This is a common question asked by many web developers and webmasters interested in earning more revenue from their website. An affiliate program is a referral-based marketing strategy, also known as "Revenue Sharing". It is the latest and greatest Internet marketing technique that makes it possible for web sites to share traffic and increase their sales.
Advertising sites (Merchants) offer commission to Affiliate sites (Affiliates) in return for referring visitors and a specific action occurring.
A webmaster visit's a company's website; WebSite.com, that offers a cooking affiliate program. If they feel their service is complimentary and useful they may elect to join that company's affiliate program. For instance, if you have a website about cooking, WebSite.com's affiliate program might interest you as their products appeal to chefs, cooking enthusiasts, housewives etc. – the same people visiting your site.
The webmaster will fill out an online form to join the affiliate program or email the company for more details. The company will in turn send the webmaster a special code that he or she may link to their website with. This special code allows the company, to track sales from a particular affiliate.
The webmaster will place banners, buttons, and/or text links on their website or newsletter to the company's site.
If a user click's on these banners, buttons etc. and buys a product from WebSite.com, you will receive a pre-determined referral fee, e.g. 20% of sale.
Let's say in our example that a user bought a product from the site. The webmaster's account will be credited with the purchase. After a certain period of time or when a dollar value of "referral" fees is obtained, the sponsor/company will issue payment to the affiliate for their sales leads.