Getting Started and Affiliated Marketing
While there is not a lot of expense in starting up as an affiliate marketer, there are a few things that you need to do if you really want to make money marketing other people’s products.
Here are some basic tips to help you line up all your things to do before you ever sign up for that first affiliate program.
- One of the basic needs for any successful affiliate program is to have a web site of your own. While it is possible to purchase ad space on sites and to advertise through Google Adwords, this is short term strategy setting up a basic web site that has a particular focus will make all the difference in the world to the success of your program. Keep in mind that your web site does not have to be complicated with a lot of flash media, animation or other fancy bells and whistles.
- In fact, if you plan on focusing your attention on affiliate marketing strategies that target the home consumer, you are better off with a basic site that will load quickly on a dial up connection. After all, dial-up is still extremely popular in a number of locations.
- Online payments are a great way to easily receive your affiliate payments and keep track of your earnings. From this angel, you may want to look into opening an account with one of the more popular online services that send and receive funds. i.g PayPal
- Another important aspect is determining just what your contact information will be, regarding communication with your affiliate program. This would include an email Address and physical mailing address. The email address should be one you have set aside specifically for your marketing business.

How to Pick the Best Product with the Best Payout and Great Demand
- One of the first things to think in terms of when it comes to affiliate marketing is determining where your talents and expertise happen to reside. One of the keys to picking the best products for your particular situation have to do with what you know and how much you know about it. As an example, a person that has worked in telecommunications for a number of years will probably know a great deal about telephony, related services, and technology that are used within that industry.
- Another aspect about setting up with the right products to promote has to do with where you see a niche to fill in. Finding a population or business sector that appears to be largely ignored in the marketing process can provide the inspiration you need to create a successful affiliate marketing program.
- Do not allow yourself to get discouraged simply because everything is not crystal clear as you begin this part of the process. Practicing some patience and giving yourself time to find the right products to promote as part of the program will only serve to make you more dedicated to the success of the program