Affiliate programs (also known as referral programs
or partnership programs) offer a way to harness
the traffic coming to your website to generate revenue, without
the complication and expense of selling anything yourself.
Instead, you earn a commission for producing a transaction.
What constitutes a "transaction" and how much it's worth will
vary with each affiliate program.
Affiliate programs are generally offered by sites selling goods
or services, although some affiliate programs reward other types
of transaction such as getting a visitor to sign up for a free
newsletter, or download a screensaver.
Many affiliate programs pay a commission based on a percentage
of the revenue generated by purchases made by visitors coming
from your website. For example, if you're participating in an
affiliate program that offers a 10% commission rate and you send
over a visitor who purchases US$100 worth of products, you've
just earned US$10 in commissions. The commission rate itself can
vary from as little as 1% for high-priced items offered by
well-known manufacturers to 50%+ in the case of intangible
products such as eBooks or website subscriptions.
Some affiliate programs pay per lead rather than per sale - in
other words, you bring them a prospective customer and they pay
a fixed "finder's fee" for the chance to market to that
customer. This is a typical arrangement for affiliate programs
in the insurance and credit card industries, for example.
There are other payment models as well, for example a (small)
payment for every visitor sent to a site or a payment for every
time an advertising unit (typically a banner or pop-up/pop-under
ad) is displayed. Such affiliate programs pay regardless of
whether a visitor ultimately becomes a customer.
When you join an affiliate program, you will be given a
specially formatted URL (or series of URLs) that you should use
to link to the affiliate provider's site. This will enable the
affiliate provider (either the merchant, or a 3rd party service
providing tracking on its behalf) to track the traffic coming
from your site and record when actions that are rewardable
(purchase, lead and so on) take place.
Key info to take away
Affiliate programs vary widely in terms of overall quality and
reliability, commission rates, statistics, the amount of help
that the parent site offers in marketing the products or
services it sells, and so on. By thoroughly understanding an
affiliate program, you'll minimize the risk of not getting paid
- and maximize your potential earnings.