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How do you make money online with an affiliate program? You’ve heard about it, you’ve seen ads for programs that promise to teach you how to do it, but how does it really work? You’re probably asking this question and its corollary: does it work at all?

First let’s look at what an affiliate program is.  An affiliate program is a method of advertising where the seller of a product farms out the advertising to “affiliates” that is anyone who is willing to advertise the product in return for a percentage of the sales price.

You might think that affiliate programs are confined to small companies who don’t have the money for large advertising budgets. Nothing could be further from the truth: most large companies have affiliate programs. Think Amazon, Electronic Arts, NefFlix and more.

Next, how do affiliate programs work…or to put it more succinctly: how do affiliates get paid? Affiliate programs work based on tracking cookies: small pieces of information that are placed on the user’s computer when the user clicks on a link and fills out the order form to buy the product. The cookie will contain an affiliate code that will tell the merchant which affiliate made the sale.  For this reason, each affiliate is given his or her own unique affiliate link through which he or she may promote the merchant’s products. This link typically goes to a sales page provided by the merchant.

You might be wondering where you can find affiliate programs to join. Finding an affiliate program can be as easy as typing in the name of a large company like Amazon into Google and adding the word “affiliate” after it. Typically, a lot of companies will use affiliate networks to administer their affiliate programs, so another way to find affiliate programs is to join any of the affiliate networks available. A good one for digital products is Clickbank. For physical products and big name companies, Linkshare and Commission Junction are the places to go.

Affiliate programs do work and affiliates can make decent money, but there are a few things you need to do to maximize your income.

1: Purchase your own domain and create a re-direct to your affiliate link. Why? If you want to use Google’s Adwords, you don’t want to be forced to compete with every other affiliate out there and the merchant itself for the same keywords, and if you want to use article marketing, most directories won’t accept affiliate links in the resource or “bio” box.  Another reason to use your own domain is to capture sales from leads who browse for a product while at work but don’t make the purchase until they get home. While they found the product from your advertising efforts, they will typically just type in the merchant’s website URL, and you lose the sale. If  you are using your own domain, they type in your domain and get to the merchant’s site through your affiliate link and the sale captured.

2: Build a list of prospective buyers. Most big time affiliate marketers maintain a list of opt-in subscribers who they are able to market different products to.

3: Research your keywords thoroughly and choose those keywords that will get you the most bang for your buck: that is long-tail ( phrases with more than three words) keywords that have a high enough search volume and relatively low competing results. A search volume of 30 and above and competing results of no greater than 80,000 would be a good place to start. You may find you do better with higher or lower numbers…test and see what works for you.

You can make money with an affiliate program, but it will take some work, and probably a little cash to see good results.