Affiliate marketing is a mutual relationship between a product vendor and a person promoting that product - the affiliate. The idea is that the affiliate tries to generate sales of a certain product, and in return the vendor pays that affiliate a commission on the sale.

It's a win win situation for all involved since the vendor only has to pay out once a sale has been made and money is in his pocket, and the affiliate can take advantage of a ready made product to sell.

Commissions for affiliates vary greatly. Some physical products may only pay out 1-10% commissions which really are not a lot. However, because of the small margin of many physical products, this is all that the vendor can afford to pay out.

One of the best ways to earn larger commissions is through digital products like ebooks and other information products. Ebooks cost nothing to produce, store or deliver and so the vendor is able to give out high commissions. Sites like Clickbank have a database of products that people can promote and earn up to 75% commissions on all sales they generate. Some vendors even offer incentives above those values if you can produce a larger volume of sales.

If you are just getting started in affiliate marketing, the best place to start is with digital information products. The two main affiliate networks are PayDotCom and Clickbank. Both of these have a large selection of products, in multiple different markets that you can promote. One of the benefits of PayDotCom is that they offer more high end products - with prices over $1,000.

This means that even with a 50% commission, you could still earn $500 per sale. Clickbank on the other hand has much lower priced products typically ranging from $27-$97 in price.

Another alternative form of affiliate marketing is based on a pay-per-lead method. Instead of getting paid on every product sale generated, pay-per-lead (or PPL) programs payout for every person who fills out a short form requesting more information. Typically the payouts are lower than for a sale, but because the end user does not have to pay anything to complete the form, conversions can often be quite high. Some of the highest paying PPL programs are based around legal and financial programs.

Google Adsense is also an alternate form of making money online as an affiliate. With Google Adsense, the affiliate places a small amount of code on their website which displays ads from advertisers on Google's Adwords network. Every time a visitor clicks on one of these ads, Google shares some of it's revenue for that ad with the website owner. While it is relatively easy to get started with adsense, it does require a significant amount of traffic and clicks to make any real money since you may only be paid a few cents for every click on the ad.