Affiliate marketing is very simply a commission based online advertising medium; a website earns a commission for advertising and ultimataly driving traffic and sales to your web site.
For example a website mysite.com hosts a banner advertising Bob's Hosting. Someone then clicks through the banner and buys some hosting from Bob's Hosting. The owner of mysite.com will earn a commission from the sale.
Mysite.com is know as the
affiliate as he is the person displaying the commission based links. In the US affiliates are often known as
associates or
publishers.
Bob's Hosting is the
merchant or sometimes the
advertiser as he is the one selling the products for a commission.
Affiliate Programmes - this is the individual scheme run by the merchant and relates to how the programme is run.
Affiliate Marketing is a very important part of an online marketing mix and will account for between 15-30% of all online business.