Use-it’s look at affiliate programs is worth a read if you are considering adding advertising and income sources to your blog.
An affiliate program is a way for sites to pay for incoming traffic: when site A links to site B, there is some mechanism for site B to pay a referral fee to site A, depending on who follows the link and how valuable they are to site B. Site A is called an “affiliate” of site B, because it is associated with site B and uses it to provide a service to its users.
The most famous affiliates program was introduced by Amazon.com with the launch of the Amazon Associates in July 1996. Amazon currently has about a quarter million sites in their affiliates program. In the case of Amazon, the referral fees work as follows:
* fees are only paid for users who buy books at Amazon during the visit that results after having followed a link from the affiliated site
* the fee is usually 5% of the sales, though it can be more for certain books if the site linked directly to the product page for that book
So, for example, if you follow this link to Amazon.com and buy a book there, I will get 5% of the price of the book.
In the case of Amazon, the affiliated site does not get anything if the user doesn’t buy during the first visit but decides to return and shop later. Other affiliates programs are more advanced and pay based on the life-time value of the referred customer and not just based on his or her initial purchase. It obviously requires more programming to keep track of users over time, but all marketing theory certainly tells us that life-time value is more important than individual sales, so hopefully we will get more affiliates programs to take the long view in the future.
With so many different affiliate programs out there, offering different options, it helps to understand how they work and which will work best for your blog, before committing.