There are many different ways to set up an affiliate program. You can give a fixed commission rate across the board. However, I recommend giving a good commission rate for the new affiliate, and giving a raise to those affiliates who drive a lot of sales. Most affiliate programs offer their affiliates a 2-tier system whereby an affiliate ears extra commissions if they refer other affiliates to your program.

First you have to decide how you are going to host your affiliate program. You can either promote your affiliate program through an affiliate network, or you can host your affiliate program on your website with your own software.

The advantage to using an affiliate network is that your affiliate program will be advertised in their databases. Marketers searching for businesses to associate with will search through these databases and choose products that they want to affiliate with. However, most of these databases are quite large, and the most popular affiliate programs with the highest conversions will be advertised the most.

This means that if you are just starting out, your program will probably only be found by people who are searching for a niche product or service to market. In order to get around this you have to market your affiliate program like you would market your product or service. Here is a list of possible affiliate network that can host your affiliate program:

1.www.clickbank.com (digital products only)

2.www.cj.com

3.www.reporting.net

4.www.linkshare.com

5.www.performics.com

6.www.websponsors.com

7.www.shareasale.com

8.www.clickxchange.com

9.www.clixgalure.com

10.www.fineclicks.com

11.www.fastclick.com

12.www.affiliatefuel.com

13.www.darkblue.com

If you are interested in hosting your own affiliate program, you need to do some research and decide what kind of affiliate manager solution fits your business or shopping cart system. You can do a side-by-side comparison of different programs at http://www.affiliate-software-review.com.

Promoting your Affiliate Program

As previously stated, you have to market your affiliate program just like you would market your product or service. Keep in mind that unless you find the ?super affiliates? who are already set up to drive massive sales to your website, the overwhelming majority of the affiliates that sign up will never make any sales. This is normal so don't be surprised.

Start by finding complimentary websites that sell products or services that are not competitive with what you offer, but are closely related. For example, if you sell plant seeds, you would want to approach a site that sells books on how to grow a garden.

You should approach as many websites as you can, but it's wise to focus on the websites with the largest amounts of traffic. You can do this research by using Alexa (www.alexa.com).

When you enter a website address, Alexa will tell you their traffic ranking (the lower the better), how their traffic has fluctuated over a period of time, how many websites link to them, and what websites their visitors also go to. It also provides contact information, including an email address.

When it comes to these email addresses, I've found that they are not always accurate. Sometimes they are outdated, and sometimes they are email addresses for the website's hosting company. To be safe, you should send an email to that email address along with any email address you can find on the website.

Another great option is to approach content sites. Websites that mostly post free content usually make their money through affiliate programs and advertising. If you have a good product or service, these could be your best champions.

However, the best affiliates are ezine publishers. If you can find an ezine publisher with a large subscriber base that will promote your product or service, you will find a huge amount of new sales coming in. The reason is that these publishers have an ongoing relationship with their subscribers.

There is usually a stronger loyalty-factor with ezines rather than content sites alone. And often these ezine publishers will also have their own content sites, so they can promote your product or service in both platforms.

It is a good idea to give your affiliates the right marketing tools. Most likely your best affiliates will have their own approaches, however everyone will appreciate getting help from you, especially since you know your product or service better than anyone else.

These marketing tools can include sales letters, articles, ebooks, special reports, solo advertisements for ezines, short advertisements for ezines and search engines, banners and graphics, and any marketing ideas you might think are key to your affiliate's success.

Party Poker, the online poker site, gives their affiliates a poker dictionary to put on their website. This is a brilliant idea, because they are giving their affiliates quality content for their website, which their visitors will appreciate. And since their name is branded on the dictionary, the visitors will associate the quality content with Party Poker. If you can think of anything like this, you will find that marketers will be more likely to join your affiliate program.