Firstly, to minimize confusion, let's define a couple of terms that are thrown around all the time, but not necessarily well understood by everyone.
This is essentially anyone who owns and/or operates a Web site. If you have your own personal or business Internet Web Site, then you are a Webmaster.
When used in the Internet context, this simply refers to the subject-matter contained on your Web site. It is the actual combination of words and graphics on your site.
These are words or graphics on webpages that are usually underlined and highlighted in blue, and sprout a little hand or arrow when you move your mouse pointer across them. When you "click" on them, you (via your browser) are taken to a different Web page or Web site from the one you are on. For example, you clicked on a hyperlink (also simply called a link) to get to this page.
Pioneered By amazon.com
Affiliate programs are not really all that new. The concept was pioneered by amazon.com in its early days in the mid 1990s. By early 2001, amazon had over 500,000 affiliates! By now, I'm sure that figure must be in the millions.(Actually, amazon.com calls them "associates", but these days they seem to be more widely referred to as "affiliates", so I will use that term from here on in.)
The way affiliate programs work is actually amazingly simple and incredibly efficient. Let's use amazon.com as an example.
Affiliate Programs Are Free
Typically, a webmaster with Web site content that is complementary to the products that amazon.com sells (i.e. books, tapes, videos, CDs, etc.) would want to sign up as an amazon.com affiliate.
There is no charge to join the affiliate program of amazon.com, or that of any other merchant.
It's All About Links
The amazon.com affiliates, are then provided with HTML hyperlinks to the amazon site, in the form of banners, buttons, or text links. They then install these hyperlinks on their own site in appropriate places, usually near complementary content, either text or graphics.
Once these links are set-up, when visitors to the affiliate site click on the amazon.com links, they are immediately taken to the amazon.com site where they can view the products for sale, and possibly make a purchase.
Affiliates Gets Commissions From Each Sale
Under the affiliate agreement with amazon.com, if that re-directed visitor buys something while at the amazon site, the affiliate is entitled to a percentage of the sale as commission, such as 5% or 10%. These percentages vary from merchant to merchant, and can range between 5% and 50% of a sale.
An Affiliate Example
For example, say you maintained a gardening theme Web site that provided all kinds of information imaginable on the subject of gardening. Perhaps you also sell seeds and bulbs and a few other gardening-related products, directly to your customers. Becoming an affiliate would mean that, in addition to income from the sale of your own products, you could have an entirely new revenue stream by becoming an amazon.com affiliate.
To do this, you would simply sign on as an amazon.com affiliate, and then display amazon.com links in the appropriate context on your Web site. These links would in turn entice many of your customers to click through to amazon.com in order to view the gardening books and videos, for example. Some of them would buy items while there, and you would receive a percentage of each sale made!
Belong To Many Programs At The Same Time
Not only that, but you could also have affiliate links to many other merchants at the same time. Say, with a garden supply company, or an online hardware store, or a florist, or a landscape architect, etc. There really is no limit to how many affiliate programs you can belong to simultaneously, as long as they they make sense for your site, and you can keep track of them all!
Everybody Wins With This Model
It's an absolute win-win situation for both affiliate and merchant! The affiliate simply re-directs its regular visitors to the merchant's site, and then the merchant pays a commision to the affiliate for a sale that it otherwise would not have made. The merchant gets the sale, and the affiliate gets the commission. It's that simple.
In addition to the sales commission arrangement, there are many merchants that pay their affiliates on the basis of raw traffic counts such as, so many cents per click, or so much per lead. These latter payment methods are most attractive to affiliates with very high visitor traffic counts that they can re-direct to the merchant site. Affiliates with lower traffic volumes tend to prefer the sales commission approach since it is not as directly volume-based as the other method.
New Affiliate Programs Emerging Daily
There are literally thousands of affiliate/associate programs available on the Internet. With this many programs, it is not that difficult to find programs that complement a particular Web site theme, no matter how specialized or offbeat it may be. In addition, new affiliate programs are being added daily.
Third-Party Honest Brokers
This kind of volume in affiliates has led to the emergence in recent years of a new type of online service provider that acts as an "honest third-party broker" between the affiliate and the merchant. Both the affiliate and the merchant register independently with these companies, and then link-up through them.
These brokers then become responsible for handling all aspects of registration, linking, transaction processing, and check issue, for both the merchant and the affiliate. In return, they receive a small percentage of each sale.
There are half a dozen or so of these third party brokers with such names as Commission Junction, ClickBank, and ClickTrade. They work very well and really streamline and simplify things for both affiliates and the merchants.
The Most Powerful Way To Market Products Online
Based on the above, it's not hard to see the potential marketing and distribution power of this model, and why it is being touted as the next frontier for large corporations wanting to sell directly to customers via the Internet.
After all, why not have a no-cost or low-cost "virtual sales force" comprised of hundreds of thousands of affiliates which are willing to work entirely on a commission basis? (remember that the pioneer, amazon.com, has over hundreds of thousands of associates!). It sure beats the increasingly ineffective banner and button advertising.
For affiliates, it's a low-cost investment business opportunity through which they can offer their site visitors high-quality brand name products and get paid for each sale. They don't even need to have their own product or service to do this. It also gives them a chance to use innovative sales strategies such as "opt-in e-mail follow-up marketing", to increase their sales.
By now, it's a proven online marketing model, that enables hundreds of thousands of folks worldwide to make additional income selling other people's products!
A Simple Affiliate Strategy
Here's a simple 5-step strategy that virtually anyone could implement to become a participant in the online "affiliate program economy".