What is Affiliate Marketing? 

In simple terms, affiliate marketing is when a company offers the opportunity for others to sell the company's products from their host websites in return for a commission on sales.

In 1996, Amazon founder Jeff Bezos attended a party. The conversation he had with one of the other guests changed Internet marketing forever. Why, the guest asked him, couldn't she sell books that interested her on her website and have someone else take care of the bookselling part of the business? Amazon's affiliate marketing program was born.

During the following 18 months, more than 100,000 websites joined Amazon's pioneering affiliate program. The party guest's website became the first Amazon affiliate, and I hope that Mr. Bezos rewarded her richly for the idea.

The absolutely best thing about affiliate marketing, from the standpoint of the company offering the program, is that they receive lots of exposure but only have to pay for results. Unlike banner ads, or traditional media, where the company pays for the number of people who read the magazine or see the TV show, affiliate marketers only have to pay after the sale is delivered. Sometimes a LONG time after the sale is delivered. They don't cut a check until a threshold commission, such as $25, is reached. In the meantime, they can use the money due to the affiliates as another source of funds.

Affiliate marketing can be good news, too, for website owners. It costs a lot of money to set up a business, order product, keep it in inventory and deliver it to the customer. Almost anyone can use affiliate programs as a way to handle this work effectively. The commission paid is less than you could earn if you totally controlled the process yourself, but the risks are much lower. It can free the website owner to do what they do best.

For example, Miss Jane Marple, mystery book lover, can read all of the mystery books she wants. If she reviews them and places the reviews on her site, other people can learn whether a particular book is worth reading. If Miss Marple does a good job of letting people know about her site, when a new mystery comes out people will look for her review. If she's an Amazon affiliate, Miss Marple's customers can order from her and receive great Amazon service. It's a win-win situation.

There are now thousands of affiliate programs available. Some are very successful. Others aren't. Some favor the company offering the affiliate program too much, to the expense of the website affiliates. The best affiliate programs work cooperatively with their affiliates, providing training and materials to help them make sales. They pay promptly and stay in touch with the affiliates.

Bad ones delay, provide poor customer service and really don't "get" the fact that it's a partnership. They leave affiliate sites alone once signed and don't work to maximize value for both sides. As a result, the affiliate sites don't make much money and they're likely to either drop the affiliate program or let it languish, unloved, on their website. You've seen these sites, which offer a crammed array of hot spots linking to affiliate programs. It's sort of like walking into a flea market, surrounded by lots of stuff, some good, some bad. They think, maybe someone will buy something! So they offer as many affiliate links as possible and, at the end of the month, receive little return.

There are a number of issues to consider when deciding to participate in another website's affiliate program and even more to consider if you're contemplating running your own affiliate program. Be sure to read the other articles in this series for more information.

Linkshare is one of the better membership programs that we recommend. They make life easy for setting up your affiliate needs and make it easy to choose affliate programs that complement your business focus.