Affiliate marketing is a way of making money online by promoting someone else’s products.

As an affiliate you’re essentially a commission salesperson for the products you’re promoting: You earn a commission for every paying customer you send to the merchant selling the product.

It’s kind of like being a real estate agent: You don’t own the home you’re promoting, but you get a nice commission for promoting it and finding the right buyer.

To see how it works, let’s imagine that Batman is an affiliate for a website called “GetFancy.com”, where customers can buy top hats, monocles and other accessories to make themselves more “fancy”.

Everyone wins here. The customer finds what they’re looking for, the merchant gets a customer he wouldn’t have found otherwise, and Batman gets paid.

Thanks Matthew Wilson for your excellent answer. I want to add more here.

Classification of Affiliate marketing.

Affiliate Marketing is classified into many types. All kinds fall under two basic categories. These are
1. Pay/click and
2. Pay/performance.

Pay/Click

It is also called PPC. It is considered to be the easiest and most popular affiliate marketing method. This is the greatest thing for small websites. With this method the affiliate marketer places the banners and text ads of merchants on his website. The affiliate is paid for every click made on these banners. When any visitor clicks on these banners and visits the merchant website, the affiliate gets credited. It is not essential that the visitor makes a purchase. However, the typical earning for a single click is very small, usually less than one dollar.

Pay/Performance

Pay/performance affiliate marketing, also called PPC, is extremely famous among big affiliates and all types of merchants. In this method the affiliate gets credited only when any visitor from their affiliate id performs the required action. This required action may be a purchase or becoming a member of a merchant website. This method is very good for the merchants because they will only pay when they are paid. For affiliates, it is attractive because they are getting a good share in the sales of merchant products. The usual share is about 15-20% of sale.

If we classify the affiliate marketing on the basis of depth, then it can be divided into 3 classes. These are
1. single-tier,
2. two-tier and
3. multi-tier programs.

Another type is the one in which an affiliate marketer is paid for every sale that is made by a person referred by him. This is called residual income affiliate marketing. Let us study these types in detail.

Affiliate Marketing: 1-Tier, 2-Tier & Multi-Tier

In an affiliate program of single-tier nature, the affiliates get the commission, only, for the visitor’s traffic or sales to the merchant’s website. Pay/performance and pay/click fall under this category.

Talking about Two-tier marketing, the affiliate gets the commission for every action done by the visitors referred by him. Plus he will get the profit whenever some other affiliate, referred by him, gets the commission. So in this way affiliate is earning directly as well as indirectly.

The multi-tier marketing is the same as two-tier marketing. But in this type, the affiliates get the commission for the sales made by their affiliated affiliates in multiple tiers. The depth of this type may be unlimited.

Residual Income Marketing

In this type of marketing, affiliates get the commission for every sale that his referred person makes on the merchant website. The only requirement is that on the first time visit, the person should come from the affiliate link of the affiliate. Next time if the same person visits the merchant website, even without using the affiliate link, the affiliate will be paid for every sale made by the visitor. The question that arises is how the merchant will know the affiliate id. The answer is very simple. On the first visit of the person from the affiliate website, a cookie is created on the computer of the visitor. This cookie stores the affiliate id of the affiliate. This cookie usually expires after 3 months. In some cases it may be longer. Whenever a visitor visits the merchant website, the visitor’s computer is checked for the existence of any previously created cookie. If the cookie is found, the affiliate id is retrieved from it and the affiliate gets credited for any purchase made by the visitor.

What is Affiliate Marketing?

Affiliate marketing may be defined as: “Selling products of other people on the internet”

Affiliate Marketing is a simple but powerful concept. It is known as the easiest and the quickest way of earning on the net.

The basic concept of affiliate marketing is to sell the products of other companies on a commission basis, on the internet. The affiliate marketer receives a sales commission on every sale, from the merchant.

You need to follow these simple and easy steps to start earning as an affiliate marketer.

1. First of all you need to search a market which you think is the best to start with. Health, sports, clothing, computers, etc. are examples of some hot market areas for an affiliate marketer.

2. Register with some suitable affiliate program. Choose product(s) to sell. These products are called affiliate products.

3. For every product, you will receive a specific affiliate link. Now you need to promote your affiliate link to get more and more sales. The success of affiliate marketing depends on this step.

4. Finally, after selling the product, you will receive the affiliate commissions from the merchant.

How to Choose an Affiliate Product?

Before choosing any product or market, the basic thing you should always remember is that you must have a complete knowledge about the demand and worth of the product. You should choose a product which has a big demand plus it is also more profitable. There are some products which are very demanding but they do not give a healthy profit. Some products carry both the qualities and are ideal for you to start with.

Promote Your Affiliate Link

After choosing the products, you will receive your affiliate links for each product. You can use many ways to promote your affiliate link. The most popular methods are websites, newsletters, emails, blogs, classified directories etc. You can use all these methods of promotion, at the same time, for best results. There are many other tools and methods to do this. The key point is how to drive the traffic that is really interested in what you are offering. If interested and serious, people will visit your website etc, thus being greater chances of sales.

When a visitor clicks on your affiliate link, visits the merchant’s website and makes a purchase, you will receive your commission. So the number of sales directly depends on how many people see your affiliate link and visit the merchant website.

How Payments are made to Affiliate Marketers?

There are different ways of paying the commissions. You can get the commissions through checks (to any country of the world). If you have an online account, then you can be paid through PAYPAL as well. International wire transfer procedure is also used for this purpose. Different merchants offer different ways to transfer money. Usually commissions are paid on the start of every month after verifications.

What is the Benefit of being a Merchant?

Merchants, who want to sell products, have two options. The can sell their product on their own or choose to have affiliate marketers. The affiliate marketers will do a promotion of the products and sell the products for the merchant. If merchant chooses to sell the product through the affiliate marketers, it takes less effort and cost to promote the products. Now it becomes the duty of the affiliate marketers to promote the products. Greater are the number of affiliates, greater are the sales for the merchant.

Affiliate marketing is the process by which an affiliate Process earns a commission for marketing another person’s or Customer Ships Product to a Customer company’s products. The affiliate sends the potential customer to the store to make a purchase and earns a commission on each successful sale. The myth that affiliate marketing is a scam and offers a low-value resource of traffic and sales is simply not valid. The truth is that affiliate programs can be as high value as those running the affiliate program market. Even prior to working with an affiliate program, affiliate marketing offers a strong opportunity for businesses to quickly expand their reach to fresh audiences and acquire new customers through partnerships. Now Learn Affiliate Marketing and start online earning.