Promoting affiliate programs is the least costly and least stressful of all types of home Internet businesses and makes an excellent starting point for Internet marketing novices. It is also one of the best ways to earn revenue from your web site if you don't have a product of your own to sell. In fact, there are some 'super affiliates' out there that make their living online doing nothing but promoting other online merchant's products or services through affiliate programs.

So, just what is an affiliate program? An affiliate is someone who partners with another online merchant to help drive targeted business to that merchant's web site in order to increase sales. An affiliate program is an inexpensive marketing strategy used by an online merchant in which a monetary incentive is offered to webmasters (affiliates) to drive traffic to that merchant's web site. The monetary incentive is usually in the form of a percentage-based commission or a fixed dollar amount. Affiliate programs are sometimes referred to as associate programs or referral programs. Affiliates are also referred to as publishers in many cases.

Sponsoring an affiliate program makes sense for an online merchant because it helps to

• Increase online exposure
• Increase traffic leading to greater sales
• Generate more targeted leads

• Low cost set-up
• Affiliate programs are free to join
• 24x7 passive income
• No employees
• No inventory
• No order processing
• No product shipping
• No merchant account needed
• Minimal risk
• Large income potential

• Pay-Per-Sale (PPS) - in which an affiliate earns a commission or fixed dollar amount based on each sale made through links from the affiliate's site.
• Pay-Per-Lead (PPL) - in which an affiliate earns a fixed amount every time a customer directed from their web site fills out a survey, requests information, joins a program, etc.
• Pay-Per-Click (PPC) - in which an affiliate earns a fixed amount every time a potential customer clicks on a link from the affiliate's site to the merchant's site.

The 'million dollar' question that I had when I first started, and that you may be wondering about right now, is "How does the merchant know that the sale/referral came from my site?"

When you join an affiliate program, you are assigned a tracking number or code, usually referred to as an affiliate ID. This ID is unique only to you. When you create a link from an ad on your web site, you simply include this ID in the link.

Once a customer clicks on your link, a tracking cookie with your affiliate ID is placed on the customer's computer. If that customer then makes a purchase, the tracking cookie will identify them to the merchant as being referred from your web site. Depending on the affiliate program, the tracking cookie may be valid for just that one visit, up to a lifetime for that customer.

Most merchants realize that a customer may not make a purchase during the same visit in which they were directed from an affiliate site. As an incentive to the affiliate, if a customer returns directly to the merchant site within the time specified by the cookie duration and makes a purchase, the affliate will still get credit for the sale.

While a normal link to a page that is selling product 'abc' at merchant 'XYZ' may look like:

http://www.xyz.com/products/abc.html

http://www.xyz.com/product.asp? PID=1234567&AID=9876

This example is a hypothetical link to a specific product or product page. Most merchants also permit you to link to their home page, or any other page on their web site. Most of the ads you will place on your site are in the form of banners, text ads, images or text/image combinations. Many merchants also supply you with more advanced linking options such as data feeds, storefronts, virtual stores, search boxes, and the like.

If you're contemplating starting a home internet business, then promoting affiliate programs is the best way to test the waters. Affiliate marketing is a proven win-win-win scenario for online merchants, internet marketers, and consumers alike.