What is affiliate marketing??Let's forget about the online world for a mo0ment and imagine that we have a product to sell in our market.?We could acquire or lease a retail premises and attract customers to our store to buy the product.?This will work OK if all our customers are concentrated in one geographic location or if we have deep enough pockets to open stores in many locations.?What are our alternatives?

We could hire sales people to call on customers in an effort to sell the product.?This would expand our reach quickly however it would still be quite costly.?People are not typically low cost.?To get around this, we could offer the sales people a commission only remuneration structure so that we only pay the sales person a proportion of the selling price once they make a sale.?This would not require a lot of up front capital and we would only pay for performance.?This is the closest model to that of affiliate marketing.

Affiliate marketers, or affiliates as they are known, specialise in selling other people's products on the internet for a commission.?Each affiliate invests their own capital to take the product to market, often in their own unique way, and when they make a sale, they receive a commission.

There is a common theme in research that twenty percent of the sales team will make eighty percent of the sales for a particular product.?Some people are very good at selling.?In the affiliate world, these people are known as 'master affiliates' and their services are in great demand.?If I have a product to sell, I really want to attract a few master affiliates if I can.

There can be more than one level of affiliate marketer.?For example, you could be an affiliate selling widgets for ABC Company and receiving a sixty five percent commission (that level of commission is not uncommon in affiliate marketing circles) and you might recruit other affiliates to sell the same product for, say fifty five percent commission.?You would therefore earn ten percent of every sale that they make.?This is called a 'two tier' affiliate commission structure.

Now why would an affiliate marketer be prepared to take fifty five percent when they could be earning sixty five percent directly from the source??Because they benefit from the knowledge, support and experience of the master affiliate.?It is in the master affiliate's best interest to help his or her affiliates to perform to the highest possible levels so they typically do whatever they can to pass on their knowledge and also provide resources for the affiliate to perform.?In a way this is similar to multi-level marketing in the off line world.

So, in summary, affiliate marketing is a network marketing concept that lends itself to the network (because the internet is a highly effective platform for networking).?Affiliates invest their own capital, knowledge, experience and time into marketing products and when they make a sale, they receive an agreed commission.?The best affiliates are called master affiliates and they often recruit their own affiliates in a two tier model and then share the commission on sales.