With more and more people turning to the internet to find a way to make money either to add to their existing income stream or to provide some much needed additional funds or even what I would call ‘luxury money’, a lot of people are coming across the term ‘Affiliate Marketing’.

Affiliate marketing has probably become one of the most popular ways for people to make some money online. I believe that the reason it has grown so much in popularity is because it has a relatively low start-up cost that most can afford to invest in to get set up and given the nature of what’s actually required to make this work is that just about anyone can start doing it, no matter how old you are or what life experience you have. Sure, there’s bound to be some technical hoops that you will need to jump through, but it is a learning curve just like you have with any new skill that you wish to acquire.

The term affiliate marketing can be broken down into this very simple definition.

Affiliate Marketing is basically selling someone else’s products or services and then in return, you receiving a commission for doing so.

Online business have learnt over the years that having a team of affiliates promoting their products or services will actually allow them to reach a much wider audience than they would likely be able to do on their own and at a fraction of the cost of advertising campaigns as all they need to do is to pay a set value or a percentage of the amount spent by a customer that ended up on their website to the person that referred them to their site.

Let me give you an example using a car insurance provider.

Somewhere, someone is searching on Google looking for car insurance when they land on the affiliates website. The affiliate makes a compelling case for why the person should choose a particular car insurance provider. The affiliate has been approved by the car insurance provider to promote their car insurance service and in turn receive 50% of the value of the policy in return for a successful referral. So in other words, when the affiliate refers a visitor that buys their car insurance policy, they get a 50% commission.

The car insurance company know from their own figures that out of every 100 people that take out a policy with them, 75% of people will sign on for an at least one more year, meaning that there is the likelihood of every 3 out of 4 people staying with them for 2 years or more. The affiliate only get recompensed for the first years policy and not the second, meaning the business will keep all of the profit from the second year and could even keep them many years beyond that and profit from those too. That customer may not have ever come across this insurance company had the affiliate not been actively promoting it.

As long as affiliates are looked after with fair payouts for commissions and provided with all the tools they need to promote such as content, images and graphics, statistics amongst other things to enhance someones buying decision then they will send you a lot of traffic (visitors) that will convert into customers. Once the business acquires that customer, they can use their marketing skills to get that customer to spend even more money with their business by promoting add on packages and additional services for years to come.