Understanding the Secret Success of Affiliate Marketing

The Internet has fast become an efficient and trusted way for companies to market and sell their product. One of the reasons for this has been the rise of "Affiliate Marketing" - which is when a website directs traffic to itself through adverts on other (usually related) websites.

Affiliated marketing either pays the affiliate through a pay-per-click program (the affiliate receives money every time an advertisement is clicked) or a pay-per-sale program (the affiliate receives commission every time a posted advertisement or sales page on their site generates an actual sale or subscription.) Generally, the pay-per-sale program (also called cost-per-sale, or CPS) is the tried and true form of affiliate marketing used. Affiliate marketing began just a few years after the world wide web was launched, originally popularized by well known companies such as CDNOW and Amazon.com.

Google's Adsense is also a very well known type of affiliate marketing, but is not considered true affiliate marketing as the advertisements usually center around the theme of the website they are displayed on (known more as contextual advertising). Google does not directly sell the specific product. It sells the advertising and takes a percentage just as you do.

Affiliate marketing is highly cost-effective - it costs both the advertiser and the affiliate nothing, while having the potential of bringing in a very large form of income for both parties. While pay per click (or cost-per-click) advertising can present a risk to the advertiser, because a click does not necessarily guarantee a sale, the cost-per-sale (CPS) system has very little or no risk at all for both parties because an actual product sale takes place before commission is paid. This makes the CPS model of affiliate marketing highly desirable for both, the seller and the affiliate marketer.

Though affiliate marketing is a relatively new way to earn money on the internet, the concept of revenue sharing has been around for quite a while, long before the internet. Thanks to the World Wide Web explosion which has turned the globe in to a "right next door" sort of communication venue, affiliate marketing has taken it to new level, reaching farther and wider than traditional sales and business commerce. It has become a staple form of advertising, bringing in business for all types of electronic commerce, inexpensively yet at a very high profit.

Online merchants find affiliate marketing very appealing due to the fact that it presents little to no risk both for the merchant or the affiliate. The affiliate earns a commission or fixed amount based on the number of sales brought to the merchant. These sale occur through sales pages and links on the affiliate' website or through email, blogs, banner ads, video or audio ads, syndicated feeds or articles. Some merchants (only about 1% of affiliate marketing) use a cost-per-click remuneration system,. This gives the affiliate an earning per click every time an internet searcher clicks on an advertisement on their site or email. However, dishonesty has taken advantage of this method in the form of false clicks which unfairly cost the advertiser money that does not lead to sales so CPC is regarded by many to be too risky. Google Adsense and other major CPC advertising services have managed to implement safeguards to detect such false click activity. But for many smaller sales businesses and individuals this is not the case.

Both pay per click and pay per sale affiliate marketing bear no cost to the merchant in the original set-up. In other words, it costs nothing to place advertising banners on an affiliate site. The cost only occurs if there is a click or a sale. Merchants also get to set the parameters, and decide on the incentive schemes. This makes affiliate marketing a very inexpensive but highly efficient way to grow a business.

Now you know the secret. Tap into it to create a passive stream of revenue that can add to your business or perhaps be the start of a whole new internet business empire for you!

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