Affiliate marketing is an Internet-based system where the affiliate gets paid for referring sales or customers to another business. What follows is an overview of the basics of how Affiliate Marketing Works.

There are plenty of different ways to earn hard cash from being an affiliate marketer, including commission-based affiliate programs which are usually either Cost Per Click (CPC) or Cost Per Action (CPA), and AdSense. Here are some fictional examples of these:

Commission Based Affiliate Programs:

Henry owns a website full of guitar playing tips; on the columns of the web pages he has placed an ad for a guitar-playing eBook. When a visitor clicks on his ad and buys the eBook from the merchant’s website, Henry receives 50% of the price of the sale as a commission for referring the visitor to the merchant.

Amy operates a very popular ezine targeting people who wish to lose weight. She regularly sends out tips and lessons to her list members, occasionally promoting products that offer her an affiliate commissions. Whenever somebody from her newsletter list clicks on a link in her promotional emails and purchases any of the various products she’s promoted, Amy earns a percentage of the purchase price.


Glen owns a body building website containing lots of useful information about various exercise supplements. By inserting some code into his website he gets ads relevant to the content automatically showing up on his web page. Glen earns money every time a visitor to his site clicks on one of these ads, even if they don’t end up buying from the merchant.

These are very real ways of making money, and very real people just like you and me are earning it, lots of it! This is what affiliate marketing is…

Affiliate Marketing Can be summarised thus:

It is…

…Pay-for-performance. An affiliate can only earn money by producing results for the merchant of a product or network such as Google, Yahoo or Bing – whether it’s from clicks, registrations or sales.

…Big business! Affiliates worldwide collectively earn billions of dollars each year. In the UK alone it is estimated that over 2 billion dollars was earned by affiliates in 2006. One has to bear in mind that this figure comprises affiliates turning over millions of dollars a year, affiliates who scrape by earning $100/week and everything in between.

…A long established business model. Affiliate marketing has been around since someone savvy realized that the Internet could be used to buy and sell. Amazon was one of the pioneers of affiliate marketing, way back in 1996, though they are not really considered to be amongst the market leaders. That crown probably belongs to ClickBank.

…Internet-based. You can promote yourself or your website using online or offline methods, but when it comes to earning commissions, all the tracking and processing is done through the Internet. You don’t need to know your customer, in fact, you almost never get to have any contact with them! Brilliant if you’re not a fan of cold calling.

…Open to anyone. You needn’t have any special credentials to be an affiliate. Affiliate marketing is pay-for-performance and most affiliate programs are open to anyone, regardless of experience. To be honest, the vendor probably doesn’t care, as long as you send him visitors and they buy his products – you get paid. You also don’t need to be a programming whizz to be a successful affiliate – everyone goes through the same learning curve. At the end of the day it is perseverance and hard work that pays dividends, regardless of what some so-called gurus would like to tell you!