If you pay close attention to each major online store, you will very likely find a link about their affiliate program of some sort. Whether affiliate program is run in-house, or outsourced to 3rd party like Commission Junction, affiliate marketing is just too valuable to be ignored. In case you're not familiar with affiliate marketing, it simply means a joint venture partnership between a merchant and its affiliate(s). The merchant promises to pay a sales commission to any affiliate who sells the merchant's products. When an affiliate system is set up and run properly, it brings benefits to both parties, a win-win situation.

First of all, why does the merchant who pays commission benefit from such activities? Simple. Because the commission payouts may be much less than other marketing costs. You should know that in the business world, it costs big money to get customers to the store, still no guarantee they'll buy anything. For example, a supermarket or a specialty store has to spend thousands of dollars on a short radio announcement, just to get some radio listeners to visit the store. Similarly, an online store may have to pay a lot of money via the form of pay-per-click just to get some visitors to the website. Now, in both physical store and online store, the visitors are in no way obligated to buy anything. So only a small percentage of those who visit the store may end up buying something. Due to competition, the advertising costs are usually too high, exceeding affiliate commissions in average. On the other hand, with affiliate marketing, the merchant doesn't have to spend anything until the products are sold. So not only the costs are usually lower, they're known in advance and as such, the merchant would be in greater budget control.

Now, it's obvious that affiliates also benefit from the sales. There're many people who have their own ways to have the products sold, yet are not employed by any marketing workforce. These people can use their own talents and hard work to present the products to potential customers, and in the end reaping the affiliate rewards. Thanks to the Internet, affiliates nowadays don't have to go from door to door to hand out flyers or do funny things to attract others' attention on the street. As the matter of fact, almost anyone who can set up a website can effectively promote products for affiliate commissions. Also thanks to the low cost computing programs, an affiliate tracking system can be set up and maintained at a negligible cost. A simple copy and paste of an html code can help establish an affiliate relationship.

Unfortunately, any easy process has its own challenges, mainly about competition. If it's too easy for one, it's too easy for many. As a result, too many affiliates compete each other for a limited consumer space. Similarly, too many merchants compete each other for a limited number of successful affiliates. When the playing field is leveled out, everyone has to work much harder to meet bottom lines. Specifically, affiliates have to spend more efforts to utilize any possible marketing techniques, while merchants have to do their best to provide necessary tools and training to their affiliates, beside keeping accurate and honest earning records.

For both merchants and affiliates, setting up the program requires a lot of work. For merchants, most of the work is done initially, as maintaining an existing program shouldn't be a burden. But for affiliates, it's an on-going battle to keep track of the programs and to increase exposure of the products. If the affiliates spend their own money for advertising, chances are rare that they can make a profit, because theoretically, the merchant would have done a better job. Therefore, most affiliates depend on their own method, mostly cost-free ones, to transform their own work into incomes. Although it requires a lot of work, for many affiliates, it's still well worth the efforts.