Affiliate merchants and marketers easily see how affiliate programs profit both sides. Affiliate merchants see affiliate marketing as the chance to advertise their products at a lower cost than traditional advertising. Affiliate marketers see affiliate marketing programs as an easy way of earning profits online by doing what they enjoy most, creating and promoting websites.

Affiliate Marketing as a Form of Residual Income

Residual income is income that is continually generated without additional effort on your part. Affiliate marketing allows the marketer to be paid whenever the customer they referred goes back and to the affiliate merchant’s site for a repeat order. Residual income is most often paid monthly or quarterly.

Referral programs most often work on a residual compensation basis. When the affiliate marketer refers customers to the affiliate merchant, the data is stored for future use. The affiliate marketer has the potential to earn residual income for the duration of their relationship with the affiliate merchant.

Compensation for affiliate programs that offer the ability for residual income is most often based on sales or a fixed amount. Fixed amount of compensation allows the affiliate marketer the opportunity to plan their marketing to maintain a certain level of income. Commission based compensation is more difficult to plan for because prices and commission rates differ.

Level-Based Affiliate Marketing Programs

Single-level affiliate programs are structured to reward compensation benefits to affiliate marketers who signed up with the affiliate marketer directly. With this model there are no upline sponsors or downline affiliates. The relationship between the affiliate marketer and affiliate merchant is a close one.

Two-level affiliate marketing programs allow room for the affiliate marketer to build an affiliate downline. The affiliate marketer is paid for the direct traffic or sales that he refers to the merchant’s site. They are also paid a percentage for each person they sponsor.

Multi-level affiliate marketing works the same way, only deeper. The affiliate marketer earns additional commission for each level of affiliates in their affiliate network. Some people refer to multi-level marketing (MLM) as a pyramid scheme scam. Some merchants avoid multi-level affiliate marketing programs because of the bad reputation they’ve received over the years.

Profitability of Affiliate Programs

No matter which affiliate technique you choose, the rewards for both the merchant and marketer can be quite lucrative. The product or service offered doesn’t have to cost a fortune to earn you one. Some of the most inexpensive products generate more sales and opportunities in the long run.

Products delivered by electronic means such as articles, videos or e-books may be sold time and time again. The profitability of files and downloads is virtually endless. The problem merchants run into with files is that they can be illegally shared with others. Each illegally shared file is money they don’t receive.

Affiliate marketers have the unique opportunity of trying out the various affiliate techniques to see which fits best. Websites that consist primarily of text may find the best results with a PPC system where visitors click links and they earn profits. Article and other informational websites are great places to use a pay-per-click (PPC) based affiliate program.

Review websites on the other hand may find pay-per-lead (PPL) or pay-per-action (PPA) affiliate program more profitable. Consumers have learned to educate themselves on products online before making a purchase. This gives affiliate marketers the opportunity to create websites that review those products and provide an affiliate link for the consumer to make their purchase.

No matter what type of website you choose to operate, there’s an affiliate marketing program that will help you monetize it. Join affiliate programs that pay for traffic, lead generation or sales and watch your account grow. Keep an eye on your data from month to month and choose the affiliate program that generates the best income for your website.

Carol Palmatier is Vice President of Marketing for the premium article distribution service; Article Marketer, and a “Word of Mouth” marketing expert. Learn more about the Article Marketer Affiliate Program here.

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