by: Edvard Halupa

Definition of Affiliate programs

Affiliate programs enable affiliates to leverage their traffic and customer base in order to profit from e-commerce while merchants benefit from increased exposure and sales.

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Affiliate programs allow you to pay and track incentives to other websites that send you visitors, leads or paying customers. You decide on the incentives you pay.

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These are programs permitting you to earn money based on the visitors to your site who click through to another's Web Site. Some pay a token amount for the click through and others provide a percentage of sales when a visitor "clicks through" your site and buys a product or service on the other party's site. This could represent a value added service to your visitors, but carried to an extreme, can delude your own message by cluttering your pages with banner ads many find more annoying than useful.

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First Affiliate program

Originally, affiliate marketing, as we know today was born in 1995 when Jeff Bez launched Amazon.com. This online shopping portal used "associate program" to rank itself as one of the best selling sites on the internet. While paying commissions base to "associates" Amazon expanded its product range from books to jewelry, DVDs and online auctions what else. Basically, anyone owning a homepage could join in just a few minutes and was provided a link to send his visitors, potential shoppers to Amazon's site, for a commission.

However, not everyone who joined was lucky enough to build profit. For example, not every visitor, sent to Amazon, was within a "target group". The system is more sophisticated today with links leading to certain group of products or special "promo" offers, increasing incentives.

Later, new shopping sites were jumping out of nowhere: CDNow, Sparks.com, 1-800-flowers.com, are just a few names that were promising you a fortune if you join and start advertising what they sell. Internet also brought new packing for a very old product: E-books. After entering credit card number you could be enjoying your favorite genre in just a few moments. No shipping. No handling. Low costs for the seller and immediate download for the customer. Sites offering e-books for download became a magnet for affiliates. Profits in this sector are very high and offered commissions reach level up to 50%. Commissions for music CDs, DVDs, are up to 10%. The higher commissions are offered only between online dating sites (some personals networks offer up to 75%).

New startup dot-com companies brought affiliate marketing to a new level: second-tier.

This system supposed to make recruiting affiliates easier and for current affiliates create one more cash source and motivate them to recommend program to other fellow webmasters. Upper affiliate usually earns between 5% and 25% (of what affiliate below him) on every transaction affiliate they recommended makes.