Affiliate Marketing Basics

Affiliate marketing is the process of tracking leads and sales for the purposes of rewarding individuals and companies for referring others to their web sites that convert into leads and sales with commission payments. Usually, this process involves the use of a specially-encoded tracking hyperlink that identifies you as the referrer of the traffic.

There is one very easy way to get started with affiliate marketing. If you've ever used the Google search engine, it's likely that you will have seen some advertisements called "sponsored links." On Yahoo's search engine, you get a column called "sponsor results." MSN's search engine calls them "sponsored sites." In each case, from the heading, you can tell that people pay for those links to be published on the search engine.

These search engines have each set up a nice easy way to relieve you of some money from your credit card, for which they display these adverts for you. You don't pay each time the ad is shown. You only pay if the reader clicks on your ad, which will send the reader to the web site you have specified. You decide on the text of an ad you would like to place, when the ad should be displayed (for example, when somebody searches for "Christmas"), and how much you would be prepared to pay if the person searching clicks on your ad. The person doing the search is then sent to the web site you specified, and you get charged an amount that may be as little as one penny, but typically may be in the region of 5 to 15 cents or 3 to 10p. Google's service is called Google AdWords, and I believe it's the most popular of these services.

Now, if you had a product to sell, you could easily make money this way, as long as enough people buy your product after you've purchased your advertising. If you don't have a product, you can still make money from the commissions, again, as long as the amount you are paying for advertising does not exceed the amount you are making with commissions.

How do you find affiliate programmes? There are many affiliate networks and individual affiliate programmes out there. ClickBank is one of the most popular affiliate networks, also providing credit-card processing services. ClickBank mainly deals in electronic delivery products such as electronic books and software, and, at the time of writing, commissions can run as high as 70% for these products (ClickBank claims commissions can be 75%, but they take a 7.5% + $1 cut, and the remaining money is shared between the vendor and affiliate according to the vendor's chosen commission percentage).

Another affiliate network is ValueClick's Commission Junction, one of the largest, which administers affiliate programmes for a lot of household brand names such as eBay. There are many smaller affiliate networks, and there are also affiliate programmes that are independent of any network, where the merchant runs the tracking software.

What most of these affiliate networks and programmes have in common is that you can sign up as an affiliate for free, and the networks or merchants will send you money when your commission reaches a certain level; in some cases this is done electronically, in other cases through the issue of cheques. Some people treat affiliate marketing as a hobby; for others, it's a lucrative full-time business. Earnings can literally be uncapped, and your success depends on how dedicated you are to the business, and, to a certain extent, luck.