Affiliate programs also known as associate programs, referral programs and partner programs among others things are Internet sales systems whereby a website which sells products or services can have hundreds and even thousands of other websites helping them sell their inventory.
The webmaster of the helping website is called an affiliate and the website which runs the affiliate program is usually called the merchant.
The affiliates help the merchant by exposing the merchants products and services to visitors of their web site. This is done by the careful placement of banners and links, sometimes merchants even provide an actual page on their own server for their affiliates to promote.
Why would anyone want to promote someone else's product on the Internet? Well it's what the merchant offers in return to affiliates which makes affiliate programs attractive to webmasters. In return for promoting the merchants products and services the affiliate receives a percentage of sales that they've referred.
Imagine for example someone visits xyz.com and clicks on a link to abc.com and then buys product X on abc.com for $100. The webmaster of abc.com has in this case just created a sale for xyz.com and will receive anything from around $10 to $60 for creating it.
The percentages of commission that affiliates receive varies widely and depends on the price of the product and how much profit the merchant is willing to share with his or her affiliates.
There are two main types of affiliate programs, these are one tier and two tier. One tier programs allow only the direct referring affiliate to make a commission based on sales referred, whereas with a two tier affiliate program you as an affiliate receive a percentage of sales from any affiliates who join the affiliate program through you.
Affiliate programs are great if you've a medium to high traffic website but you don't have your own product. Nearly all products are catered for by affiliate programs so you can easily find one which your websites visitors will be interested in.
How do affiliate programs work?
In order for affiliate programs to work the merchant has to have specialized scripts installed on the same server that his website is hosted on, or use a third party service like clickbank.
Both the scripts and services provide each affiliate with an affiliate id which is unique to them, they then direct a new affiliate to a webpage or email them the HTML they need to place on their page, this HTML will contain the affiliates ID.
Whenever a visitor clicks on an affiliate link be it a text link or an image link they're immediately taken to the merchant's website. The merchant tracks where the visitor comes from by using cookies. If that visitor then buys from the merchant then the affiliate will receive a referral fee.
Usually every month the merchant will send all his affiliates who referred sales a check for all the commission they've made. The merchant is not losing money by sharing profits because without his affiliates he would not have made profits in the first place.
Can affiliate programs make me rich?
The simple answer if your an affiliate is no, you'd have to run a mega traffic website to expect to get rich through affiliate programs. You can however create a very healthy income through them if you've a medium to high traffic website. It's not uncommon for knowledgeable webmasters with 10,000+ visitors a month to make around $2000-$3000+ a month. In most cases however a $500 fee would be a successful month for any affiliate.
It's a different story altogether however if you're the merchant, in this case they can make you rich. Imagine 200 high-traffic sites recommending your product. Your bound to make hundreds of sales each month, this is hundreds more sales than you would have on your own. Next you give your affiliates their cut and you take the rest. It's a win-win situation.
About The Author:
David Callan is an Internet marketing professional and webmaster of www.akamarketing.com/webmaster-forums. Visit his webmaster forums for the latest discussions on search engines, website authoring and Internet marketing related issues and topics.
Thank you for attending today's guest lecture. Affiliate marketing is one of the more enlightening ways available to create an extra stream of income from your website. I let Mr. Callen have the floor today because his explanations are way more concise than my usual verbous style and a clear understanding of Affiliate Marketing is essential for success. When you are ready, I will turn the podium back over to Mr. Callen for the second half of today's lesson.
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