If you have a website with some traffic, you can make money by having links to merchants' online shops on your site. If someone goes through your links into the shop of the merchant, and buys something, you earn commission from the sale, between 5% and 40% depending on type of merchant. Some merchants also pay for each click or each lead. A lead is a new visitor to the shop that asks for more information or prize offers.

Often there is a variety of links to choose from, offered by the merchant. The simplest type is just an URL with an affiliate code and a product code as parameters. This can be used bare, or combined with an anchor text and formatting you make yourself. Another simple variant is a ready made anchor text with a link offered by the merchant.

A more complicated variant is a banner or an anchor text dynamically uploaded from the merchant's site. This allows the merchant to change the anchor text and the banner when he wishes to do so. A still more sophisticated variant is a dynamically uploaded quarter page sized, half page sized or a full page sized add copy with links.

People or companies having these links on their web-sites, are called affiliates, and the links are called affiliate links. The administrative infrastructure by the merchant that the affiliate registers into, in order to get the linking code, is called an affiliate program.

To register into an affiliate program is usually free, and through the program you get freely all you need to make the linking code, to monitor the traffic through your links, and to see what commission you have earned.

An affiliate program is not a MLM program, since the affiliates only earn from sales, leads or clicks. However, in many programs you can recruit other affiliates and earn some commission from the sales made by the recruited affiliates too. The portion of the sale revenues generated by recruited affiliates, that you can earn as a commission varies between 5% and 20%. In most affiliate programs you will only earn from to levels - your own sales and sales generated by affiliates directly recruited by you. Some programs have a 3-tire commission structure.

There are also common networks operated by third-part companies where several merchants use a common software and administrative infrastructure to recruit affiliates and monitor the traffic from affiliates. These are called affiliate networks. Both the merchants and potential affiliates register into the network, and the affiliates can find links to the online shops of hundreds of merchants to use at their web-site. Examples of affiliate networks are Commission Junction, LinkConnector and Linkshare.

From my experience, the best affiliate programs are for merchants selling alternative health items or items for erotic improvements. I also have good experience with programs in the fields skincare, cosmetics and hobby. However, it is important that the products sold through the affiliate program have one or more of these properties: They have especially high quality. They are sold for a more affordable prize than from local shops. They are unique so that similar products are only found through the internet shop. They are not found locally in many customers geographical area.

What will work best for you, will however depend upon the kind of traffic you have, and the interests of people visiting your site.