Affiliate programs are also known as associate programs, and are arrangements where an online merchant web site will pay its affiliate Web sites a commission to send them traffic through banner or text links that the merchant provides for you. The affiliates place links to the merchant site, and are paid a bounty either for just sending someone to the site or a much higher bounty if the visitor buys something from the merchant.

Setting up an affiliate scheme is a great way to sell your products online if you are a merchant yourself, but it can also be a cheap and effective marketing strategy; it’s a good way to promote your site and get lots of inbound links.

There are at least three levels involved in an affiliate program transaction:

• The customer who visits your web site initially
• Your affiliate web site
• The merchant site where the products / services are actually on offer

In 1996 Amazon.com started the idea as an Internet marketing strategy. Affiliates of Amazon.com added links to books for sale on Amazon.com to their own web sites, on the promise that a percentage of the sale is paid to them if someone clicks on the link and then makes a purchase. The affiliate initiated the sale ideally by pre-selling (illustrating the benefits or how great the product is beforehand), and then Amazon.com did everything else to complete the transaction: Order processing, collect the payment for the product and shipping the product to the customer. With more than half a million affiliates, Amazon.com is certainly a world leader in the success of affiliate programs.

Recently affiliate programs have become extremely popular, becoming increasingly varied in how they are run and revenue is calculated. Web sites that are not e-commerce based can find affiliate marketing a fun way to enjoy the potential of e-commerce and perhaps use affiliate marketing as a lead to their own e-commerce sites as more potential customers visit their sites.

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