Wikipedia defines Affiliate Marketing as
"Affiliate Marketing is an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's marketing efforts. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network, the publisher (also known as 'the affiliate') and the customer. The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors."
Affiliate marketing is a method of distributing products or services to consumers through a network of affiliates who refer customers to the seller. The affiliates are rewarded for these references and/or for sales to the referred customers.
According to Forrester Researching., affiliates delivered 13% of retail sales in 1999, and will deliver 21% in 2003. The power of Affiliate Marketing is viral distribution. According to research of Opinion Research Corporation International (ORCI), users told an average of 12 other people about an online shopping experience. So the Network of affiliates grows very fast.
Following are different types of Affiliate promoted sites
Search affiliates that utilize pay per click search engines to promote the advertisers' offers (i.e., search arbitrage)
Comparison shopping websites and directories
Loyalty websites, typically characterized by providing a reward system for purchases via points back, cash back
CRM sites that offer charitable donations
Coupon and rebate websites that focus on sales promotions
Content and niche market websites, including product review sites
Personal websites
Weblogs and website syndication feeds
E-mail list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail drip marketing) and newsletter list affiliates, which are typically more content-heavy
Registration path or co-registration affiliates who include offers from other merchants during the registration process on their own website
Shopping directories that list merchants by categories without providing coupons, price comparisons, or other features based on information that changes frequently, thus requiring continual updates
Cost per action networks (i.e., top-tier affiliates) that expose offers from the advertiser with which they are affiliated to their own network of affiliates
Websites using ad bars (e.g. Adsense) to display context-sensitive, highly relevant ads for products on the site
Virtual Currency: a new type of publisher that utilizes the social media space to couple an advertiser's offer with a handout of "virtual currency" in a game or virtual platform.
