It's similar to collecting commissions as a typical salesperson would. The more the affiliate sells... the more the affiliate gets paid. It's as simple as that!

Compensation calculations vary but are typically based on one of the following:

Pay-Per-Click (PPC) - a specific amount is paid for each visitor the affiliate sends

Pay-Per-Lead (PPL) - where the affiliate is paid for registrations or sign-ups

Pay-Per-Sale (PPS) - a specific commission per sale is paid to the affiliate

If your goal is to generate your entire income online you can drive traffic from your subscriber lists, your websites, and from other marketing methods to affiliate links.

What About Product Sales and Marketing?

You'll want to watch for great products and services with the potential to benefit your niche market and your mailing lists. To build trust and income, it's best to recommend only those products that will be of specific interest to them. It's a win-win situation for everyone that way.

When an affiliate is marketing any product, the cost of marketing the product is absorbed by the affiliate, so it's important to keep that cost in mind when promoting products. Typically the higher the percentage of affiliate commissions possible from any quality product, the more that product is worth promoting.

When a product is sold through the affiliate's personal link, depending on the service used, the total sale is divided up among the vendor, the affiliate, the taxing authority, the shipper (if any), and the payment processor.

It is common and expected that all affiliate details be spelled out in the affiliate sign-up process. However, you shouldn't be afraid to contact any vendor to clarify their affiliate program if you have questions. Often you can telephone or email for a fast reply. If they are not willing to answer your questions then you should stay away from them. There are plenty of other quality affiliates programs that would love to have you!

Is a Digital Lifestyle for Me?

Many standard retailers offer very small commissions for affiliate sales while most internet marketers offer around 50%-75% of the sale for being an affiliate of their digitial product. This is why being an affiliate of digital products can be very lucrative in a relatively short period of time.

Although the number of affiliate programs for tangible goods and off-line services is rising, a completely digital lifestyle can be developed solely from digital or downloadable affiliate products that may never take physical form.

Of course it's important to note that as an affiliate of any tangible product, you generally never do more than promote a link to the product online. So in that sense it's basically the same as a digital product.

One of the best places to find digital products to affiliate with is ClickBank.com. They have an automatic affiliate program built into their payment processing service so that affiliate payments are not left up to the product owner to process.

Three other good affiliate programs to check into are:

CJ.com (Commission Junction)
Amazon.com
LinkShare.com

Staying with reputable, well-known internet vendors makes a great deal of sense because you know you will get paid, you know when to expect a check or bank deposit, and you can see your account details online at any time. Plus, if you do have a problem they are more than willing to take care of it.

How Do I Get Started?

There are many ways to start with affiliate marketing, but a basic starting point is to have a web site with text or image affiliate links to products you want to promote. Generally you want to stay focused within a niche or interest group to increase your sales potential. In other words, you don't want to have many different affiliate links to variety of completely different markets on your website. Stick to a similar theme.

If you have used the products, your promotional efforts could include a product review based on your own experience along with images and other supporting information.

Developing an email opt-in list is helpful in affiliate marketing because it gives you the opportunity to find the products and information with the most potential benefit for a group of like-minded individuals (your subscribers) and tell them about it. A targeted list of subscribers, that you have built a good relationship with could be worth thousands of dollars over time.

By promoting affiliate products to several targeted niche markets, it is possible to create a substantial income over time. Especially when the affiliate marketer is only promoting quality products with a real potential to benefit customers within the niche.

In conclusion, affiliate marketing is a great way to build an income without having a product of your own, and without having to do much more than get interested people to view product information through your affiliate links. It's very easy to get started and can eventually put a lot of money in your pocket. But be prepared to put in a lot of time and effort. Making money online through affiliate programs is not easy. If it was everyone would be rich.