What exactly is Affiliate marketing?

In simple terms, affiliate marketing is a web-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's marketing efforts.

Currently the rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media has allowed merchants to get closer to their affiliates and has improved communication between each other. Affiliate marketing has grown rapidly since its inception and as the Web expands daily so does affiliate marketing. Affiliate marketing has already been hailed as a highly effective form of online marketing overseas. If used ethically and efficiently affiliate marketing is one of the most effective strategies online today.

The advantages of affiliate marketing are plenty:

1 Affiliate marketing boosts market penetration

2 Affiliate marketing enhances existing sales efforts and marketing channels

3 Affiliate marketing gives an extremely attractive ROI and affords unlimited opportunities for cross-marketing.

4 Affiliate marketing is cost effective in nature; as a merchant only has to pay once a lead has been generated or a sale has been made. This ensures no income is lost and results can be tracked.

5 Affiliate marketing also provides benefits to smaller companies by exposing their products on well known websites that already have an audience. Affiliate sites also benefit substantially from this type of marketing as they are the ones who receive a commission every time a sale is generated from their website. Affiliate marketing is a win-win situation.

Affiliate marketing also has a reverse side. Some of the disadvantages of affiliate marketing are given below:

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

7 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 may lose potential customers.

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

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

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

11 There is also false advertising, unlawful use of trade names, logos, or brands.

12 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.