Affiliate marketing is an advertising method in which a business incentivizes partners (called affiliates) for each agreed positive action brought about by the affiliate's own marketing efforts.  Some examples of how affiliates generate revenue include a certain value for each visit (Pay-per-click), registrant (Pay-per-lead), or a commission for each customer or sale (Pay-per-Sale).  Obviously, for an advertiser, the most attractive aspect of affiliate marketing is its variable, not fixed, cost.  No marketing costs are paid to an affiliate until results are realized.

Usually, affiliates are given a unique ID to be encoded into any links to the advertiser’s site in order to identify the traffic that they are sending.  As well, advertisers usually provide ads ready to be implemented on any site very quickly including a variety of shapes, sizes, and color schemes.   Some advertisers run their own programs such as Amazon and eBay, but most affiliate programs are run via a third party system that offers security and accuracy to both the advertiser and the affiliate.  Some of these third party systems include Commission Junction and Link Share.

Overall, affiliate marketing has proven to be a great viral technique that can return a high Return on Investment for advertisers as they leverage other users to generate revenue.  However, in its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.