An affiliate is a business that sells them products or services of another business, called a merchant, via a link on the affiliates website. When a sale take place, the affiliate receives a commission.

Affiliate business is popular because it is performance-based; merchants with affiliate programs incur promotional costs, in the form of commissions, only when sales are made. By comparison, sellers that promote their products or services via ads, TV commercials, direct mail and the like, pay for these marketing costs whether or not the media is successful in bringing them sales. Affiliates typically do not pay to participate in affiliate programs.

When a business joins the affiliate program of an online merchant, they are assigned a unique link that they put up on their website, or include in email messages. When one of their site visitors clicks on the link, they are directed to the merchants website. If they make a purchase, the affiliate is credited with a commission, but if they dont buy, there is no charge to the merchant for window shoppers.

In order to maximize their earnings, it is important for affiliates to choose merchants whose products are expected to be of great interest to their site visitors. For instance, it is unlikely that a link for custom fishing lures will generate many sales from a site selling professional cookware. However, a site for potted culinary herbs may do quite well. By entering into affiliate relationships with appropriate merchants, businesses can not only increase their online earnings, but provide a valuable service to their site visitors by introducing them to merchants of interest and products theyre ready to buy.