Affiliate marketing is a joint and mutually beneficial business partnership between merchants and website publishers/owners whereby an affiliate is compensated for every visitor or client provided through his effort. The moment a customer makes a purchase of goods or service, part of the profit generated from that particular transaction is credited to the affiliate's account as a commission. Amounts of compensation may be based on a fixed value for each visit (pay-per-click), registration (pay-per-lead), or for every purchaser (pay-per-sale).

However, just like a coin, the affiliate marketing program also has its obverse and reverse side.

Advantages

1. Merchants gain a wider place to sell their products and services, resulting in more customers and more sales.

2. Merchants can gain more customers without spending valuable time in searching for them.

3. Programs that track compile statistics from affiliate sites provide reliable and current client behavior on trends and demands at no extra cost.

4. The affiliate marketing program provides an easy way to create additional sources of income for website publishers and owners. Marketing banners of merchants products generate instant sales wherein they get a commission.

5. It does not require a sizeable investment on the part of the affiliate.

6. The affiliate does not have to worry about customer support, book keeping, and e-commerce related headaches since in affiliate marketing, the merchant handles it all; all the affiliate needs to do is promote and resell the product.

7. An affiliate marketer enjoys the luxury of being his own boss and work on his own time. He can work only for a few hours or more and generate income 24/7 wherever he may be located in the world.

8. An affiliate marketer can still maintain his present work or business and have the affiliate marketing income to supplement his financial position. With a laptop and an internet connection, anybody can work almost anywhere even while enjoying a vacation.

9. For clients, they do not have to drive all the way to the merchant's store or retailer to physically buy the product or engage the services of a service provider.

These are only some of the advantages of affiliate marketing. However, it is also best to be aware that this online business also has some disadvantages.

Disadvantages

1. There is the possibility that some merchants may incur high commission costs and costly set up and maintenance fees due to affiliate facilitators/brokers.

2. The affiliates may engage in false and misleading advertising in order to get sales commissions. Unscrupulous affiliates may make claims and promises regarding the product and services, which are completely wrong or extremely exaggerated. In cases like these, the merchant usually receives complaints and lose any potential consumer.

3. Unscrupulous and dishonest merchants may arbitrarily close down programs without informing the affiliates and without paying commissions.

4. Merchants may promise high commissions to attract new affiliates then drop commission rates after a week or two.

5. Link hijackers can hijack affiliate links and get paid for the commissions instead.

6. There are also false advertising, unlawful use of trade names, logos, or brands.

No matter the disadvantages, affiliate marketing still remains as one of the best ways to make money online. Marketers simply have to understand that by doing their homework and research before hand and by implementing simple security measures, they can easily negate all these disadvantages in order to enjoy the advantages of the affiliate marketing program.