Today’s internet has become a fast and efficient way for many companies to sell and market products. The ‘affiliated marketing’ systems have been a large part of many on-line companies’ success. To clarify, ‘affiliated marketing’ is when a product or subscription is offered for sale and traffic is directed to the company’s website through advertisements or other related websites. The company then pays the affiliate (the person who has offered the product for sale on their website, or the one doing the advertising) through a pay-per-click system or a pay-per-sale program.

A pay-per-click system gives the affiliate a set amount of money every time a user clicks on the advertisements containing the offer. A pay-per-sale system gives the affiliate a commission each time an ad posted on the affiliate site generates a sale or subscription. The pay-per-sale program (also called cost-per-sale) is the more typical form of affiliate marketing used.

Affiliate marketing started four years after the World Wide Web was launched. This type of marketing was originally popular with well known companies such as CDNOW or Amazon.com.

Another well-known user of affiliate marketing is Google’s Adsense, but this is not really considered as true affiliate marketing because the advertisements typically center around the theme of the website on which they are displayed. It is more commonly known more as contextual advertising. Google does not directly sell a specific product, but generates money from other sources.

Affiliate marketing is considered highly cost-effective. In effect, it costs neither the advertiser nor the affiliate anything unless an actual sale is made or a subscription is purchased. It does, however, have the potential of bringing in a very large form of income for the affiliate and the selling company, depending on the amount of traffic the affiliate’s ad draws to it. The more traffic the ad receives, the larger the chance of a sale being made. It is, therefore, in the affiliate’s best interest to drive as much traffic as possible to their website in order that the advertisement is seen and acted upon.

The pay-per-click (or cost-per-click) system mentioned above can present a risk to the advertiser. The merchant has to pay each time someone clicks on the ad and there is no guarantee that a sale will be made. In contrast, the cost-per-sale (CPS) system has very little (or no risk at all) for both parties since no money is changed hands until an actual sale is made. It is, therefore, the preferred method of affiliate marketing.