Affiliate marketing is one of the most popular ways to make money online. The idea of affiliate marketing picked up with the invention of the internet two decades back, and today, millions of people earn a respectable livelihood through this marketing method. The basic idea is simple enough: the vendor gives a commission to the affiliate marketer for each sale he makes. The commission can vary from 1 percent for high-end physical goods, to up to 80 percent for digital downloads. It is a mutually beneficial arrangement that gives vendors access to a huge pool of marketers who do not have to worry about payment, shipping or customer service.

Thanks to the sophisticated nature of compensation methods in affiliate marketing, various tracking tools are available. URL tracking (integrating the partner’s ID into HTML code), cookie tracking (saving identifying information in the user’s browser), database tracking (combining the URL and cookie tracking), and Web bugs (use of HTML bugs) are all frequently used. Affiliate marketing has become an important pillar of online customer acquisition that has found acceptance even among the best known businesses.

Affiliate marketing is a very cost effective way for companies to reach potential buyers who match their target audience because it is similar to adding a sales force, but without the expense. Affiliate marketers earn a commission when a buyer makes a purchase or takes action. Typical payment structures are Cost Per Lead (CPL), Cost Per Action (CPA), and revenue sharing, which is what the affiliate earns as a percentage of the purchase. Affiliate fees generally range between 5 percent and 20 percent and may vary based on the volume of purchases made. Affiliate programs are booming as more businesses pursue affiliate marketing as a key component of their strategy. The referral fee is akin to paying a sales commission but without the hassle and expense of hiring and managing a sales force. Another advantage is the extended brand presence created by affiliates.

Affiliate marketing works best when there is a relationship of mutual trust between the publisher and his audience. If you have a large readership with regular readers who look to you for advice on which products are the best, then they are more willing to use your affiliate links to purchase the products that they require. However, there is a downside. If you promote the wrong product, then the trust you worked so hard to build will crumble. For instance, if trusted websites such as the Breaking Zero blog were to misuse the affiliate marketing process, then this would ultimately hurt the blogs reputation and brand. As such, it is essential that you promote only products that will help you build this trust.

There is no limit to how much money you can make through this method. With commissions ranging in 70-80% for digital goods (which routinely sell for $50+), it is not unheard of to make $40 or so per sale. With even a handful of customers and referrals, this can quickly multiply into a five figure monthly income. The internet is already littered with the success stories of six figure affiliates who earn $100,000+ throughout their affiliate marketing efforts. In fact, there is a huge crop of blogs such as http://www.breakingzero.com/ to help you make money on the internet as an affiliate marketer.

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