How Do Affiliate Programs Work? By definition an Affiliate Program is a program, run by a company or a third party for the company, that allows other companies, or individuals, to advertise and market the company's products or services for a commission fee per item sold.

To understand how affiliate programs work, we have to start by looking at how they come into existence. Affiliate programs are created by a merchant or service provider, usually when it is in their best interest to do so, and almost always for financial gain. The program may be created in-house by employing the services of a programmer or by purchasing software and having some knowledgeable personnel set up the program. Setting up the program can be contracted out to a web-based tracking service or the merchant or service provider can simply choose to join an existing affiliate program.

Next the merchant or service provider advertises to let prospective affiliates know that this new affiliate program is launching. This can be done in a number of ways. Emails are an effective way to get the message out. Posting news releases in newsletters, e-zine articles, on bulletin boards, and in forums can be highly targeted means of advertising, as well as posting text ads on other websites. Radio and television can be used to announce the launching of a new affiliate program as well as videos on YouTube and tweets in Twitter.

When a prospective affiliate responds to any of the advertisements, a couple things can happen. If the affiliate program is designed for the affiliate to place a link on his or her website that links to the merchant's website, then the merchant may want to check out the affiliate's website to see if the site is compatible to the product or service being offered.

If the merchant has designed the affiliate program to provide the affiliate with a replicated website or squeeze page, then the merchant will more that likely accept all who sign up for the program, as long as they meet the minimum age requirements outlined in the affiliate agreement or contract. The contract itself details the rights and responsibilities of both parties, including compensation and pay schedule.

Tracking Is  Big Factor In How Affiliate Programs Work

A very important key to how do affiliate programs work is in the tracking. Affiliate programs use tracking software to determine which affiliates are responsible for triggering the desired action that pays the compensation.

The desired action may be a click (cost-per-click), where a visitor to the affiliate's website clicks on an text link, ad, or banner and the results is registered with the Merchant.

The action can be a visit (cost -per-visit), where the visitor clicks a text link, ad, or banner on the affiliate's website and is redirected to a squeeze page or a predetermined Merchant's web page.

The action can be a sale (cost-per-sale), where the visitor clicks, visits, and purchases. Each of these terms can be classified as cost-per-action which is a broader term that is used to describe whatever it costs the Merchant to get the desired action.(a purchase, fill out a survey, visit, signing up for something, and etc.)

In an affiliate program contract, it is desirable for the affiliate to have a long return date, because the affiliate doesn't get paid until after the visitor has completed the desired action. The return date is the amount of time a visitor has to return and complete a desired action, after the initial visit.

For example, if a visitor initiates the desired action and leaves the affiliate's website without completing the desired action but returns at a later date and follows through, the affiliate gets credit for the desired action, even if the visitor by-passes the affiliate's website and completes the desired action at the merchant's site. A longer return time favors the affiliate. Some affiliate programs have return times as long as one year or longer, long after the affiliate will have forgotten about the visitor. 

I hope this adequately answers your question on "How Do Affiliate Programs Work?"

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