How Do Affiliate Programs Work?

An affiliate program is a partnership with an online merchant in which the affiliate earns a commission for referring sales and/or leads to the merchant’s online store. Affiliate programs are also known as associate, referral and bounty programs.

From a merchant’s perspective, partnering with affiliates is an inexpensive marketing strategy to increase sales, drive traffic, generate qualified leads and extend brand reach.

Affiliate marketing is as easy as 1 – 2 – 3:

  1. You join the affiliate program and place links on your site, or in your newsletter.
  2. Your visitor clicks that link and buys a product, service or fills out a form.
  3. You earn a commission for sales and/or leads generated through your links.

3 types of commission schemes:

1.   Pay-Per-Sale – Pay-Per-Sale programs are also known as Partnership and Percentage Partners programs. These programs pay either a fixed dollar amount or a percentage of sales generated by your links.

2.  Pay-Per-Lead – Earn a set amount whenever your customer fills out a survey or requests a quote or information.

3.  Pay-Per-Click – Pay-Per-Click affiliate programs are similar to Pay-Per-Lead.

Essentially you are paid each time one of your visitors clicks on the link through to that programs site.

How does the Merchant know that the visitor came from YOUR site?

As an affiliate you will be assigned a special link coded with an ID that is unique to you. Software on the merchant’s site tracks sales and leads generated by that unique affiliate link.

For example, Amazon’s homepage URL is:

However, as an affiliate, my affiliate ID is ‘byebye925-20′. My link to the homepage therefore looks like this:

By attaching your affiliate link to a banner ad, small graphic or a text link you earn a referral fee from every sale generated through that link.

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