In terms of the Internet, affiliates are websites unrelated to yours that are willing to promote your product in return for a commission of any sales they refer to you.
Affiliate marketing is targeting your message to other site owners and providing them with the proper commissions, the tools (banners, ads, programming scripts, dynamic content, and more) in order to help them direct more visitors to your site.
Once you’ve gotten the banners and links from affiliates, the next step is to make sure your site has multiple landing pages based on the traffic source in order to convert as many of the visitors as possible into cost-effective commissionable actions.
A commissionable action is different from a sale – it is when the affiliate earns revenue as that is all that matters to the affiliate. Affiliates are compensated a number of different ways:
CPA – cost per action: the affiliate earns commission either on a flat or % basis when a sale occurs on your site
CPL – cost per lead: affiliate earns commission when a contact form is filled out or you have received a “lead” from your site
CPC – cost per click: affiliate earns commission for every click they send to your site
CPM – cost per thousand impressions: affiliate earns commission every time your banner loads on their site
It goes without saying that you have to monitor each traffic source and optimize them to ensure that you’re not paying more than you’re earning.
Affiliate marketing is one of the most powerful ways to marketing your products online. Amazon.com became the powerhouse it is today through affiliate marketing.
I would just caution you to be right on top of your program and your numbers.
There is a lot of fraud that goes on through affiliate programs and you should be prepared for that as well. Not all affiliates are fraudsters but there are enough bad apples to destroy your barrel if you’re not careful.