How Do Affiliate Programs Work?

Posted by Nick Niesen on October 29th, 2010

Affiliate programs are one of the biggest money makers on the Internet today. These programs consist of an agreement between the website owner and the merchant that sets a price for each visitor that does a specific action. This action may be as simple as clicking on an ad for the merchant or as complex as a completed sale. The affiliate gets a commission for every visitor from their site that meets the merchants requirements. It generally works that the merchant pays the affiliate because the traffic sent by the affiliate made money for the merchant.

There are three main general types of affiliate payouts, and these are pay per sale, pay per lead, and pay per click. Pay per sale affiliate programs pay the affiliate for any traffic sent from the affiliate website to the merchant that makes a purchase. This method of affiliate program may also be called a cost per sale payout. Pay per click affiliates get paid based on how many visitors click on the merchant ad and actually visit the merchant site, whether a purchase is made or not. The purpose of these affiliate programs is to bring visitors to the merchant site, and that is what the affiliate program pays for regardless of if a purchase is made. Pay per lead, or cost per lead, affiliate programs pay for any visitors from the affiliate site who fill out a short lead information form. Whether the merchant sells this information as a sales lead or follows up on the information themselves makes no difference, the affiliate gets paid either way. There are numerous other affiliate programs out there which have different payout requirements, it all depends on what the merchant is looking for.

Some variations of affiliate programs include two tier programs, which are very much like multi level marketing companies, residual programs, which pay for every purchase a customer makes that you referred for a specific time, and pay per impression affiliate programs, which pay for each visitor to your site that sees the merchant ad.

An affiliate program can be structured around any agreement between the merchant and the affiliate. These programs generally work because the merchant is willing to pay an affiliate for every visitor that does the required action. This can be making a purchase from the merchant, clicking on the merchant ad, or giving requested information to act as a lead, as well as numerous other actions. Affiliate programs are a very popular way to make money online, because they can be customized to fit individual merchant needs.

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