Affiliate Program Fundamentals

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.