Online affiliate marketing is considered to be a modern-day version of paying “finder’s fees” to someone who refers new business to another.
Payment to an affiliate is generally done in three tiers or in combinations of these tiers:
Pay per Click—Compensation is given for each visitor
Pay per Lead—Compensation is given for each visitor who also registers
Pay per Sale—Compensation (or commission) is given for each visitor who makes a purchase.
Research has shown that websites which choose to participate in online affiliate marketing see about a 15-20% increase in their online sales.
Using affiliate marketing is considered to be a safe way to advertise because you don’t pay until the affiliate produces the results you require. They can send over 1,000 visitors to your website, but if your system requires the new visitor to make a purchase before you pay the affiliate, you have lost nothing unless those 1,000 visitors each make a purchase, in which case, though you pay your affiliate a percentage, you really still come out on top.
There are two main types of ads to offer your affiliate. Banner ads tend to be the most productive as they are eye-catching which encourages people to click on them. Text links can also be effective if they are well designed and well written.