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What is Affiliate Marketing and How Does It Work For You?

Affiliate marketing is a relatively young Internet-based marketing technique where one Web business partners with other Web businesses to market their products online and send customers to their site to buy whatever it is they are selling. In old-time sales lingo, affiliate marketing is online revenue sharing.

With affiliate marketing, one big Web site signs up smaller Web sites (the affiliates) that then post advertising and content on their Web site that is designed to drive Web traffic back to the original site. The affiliate site is then paid for the customers they send to the partner site, much like commission sales in the non-Internet world.

Affiliate marketing on the Internet was primarily featured on adult content sites when it began shortly after the World Wide Web became popular. The concept expanded to include the music industry and finally exploded when Amazon.com started their affiliate program in July of 1996.

In a nutshell, smaller associate Web sites signed up with Amazon.com and then posted banner ads, links and products on their Web sites. When a customer clicked on one of these links or ads, they would be instantly whisked away to Amazon.com where they could make a purchase. Then Amazon paid the smaller, affiliate site a commission for making the sale possible.

So, now you know what Affiliate Marketing is (hopefully). Here's how it works.

1. Web site 1 becomes a partner with another, usually larger, Internet company (Web site 2).

2. Then Web site 1 posts ads and content on their site that has been specially designed to entice customers to travel to Web site 2.

3. Customers visit Web site 1 and check out their ads and high-quality content.

4. Web site 1 customers click on an ad, link or product that sends them to Web site 2, where they buy something.

5. Web site 2 compensates Web site 1 for all of the customers they send their way.

Compensation in most affiliate marketing programs is done via revenue sharing or cost per sale (CPS). This involves paying the affiliate a specific percentage of the revenues that were generated from customers the affiliate site referred, minus tax, shipping and other costs.

Affiliate marketing is utilized most frequently with adult, gambling and retail sites on the Internet. However, it is a growing online marketing concept and is expected to see a serious boost in the entertainment, finance, cell phone and travel industries soon.

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