Introduction to Affiliate Program Income

Starting a business is usually an expensive proposition. But with an online "affiliate program" you can at least eliminate most of the setup expenses.

Affiliate programs are online networks where merchants -- such as Ebay, Amazon, Barnes and Noble, Kmart, and thousands of equally popular and many lesser known companies -- sign up to allow website owners (publishers) to sell their goods and services on a commission basis. Signing up with a legitimate affiliate network is free and you never have to pay them a dime -- they pay you, if you sell.

With an affiliate program you never have to stock inventory or fill orders; the merchant does all that. All you have to do is attract customers. This may be the most difficult part of any business, but at least you eliminate many of the other headaches associated with running a business.

The commissions you'll receive in an affiliate program will probably be less than the markup you'd make in your own business, but that's the price you pay for reduced headaches. (Tylenol is even better; but no one makes money taking Tylenol.)

You will need a website to sell for an affiliate program. And you will probably have to modify it often. So, unless you're already doing very well with it, it's probably not a good idea to hire an expensive consultant to set up and regularly modify your website. You can do it yourself with some user friendly software (like Frontpage) or a website hosting account that comes with a website builder.

While some affiliate networks will accept your signup instantly, others will scrutinize your website to see whether it meets whatever their requirements are: for example, how much traffic (visitors) it gets, the demographics of the traffic, what industry you cater to, and so on. Once you sign up, you (often, but not always) have to apply to each merchant individually.

A few affiliate programs that come to mind are cj.com (Commission Junction), performics.com and clickbank.com. You can find many more by googling "top affiliate programs."

Some merchants, like Amazon.com (affiliate-program.amazon.com), run their own affiliate programs, so you don't have to join a network.

Besides commissions and fixed amounts per sale, some merchants will pay for other "actions," such as "leads" and "clicks." A lead is when a visitor signs up for something (usually free) or request some info. A click is when a visitor simply clicks on the merchant's banner or link that you've put up on your website. (You get these banners and links from your affiliate program account.)

The amount of compensation, which is specified up front, varies from merchant to merchant, even for the same products and services. It's important to keep in mind that merchants that pay per click or per lead usually have anti-fraud software to catch website owners who enter fraudulent clicks or leads; so cheating is never a good idea.

Generating traffic and getting good "conversion" (visitors turning into sales) are vast topics in their own rights and beyond the scope of this article. An ideal situation, however, would be if you already own a domain name (perhaps from a company that's no longer in business) that already gets traffic, and it converts into considerable sales. Otherwise, advertising campaigns, perhaps through PPC (pay Per Click) ads on google.com and/or yahoo.com, to generate traffic is one way to go.

Obviously, affiliate programs are not magic-bullet businesses where you set up a website, and a year later you're flying around on private jets. Developing a business out of an affiliate program probably requires the same business savvy as that of a "brick and mortar" (real, physical) store; it simply involves a few less headaches.

One beauty of affiliate programs is that you can try several products, services, lines or approaches before hitting one that gives you a good ROI in less time and expense than one "brick and mortar" business; and you never get stuck with a lease or inventory. Website hosting is so cheap these days, a one-year commitment (which you seldom have to sign up for; monthly payments are usually available) can cost you less than taking a family of four to the movies. And a domain name averages only about ten dollars a year.

If you have your own goods to sell, you might want to join these same affiliate programs as an "advertiser" and perhaps get others to sell your products for you.