Affiliate marketing, simply put, is the revenue sharing between a company and the people who advertise products and services for that company. A company with an affiliate program pays a set amount to the affiliate based on the results created by that affiliate.

Compensation is usually based on one of three things: a flat amount for each prospect introduced to the company, a flat amount for each prospect who signs up for the company’s offer, or a flat amount or percentage for each purchase completed by a customer as a result of being referred by the affiliate. In Internet Marketing terms, these performance measures are referred to as Pay-Per-Click, Pay-Per-Action, and Pay-Per-Sale, respectively.

So why should you care?
Affiliate marketing brings the potential to earn a lot of money. The best affiliate programs will pay 50% or more of the cost of a product to the affiliate when someone they refer makes a purchase. Imagine for a moment what this can mean when you’ve built a relationship with your prospects. If you introduce them to a product that costs $5,000, you earn $2,500 for EACH sale. That’s why you see so many internet marketers become millionaires very quickly.

Additionally, affiliate marketing is very inexpensive for the affiliate. To be an effective affiliate marketer, you will need a website to promote your programs (which you can build for free using a service such as Blogger.com) and a method to keep in touch with your prospects. Many of the most lucrative affiliate programs cost nothing to join.

As an affiliate marketer, you don’t need to develop your own products, you don’t need a method to collect payments, you don’t even need to provide customer support. Your job is to find and recommend the best products and services to your prospects. It is recommended, however, that you only promote products and services that you own or have reviewed.

The biggest investment to you as an affiliate marketer is in the amount of time you’ll spend maintaining your site and researching various companies. You can work with one company or promote for as many as you’d like to fit your business goals.

Perhaps the biggest advantage to affiliate marketing is that it fits in perfectly with any other business building strategies you use. If you have your own products and services, you can still recommend complementary products to generate additional revenue. Again, the most important thing to remember is that you should only promote products and services you believe in.