If you have a website and you are not involved in any of the thousands of affiliate programs available on the Internet, you are loosing great opportunities to make some extra income. As in the case of some top affiliate marketers this extra income might even transform into thousands of dollars.

Affiliate program is one of the most effective methods of producing sales second only to direct mail. According to Forrester Research, a marketing research company, in this year 21% of all online sales will be generated from affiliate sites promoting affiliate products.

If you do your homework right, you too can earn handsomely from the correct use of affiliate programs.

What is an affiliate program?

The concept of affiliate program is based on the age-old business practice of referral service. This is quite common in many industries. An attorney, for example, gets a certain percent of commission if he refers a client to another lawyer.

Back in 1996 Amazon.com started the first widespread use of referral service on the Internet. If a client comes to Amazon.com and buy a product using a link provided by Amazon, from a website which signed affiliate partnership agreement, that site receives 10 to 15% commission from the sale. The Amazon Affiliate Program became so successful that it prompted others to follow the suit. Today, affiliate programs became ubiquitous on the Internet making them one of the primary methods of online marketing of products and services.

Affiliate Program can be defined as Internet marketing system where a company allows and helps third party websites, called affiliates to post link and refer clients in return for a predetermined flat-fee or percentage-based commission.

Benefits of affiliate programs
Affiliate Programs became so popular because as a partnership its a win-win situation for both the program owner and the affiliates.

Benefits for program owners include:

Increase Sales
The primary reason for most of the companies to adopt an affiliate program is the possibility of boosting sales. In fact, proper implementation of a quality affiliate program is capable of increasing sales dramatically.

Free promotion
A successful affiliate program can easily become the largest traffic generator for the company website. Many websites receive major portion of their visitors from their affiliate links. To find suitable websites with required content in order to run a banner or link campaign is time consuming and require large resources; affiliate programs in comparison can resolve this issue often with a far smaller investment.

Increase search engine ranking
Search engines, Google in particular, calculate link popularity as one of the main factors in their ranking algorithm. Backward links from affiliate sites certainly help improving this.

Branding
Thanks to its affiliate program Amazon.com banner links can be seen on numerous websites. Popularity of Amazon.com among the newcomers to Internet proves that Amazon.com was successful in creating its online brand name. No doubt, omnipresent visibility of their logo on the affiliate sites definitely had a huge impact on the brand recognition of the Amazon. Offline companies had to spend billions of dollars of advertisement money to get similar results!

How about the affiliates? What are the benefits they get from an affiliate relationship?

No product or service to carry
Online business with your own product or service might be rewarding, but it requires substantial investment from your part. With carefully chosen affiliate programs you can have your online business without the requirement of having your own products.

The investment is low as all you need is a website.

No need to have a merchant account
Since you dont carry your own products or services you do not have to go through the hassle of having a merchant account to cater your clients. Your affiliate program owner will do everything. All you have to do is supply clients through your designated link.

Possibility of residual income
Many programs pay you a commission from the sales made to the customers generated from affiliates, who have signed up as an affiliate following your link. This kind of affiliate system is called 2-tier system.

Visitor tracking system allows affiliate programs to pay you a commission when same visitor from your website makes repeat purchase.

Some affiliate programs that promote monthly or yearly subscription services pay a commission each month as long as customer referred by you stays subscribed.

Complement you website with added products and services If your site is dedicated to certain products or services, there must be other stuffs that go well together with your own products. Its a good idea to seek out viable affiliate products of these items and promote through your site. Your visitors will love this and this will help building loyalty among your visitors.

Have new contents for your site
many affiliate programs supply you with valuable marketing materials. Some of these materials can be nice addition to your site content bringing further value to your website.

Various Affiliate programs

There are two ways of running an affiliate program: The company owns and handles the program itself, using certain software.

The company uses third party administered affiliate programs. The reasons why many companies prefer to hand over management of their affiliate programs include technical aspects, cost factor and human factors.

Companies do not have to spend money on developing, running and updating the software.

Proven technology allows companies to concentrate on their job of selling their products and services.

Many prospective affiliates prefer third party managed programs, because they rightfully ponder, in this case the program owners have less chance to cheat their affiliates.

Find below a list of some leading third party affiliate program administrators:

http://www.befree.com
http://www.linkshare.com
http://www.cj.com
http://www.clickbank.com

However, this does not mean that you should avoid company run affiliate programs. On the contrary, some of the most successful and best affiliate programs are run by the owners.

If you find an affiliate program that suits your requirement and you feel that the company is a reputable one, by any means you should give it a try!