As we stated earlier, an affi liate is a person who refers potential new buyers to a seller ’s site. Affiliate-specifi c sites are set up to provide an additional venue where people can come and buy from the merchants with whom the site owner is affi li-ated. Affi liate sites may be the single business model that has created the most wealth on the Internet. Many affi liate businesses are producing six - and seven - fi gure incomes for their owners. It has been estimated, however, that 10 percent of active affi liate sites are producing 90 percent of affi liate site income. This fi gure emphasizes the importance of following the action steps presented later in this book.

ADVANTAGES

Affi liate sites offer a number of advantages. In addition to being potentially very lucrative, affi liate sites can be up and generating income quickly. As is true of most Internet businesses, setup costs are low. An affi liate can sell almost any product imaginable, or any combination of products. When you fi nd a niche that excites you, you can easily identify products in that niche for which you can become an affi liate. There are many thousands of affi liate programs available. You can be an affi liate for building materials. You can be an affi liate for shoes. You

can be an affi liate for dental services, for legal insurance, for stock brokerages, or for credit cards.

Affi liates do not carry inventory and are not responsible for processing orders or shipping. You will not need a merchant account to be an affi liate. Because you will be selling other people ’ s products, you do not need to incur the time and cost of producing products of your own. Sales experience is not necessary, and you need not develop your own marketing materials. The company you represent will provide you with everything you need to sell their products. If at any time one of the products you represent is not selling well, you can easily drop it and pick up another product. Your risk is minimal.

With an affi liate site, as with any Internet business, you control your income to an extraordinary degree. Your success depends on how well you are able to present your information, and how many people you can attract to come to your site and click through to the merchant for whom you ’ re an affi liate. Finally, as an affi liate, you can live almost anywhere in the world.

MAKING MONEY AS AN AFFILIATE

The mechanics of affi liate sites are straightforward. When you sign on to a merchant ’ s affi liate program, you are given links to place on your site or send out in your newsletter and e - mails. Visitors to your site click on the link and are transferred to the merchant ’ s site. When your visitor makes a purchase from the merchant, or takes another specifi ed action, your account is credited. Each affi liate link contains your spe-cifi c identifi er, and software on the merchant ’ s site tracks your sales and the leads you generate.

Generally affi liates are paid one of three ways. The fi rst is cost per action (CPA), such as compensation for lead generation. Imagine you are a wine afi cionado and have a site devoted to wine. Your site might include information about French wines, California wines, Portuguese wines, Australian wines, and Texas wines. And, of course, you offer affi liate links there.

A visitor to your site may click on an affi liate link to get information about a tour of the Napa Valley for wine tastings and perhaps a stay at a bed and breakfast on a winery. The visitor is routed to the merchant ’ s site and reads about the trip. He thinks, “Wow. I’d love to

do that, but not this month. ” Still, he signs up for the merchant ’ s newsletter. Now the merchant ’ s site has generated a lead from your affi liate link, and if the merchant has a pay -per-action program, you have earned a commission.

The second way for affi liates to be paid is cost per click (CPC). In that case, you as an affi liate are paid every time a visitor clicks through your site to the merchant ’ s site, regardless of whether that visitor takes additional action.

The third way affi liates are paid is cost per sale (CPS). Cost per sale is the most concrete operation and it is the biggest moneymaker for affi liates. Often it is the only type of payment offered by merchants. In this case, your visitor goes to your site about wine, fi nds the tour of the Napa Valley for wine tasting, pulls out his or her credit card, and says, “ Yes, this is what I am doing this summer. ” And you, the affi liate, receive a percentage of the sale.

There are also some programs that pay on the basis of cost per impression (CPM). However, these programs are not usually profi table for the affi liate, as they are often associated with sweepstakes or efforts to collect e - mail addresses for future campaigns.