Affiliate programs. Sounds like heavy stuff. What are affiliate programs really?

These days, it's so easy to set up your own webpage. If you have a computer and internet access, you can simply go to a site such as GeoCities or Yahoo and use ready-made templates to construct a simple personal page. These sites will give you a URL, store the content of your page and slap on some advertisements. In an hour or two, Voila! Your page is on the Web!

But what if you have a content-driven website and want to make money off your traffic? If you are an online merchant, how can you get people to your site to buy your products? This is where affiliate programs come in.

Simply put, affiliate programs, or associate programs, are arrangements in which an online merchant pays an affiliate website a commission to send them traffic. These affiliate websites post links to the merchant site and are paid according to a particular agreement. This agreement is usually based on the number of people the affiliate sends to the merchant's site, or the number of people they send who buys something or perform some other action. Some arrangements pay according to the number of people who visit the page containing their merchant site's banner advertisement. Basically, if a link on an affiliate site brings the merchant site traffic or money, the merchant site pays the affiliate site according to their agreement. Affiliate programs work great when selling products online, but it can also be a cheap and effective marketing strategy. It's a good way to get the word out about your site.

Here's a good example of affiliate programs in action. In 1996, Jeff Bezos, CEO and founder of Amazon.com, popularized affiliate programs as an internet marketing strategy. Amazon.com attracts affiliates to post links to individual books for sale on Amazon.com, or for Amazon.com in general, by promising them a percentage of the profits if someone clicks on the link and then purchases books or other items. The affiliate helps make the sale, but Amazon.com does everything else: They take the order, collect the money and ship the book to the customer. With over 500,000 affiliate Web sites in participation, Amazon.com's program is a resounding success.

Over the past few years, affiliate programs have grown enormously in popularity, taking many interesting forms. For many Web sites that don't deal much in e-commerce, functioning as an affiliate is a good way to jump into e-commerce.

There are three basic types of affiliate programs payment arrangements:

Pay-per-sale - Amazon's affiliate programs mentioned above is an example of a pay-per-sale arrangement. In this arrangement, the merchant site pays an affiliate when the affiliate sends them a customer who purchases something. Some merchant websites, like Amazon.com, pay the affiliate a percentage of the sale and others pay a fixed amount per sale.

Pay-per-click - In these affiliate programs, the merchant site pays the affiliate based on the number of visitors who click on the link to come to the merchant's site. They don't have to buy anything, and it doesn't matter to the affiliate what a visitor does once he gets to the merchant's site.

Pay-per-lead - Companies with these affiliate programs pay their affiliates based on the number of visitors they refer who sign up as leads. This simply means the visitor fills out some requested information at the merchant site, which the merchant site may use as a sales lead or sell to another company as a sales lead.

There are a number of other arrangements as well. But basically, a company could set up affiliate programs based on any action that would benefit them, and then pay their affiliates based on the number of customers the affiliates send them who perform that action.

Most affiliate programs also prohibit offensive content, but generally speaking, any website could be involved in an affiliate program. Although they are commonly called merchants, websites don't even need to sell anything to benefit from having affiliates. A lot of content-based Web sites get most of their money from advertisers, which are attracted by high traffic numbers. Because of this, traffic translates directly into profit for these sites.

There are all sorts of affiliate programs, from top Web sites to small personal pages. Basically any website can join affiliate programs, and if they choose well, they could just make some money off of it. Some sites, such as Memolink and My Points, are just big collections of affiliate programs. These sites join a variety of pay-per-click or pay-per-lead programs and then pay their visitors a fraction of the commission on each click or reward them with prizes.