How Affiliate Programs Work

There are three general types of affilate programs:

Pay-Per-Sale (PPS) - in which an affiliate earns a commission or fixed dollar amount based on each sale made through links from the affiliate's site.

Pay-Per-Lead (PPL) - in which an affiliate earns a fixed amount every time a customer directed from their web site fills out a survey, requests information, joins a program, etc.

Pay-Per-Click (PPC) - in which an affiliate earns a fixed amount every time a potential customer clicks on a link from the affiliate's site to the merchant's site.

Once you are affiliated with a merchant, you may place their ad(s) on your web site. When a customer clicks on one of these ads and is taken to the

merchant's online store, if they then make a purchase, fill out a survey, etc., then you get a commission for that sale or referral based on the merchant's payout structure.

The million dollar question that I had when I first started, and I'm sure you're wondering about right now, is "How does the merchant know that the sale/referral came from my site?" When you join an affiliate program, you are assigned a tracking number or code, usually referred to as an affiliate ID, that is unique only to you. When you create a link from the ad on your website, you simply include this ID in the link and the merchant will know that the customer was directed from your site. While a normal link to a page selling product 'ABC' at merhcant 'XYZ' may look like:

http://www.xyz.com/products/abc.html

Your affiliate link may look something like:

http://www.xyz.com/product.asp?PID=1234567&AID=9876

where your affiliate ID is '9876' and the product ID or SKU for item ABC is '1234567'.

This example is a hypothetical link to a specific product or product page. Most merchants also permit you to link to their home page, or any other page on their web site. Most of the ads you will place on your site are in the form of banners, text ads, images or text/image combinations. Many merchants also supply you with more advanced linking options such as data feeds, store fronts, virtual stores, search boxes, and the like.

So, now you know what an affiliate program is, and you know how the concept works. All that's left for you to do is find some products to promote and slap some affiliate links up on your web site, right? Well sure, as long as you don't want to make any money. ;-)

The item we discuss next is probably THE most important part of the affiliate business process. That item is identifying an area of online commerce that you will enjoy working with, AND one that you can make profitable. This effort is commonly referred to as identifying your niche.

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