Essentially, the affiliate marketing business model is also known as the third-party proprietor. It is one of the easiest and most effective methods to get started and make money online. In a nutshell, an affiliate marketer promotes other people’s products via referral and then gets paid a commission for their marketing efforts.

Affiliate marketing has also been growing in popularity in various industries in the recent years. The reason for this is because more and more business owners are realizing the power of affiliate marketing by leveraging on other people’s marketing skills. On the affiliate marketing end, it is so easy because affiliates avoid the trouble on product creation and customer support. Yet as an affiliate, they still get to practice all the essential marketing skills that will bring successes into any business.

The first thing you need to understand about affiliate marketing is that it is a “pay per action” model. Affiliate marketing works by having an arrangement between the merchant, also known as the product vendor, and the affiliate marketer. Only when an affiliate successfully sells a product or generates a lead, which is the action, then the merchant pays the affiliate a commission.

In other words, the affiliate marketer gets compensated based on either the visitors they referred make a purchase or fill out a form by providing their contact information. The affiliate then gets rewarded with commission, which can range between 5 – 75% of the product price.

This referral process works by using a unique link that allows tracking for both the merchant and the affiliate. Therefore, when an affiliate is doing their promotion, the sales will most definitely be accredited to the affiliate. The merchant on the other hand will notice which affiliate is performing well and in some cases, provide incentives or resources to assist in the affiliate marketing process.

Lets look at the process flow of the affiliate marketing model. We begin with the affiliate marketer.Very simply an affiliate marketer visits an affiliate network to find a merchant and a product to promote. Some of the examples of affiliate networks out there are ClickBank, Commission Junction, PayDotCom, and Link Share.

Basically, an affiliate network is a market place which brings affiliates and merchants together. When an affiliate identifies a product from the market place that could be profitable to promote, what the affiliate does is to set up a campaign and send targeted traffic to the merchant’s sales offer. This targeted traffic will be the merchant’s potential customers.Thereafter, when a sale or lead is successfully transacted, the merchant then pays the affiliate marketer the stipulated commission.