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Affiliate marketing is a revenue sharing venture between a web site or blog owner (Publisher), an Affiliate Management Company and an online merchant (Advertiser).

The Publisher/Webmaster has a valuable commodity called visitors and it's these visitors that the advertiser wants a piece of. They might have the products and services but that does little for them unless they also have the potential customers to check out (and buy) their wares. This is where you come in as a Webmaster by generating traffic to your web site and then sending a portion of your visitors to the advertisers web site.

When these visitors go to the advertisers site and they buy a product/service or they subscribe to the advertisers newsletter for example then you earn a commission, sometimes big, sometimes small but you earn it. You sent the visitor, the visitor purchased and you get paid.. affiliate marketing at it's finest.

Let's not forget about the most import part of the formula since they orchestrate and coordinate activities between the webmaster and advertiser, we're talking about the affiliate management company.

As an intermediary, an affiliate company makes it easier for a webmaster to find quality advertisers to run text ads or banners for. Why try and join 10 different affiliate programs such as Amazon, eBay,  and others only to attempt to keep track of your ads and earnings through these 10 individual web sites when you could command ads from thousands of advertisers through one affiliate management company.

With 8000 people a month (266 a day, 11 per hour) visiting your web site and with only 1/8 of your visitors (1000) clicking on your banner that went to the Entrepreneur business course site where only 10% of those (100 people) stayed more then 1 minute on the site, and finally only 1/10th of those people (10) actually bought a $69 home business course and subscribed - you would earn $222.50 for the month. So what the heck happened here, $222.50 a month isn't all that shabby and would cover a monthly car payment. So (get ready to scream woo-wee), that silly little ad... is your car payment. This is not far fetched and it IS attainable for you.

With only a 1.25% response rate from your traffic, you've generated enough income to (ok and we'll say it now)... to earn you a 100% free car!

If you still find any of this hard to believe, then you might want to jump over to our show me the money page and take a little peek at what Margie and I have done in the past... yep, not just our car payment but even a bit more. You can return back here to the Affiliates 101 page when you're done there.

Affiliate marketing through affiliate programs as we discuss on this web site has nothing to do with all the "fast cash, join now, insider information, MLM, over-hyped, make money while you sleep, guru approved, private label rights (PLR), we'll do all the work, auto responder email blasting, secret handshake stuff that has overly saturated the internet since there was an Internet. Our example above and what we do as affiliate marketers is what we call "passive affiliate marketing". It's takes three main elements for you to accomplish this... good and valuable web content, quality targeted visitors, and affiliate banners or text ads - this creates the most simple and almost hands off income generation available to you online.

OK, we best get back to the affiliate company discussion, we got a little deep into the example above and got a tad off track. Focus David, focus.

So... Affiliate companies also allow websites offering affiliate programs (typically online merchants) to reach a larger audience by promoting their products and services through all of the publishers participating in the affiliate network. Advertisers then directly benefit from affiliate marketing companies too since it's also a one-stop-shop for them since they want Publishers with web traffic.

The interaction between your visitors, the advertiser, the affiliate company and of course you is fairly standard throughout the affiliate industry however to give you a better idea of the flow we put together a mini diagram for you:

The early days of affiliate marketing on the Internet primarily involved Amazon and its associate programs since then retailer company involvement in affiliate programs and marketing has grown exponentially with many companies such as Alert Pay, AWeber or GoDaddy for example adopting this business model, especially since for them it is free advertising (through you the publisher/affiliate/webmaster) plus they receive the added bonus of free branding since their name is virtually plastered all over the Internet getting burned into everyone's brains along the way.

Generally advertisers reward affiliates (through the affiliate company) based on actions that produce measurable value to the advertiser, there are various models that determine how you'll get paid, the top three are cost per sale (CPS), cost per action (CPA) and lastly cost per click (CPC). Eighty percent of affiliate network programs today use revenue sharing or cost per sale (CPS) as a compensation method, nineteen percent use cost per action (CPA), and the remaining programs use other methods such as cost per click (CPC). Here are the detailed breakdown of these models for you:

  Cost per Sale - This is sometimes known as Pay Per Action or PPA and is an online advertising pricing model where the advertiser pays for each specified action such as a purchase of their product or service that was linked to the advertisement on your web site. In this case a visitor from your site will not only need to go to the merchants web site, they'll also need to complete the purchase at the merchants site before your affiliate program commission is deposited into your affiliate commission account. This can be for a one time sale, or in some cases (if you're lucky) you can earn "for life" whenever this customer purchases from that merchant any time in the future. These type of "residual" sales offers are rare however when you're involved in one of them and you're making sales, all you can hope for is that they stay in business for a very long time. Example: The link on your web site sends a visitor to a site that sells cat clothes (surely there's actually a site out there that does this), and the visitor buys a decadent cashmere sweater for tinkerbell at a cost of $49.00, let's say the commission is 15% so you'd earn $7.35. Not all that bad for keeping little tink cozy warm on a cold and brisk winter morning.

  Cost per Action - Many advertisers consider CPA the optimal way to buy online advertising, as an advertiser only pays up when the desired action has occurred. An action can be something as simple as sending a visitor to another web site. If you've seen Google Ads (ahem like ours there in the left column) then this is a prime example. We earn a small amount every time one of our visitors complete the action of clicking through to a site via those Google ads. In other cases a CPA might involve something such as a form being filled out in a survey, or signing up for a merchants newsletter. The desired action by the way to be performed by the visitor you sent them is determined by the advertiser, however you'll always know that beforehand. Example: The link on your web site sends a visitor to a site called Affiliate Company List where you can learn to monetize your web site or blog. This site has Google ads in the left column (how convenient). You see something of interest and click the link. In this case your commission is variable, but could earn you anywhere from a few pennies per action (click) to a few dollars per action.

  Cost per Click - Here advertisers pay only when their ad is clicked, this isn't the same as CPS or CPA above since it really doesn't matter what the visitor does once they arrive at the merchants web site. The merchant in this case is simply paying you for a visitor... per click. This has become very popular with some pay to click search engines where the advertisers there typically bid on keyword phrases relevant to their target market. It also applies to general content sites where advertisers are charged a fixed price per click rather than use a bidding system. So, it all comes down to an advertiser (merchant) paying a publisher (again, you) for a single click on its advertisement on your site that brings one visitor to its own website. Example: The link on your web site sends a visitor to a web site. Let's say that the agreed upon amount is 5 cents per click. This amount is fair, especially considering the fact that the merchant does not know if you're sending them a targeted visitor that's interested in what they have to offer or whether you're sending them someone that really could care less about their products or services and end up leaving their site within the first 10 seconds of arriving there.

  For more affiliate marketing terms & abbreviations be sure to check out the Affiliate Glossary

While these three affiliate commission models might seem complicated at first, it really comes down to what will work on "your" web site or blog. You might use one model, two or even all three, it really depends on the type, theme and content of your web site and the visitors you're receiving. A majority of sites use CPS since a big part of the Internet is about people buying stuff online. So, you including the CPA model is just smart web mastering - if you're visitors are going to leave your site or blog, well... you might as well give them an avenue to click out on - that earn you money when they leave.

Margie and I could have filled another few dozen web pages with some of the more complex affiliate marketing and affiliate program information for you, however we wanted to keep it light and really just give you a basic understanding and a general overview of affiliate marketing. If we were to condense this area down to one paragraph for you it would be:

 "Affiliate marketing through affiliate programs is a beneficial and profitable business agreement between three parties, the publisher (you), the merchant (advertiser), and the affiliate management company (the middleman). You have the traffic and visitors, the merchant has the products and services, and the affiliate management company brings you two together by collecting the money from the merchant and then paying your earned commissions when your visitors complete certain actions such as buying a product, signing up for a service or subscribing to a newsletter. You then, put people that have a problem, in contact with someone who has their solution - and then you get paid very well for it"

For even more affiliate information you'll want to visit Afiliorama, a great affiliate marketing resource site that we've used for years now. Nope you don't have to pay for it, it's a freebie. Margie and I joined as free members long ago and to this day we still find helpful affiliate marketing  information there. Check them out when you have the chance it'll be worth your time and the free affiliate educational goodies will help you grow your future (log term) affiliate earnings too.

If you own a web site or blog and you have visitors, any amount, you can turn your web site into your personal little "income stream machine" (kind of catchy huh?) but you'll need a bit of assistance and that's where affiliate company programs and the associated advertiser offers come into play for you...

We're very serious about the affiliate marketing we do, but sometimes you gotta take a small break so before you head over to the next page here's a little "teamwork" parody humor we put together for you.

  Learn more about affiliate management companies and how they can help you. 

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