Before we begin to understand what affiliate marketing is; it is worth noting, affiliate marketing is not a new fangled, hyped up, latest craze method of doing business online, in fact affiliate marketing has been around for several years and has been responsible for the massive sustained growth of many well known companies.

Amazon is perhaps the best known of them all. Amazon understood the power of affiliate marketing way back in 1996. Since then they have utilized this business model to drive their net sales to some $14.263 billion per annum!

The best part folks is this; affiliate marketing is a sound and successful business model that anyone with a modicum of drive, desire and attitude can replicate to build a profitable online business, whether it is a few hundred dollars a month to hundreds of thousands of dollars per month, affiliate marketing offers you the individual the opportunity to achieve all that you have ever dreamt.

Affiliate marketing is a huge business piece on the Internet. It is a cooperative effort between merchants and an affiliate’s website. For many years now, affiliate marketing has proved to be a cost-efficient, measurable method of delivering long-tern results. It has become famous for Internet sites who are trying to make some extra or additional income for their site.

One of the common misconceptions that are being associated about affiliate marketing is “selling", though selling is an important activity of affiliate marketing and the central function of a business operation. Another is that affiliate marketing is commonly linked with “advertising". While the importance of advertising in marketing a certain product is not to be underestimated, the fact of the matter is, advertising like selling, is merely a part of the many functions of marketing.

An affiliate is compensated for every visitor, subscriber and/or customer provided through his efforts. The said compensation may be made based on a certain value for each visit. The most attractive aspect of affiliate marketing from the merchant’s viewpoint is that no payment is due to an affiliate until results are appreciated.

Affiliate marketing is typically being run by affiliate networks and this affiliate networks are composed of two functional bodies, the group affiliates and the group merchants. Each has their special function and role when it comes to affiliate marketing. The affiliate network acts as a third party between the merchant and the associated affiliates. The network provides the technology to deliver the merchant’s campaigns and offers. The affiliate network also collects commission fees from the merchant and then pays the affiliates which are part of the program.

The merchant is any web site owner that wants or desires to take advantage of performance based marketing. The benefits to the merchant are many. First, the merchant maintains and operates the affiliate program. If it would be extracted, the merchant needs to do their part by researching interested affiliate websites to ensure that they are a good fit for that particular website.

The affiliate or the affiliate marketer also sees a lot of benefits. The affiliate is a web site owner that promotes one or more merchants and their affiliate programs. Affiliate marketing can generate a full-time income for the affiliate. But this is not an easy task to accomplish. The affiliate needs to have a better understanding with the merchant what the commission will be, expected payment method and time involved in the contract. The affiliate has also the responsibility to stand for the merchandise their user based would be most interested in.

Affiliate marketing is a great situation for both the marketer and the affiliate. If they would work together, they can be an advantage to both. Plus the fact that it seems to make sense, it is easy and inexpensive way to start, and you can be up and running within a few days. But there is one thing to consider, it is how to get traffic and make your offer different than all others.