Affiliate marketing is one method of Internet marketing that relies on affiliates (hence the name) in order to make profits. Affiliates who successfully make a sale (or sales) will then be rewarded with cash, check, or other forms of incentives. Affiliate marketing also makes use of other forms of Internet marketing, such as Search Engine Optimization (SEO), Pay Per Click (PPC), and others.

Affiliate marketing is almost similar to referral marketing, with the only difference being affiliates are driven by personal rewards like cash incentives and the like while referrals are mostly driven by trust and personal experience.

Advantages of Affiliate Marketing

• Cheap (or even no) startup capital. You only need to satisfy one customer, earn their trust, hire them to become an affiliate and they will then tell their other friends about your services. Their friends will then tell their own friends about your service and so on and so forth.
• More affiliates mean more customers and clients. You no longer need to exert any effort in promoting your business, as your affiliates will do it for you. While you benefit from them, they also benefit from you as well (through compensation). It’s a win-win situation indeed!

Disadvantages of Affiliate Marketing

• On the merchant (employer) side, the affiliates may demand for higher commissions upon guaranteeing a transaction or two, therefore leaving the merchant with fewer profits. On the affiliate side, the merchant might suddenly close down their business, leaving the affiliate without any commission (even if they have successfully completed transactions). Some merchants tend to scam their affiliates as well.
• Should you hire an affiliate which has few friends, you won’t be able to spread out your business. From there, you will need to opt for another promotion method.

Affiliate Marketing: A Good Internet Marketing Method for 2012?

As said earlier, affiliate marketing is based on the promise of financial rewards / compensation. However, like referral marketing, trust between the merchant and the affiliate is important as well in order to make your business grow and prosper.

During these times of hard economy, people will take almost any job in order to pay their bills. Hiring a trustworthy affiliate will not only benefit you, but benefit them as well. However, you should learn to trust them, as they would put their trust in you. Affiliate marketing requires good communication between the two parties in order to work out. With both learning to trust each other, the merchant will get an endless supply of income, with the affiliate getting commissions from all the transactions they have made. So as you can see, the end result of this fruitful partnership will benefit the both of you in the future.

However, one should consider that affiliate marketing does not work for all people. It is very important that you take note of the mechanics behind affiliate marketing, as well as to know more about the do’s and don’ts of affiliate marketing. Otherwise, it might not work for you, thus making you invest on other types of Internet marketing strategies.

The author is a technology enthusiast who writes mainly about communication technologies and emerging IT trends. His current focus includes online fax technologies and related systems.