The Basics of Affiliate Programs

The basic Affiliate Program works like this:

1.  Your site offers a sign up page that registers a visitor either directly with your site or with an affiliate network.

2.  You approve or reject the affiliate applicant.

3.  The affiliate uses materials you supply, such as banner ads or text links, to drive traffic to your site becoming part of your Internet marketing reach.  (You may pay the affiliate for presenting these materials to their own visitors.)

4.  A visitor to the affiliate's site or reader of the affiliate's news letter clicks the link to go to your site.

5.  The click is tracked either directly by your site or by an outside provider of "click-through" services to connect that visitor to the affiliate that directed them to your site.  (You may pay the affiliate something for simply sending you the traffic.) 

6.  The visitor (hopefully) buys something.  The transaction may need to be transmitted to an outside affiliate software provider, or may be processed internally, but is ultimately tracked back to the affiliate that sent you the buyer.  (You may pay the affiliate a flat rate, a percentage of the purchase, or some combination thereof.)

It's that simple:  Either for commission or for sheer traffic, you buy customers from someone else on the Internet.

Taking It Up a Notch:  The Two-Tier Program

The "Two-Tier" Affiliate Program was devised to solve a particular problem with Internet marketing.  If a visitor sent to you by an affiliate were to sign up as an affiliate before buying anything, they could then visit your site with themselves as the affiliate taking the original affiliate's commissions.  It's a bit complicated, but it actually became quite a problem.  

The solution to this was to pay commissions to both an affiliate and the affiliate's "parent".  The parent's commission is usually smaller, but offset by the fact that any visitor that the sub-affiliate produces creates commissions for the parent.  It stops after two levels to avoid multilevel marketing regulations and for the simple fact that traffic is mostly to the merit of the affiliate's own efforts and not those of the parent. 

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The best site on the Internet is useless if no one knows it's there.  Affiliates basically sell you their traffic for a commission or flat rate.

Since the core of every affiliate program is the payment of outside websites for their traffic, tracking traffic and sales back to their source is how it is all made to work.  A would-be affiliate will not send you traffic if they have no faith in your ability to track it for payment.  Just about every affiliate will test your affiliate software by coming to your site and doing something they should get paid for and waiting for the check.

Multilevel marketing isn't a bad thing in and of itself.  Complying with all the regulations that were developed to stop abusive multilevel schemes is the hard part.  In fact, it's so difficult that unless it's the core of your marketing plan, it just isn't worth it.  The two-tier program our affiliate software uses isn't classified as "multilevel" and still carries most of the benefits.