The concept of revenue sharing has been about for quite a while, long before the internet. Affiliate marketing, however, has taken it to new heights, and it’s become the main line advertising system for Internet companies.
Because affiliate marketing presents little to now risk for both the affiliate and the marketer, internet traders find it highly advantageous. The way it works is that the affiliate earns a sort of commission or fixed amount based on the amount of sales the affiliate brings to the merchant, either thru on-line links on the affiliates website – or through e-mail, blogs, rss feeds and plenty of other categories of on-line communication. About one percent of people that use affiliate marketing use the cost-per-click system, meaning an affiliate earns commission each time the merchant’s advert is clicked. However, this type of remuneration is no longer preferred because it’s too risky for merchants, thanks to dishonest individuals taking advantage of the system.
Affiliate promotion also doesn’t cost the merchant anything to place banners on affiliates’ sites, so they just compensate if a sale or lead is generated. Merchants also get to set the parameters, and decide on the incentive schemes. Therefore, it’s a extraordinarily inexpensive (but highly efficient way) to cultivate a business.