Affiliate marketing means promoting a company's products on the Web and receiving a commission for sales of those products (or for some other result, such as getting them sales leads).

On paper it sounds like easy money. You set up a website, become an "affiliate" for a product that seems like it has a good market, then run ads for the product on your website. Whenever someone clicks on one of the ads and buys the product, you earn a commission. Simplicity itself.

If you're not at all familiar with this method of making money on the Internet, you're probably wondering, "Okay, so how do I get to be an affiliate for some company's product? And once I'm an affiliate, where do I get the ads? And how do I get paid?"

Before I answer those let me share a dirty little secret about affiliate marketing with you. In the past many companies which offered affiliate programs didn't pay their affiliates, or, more commonly, underpaid them. Suppose you promoted ABC Company's widgets on your website and received $1000 worth of orders in a month. The company has promised to pay you a 20% commission. So you should receive $200. Trouble is, nobody but the company really knew how much your sales were, in many cases. They might actually pay you $50, therefore, or nothing. You wouldn't know you were being hoodwinked.

Nowadays there's an easy way to avoid that problem, and this answers the questions posed above. You become an affiliate through an affiliate network like Commission Junction or LinkShare. These networks represent hundreds or thousands of companies. You pick the companies on the network you want to promote and your commissions are tallied by the networks, not by the companies whose products you're promoting. You receive your payments directly from the networks. In my opinion, this is a huge improvement - at least in this way you can be sure you'll get paid for your efforts.

So the answer to the first question above, "How do I get to be an affiliate for some company's product?" is you join an online affiliate program. This is actually pretty easy. Just go to Commision Junction at cj.com or LinkShare at linkshare.com -- which are the two biggest - and sign up. You do need a website, however.

Once you're accepted by either of these networks, you then review their lengthy lists of companies which offer affiliate programs through them. You'll be looking for good programs that offer products or services that will appeal to the visitors to your site. So for example, if your site is about personal finance, you might want to run ads for personal loans, insurance, home refinancing, Internet banking, etc.

You'll notice that some companies' affiliate programs pay you only for actual sales (i.e., $20 for selling a car insurance policy) whereas others pay you for leads (i.e., $20 for a potential customer filling out an application for a car insurance policy). Guess which of these two types of affiliate programs is more profitable. The latter is almost inevitably far more profitable. So you should, initially at least, only promote programs in which you get paid for leads, not for actual sales.

The way it works is this: You select one or more online affiliate programs which appeal to you, then you apply to become an affiliate of those programs. In some cases, you'll get approved automatically. In other cases, you'll receive an email later either accepting or rejecting your application. (The company may have a policy of not accepting "new" websites, or may not accept websites in certain fields, etc. -- thus a possible rejection.)

Once you're accepted into a few programs, you then go back to the affiliate network's website (i.e., the site of Commission Junction or LinkShare) and copy the HTML code for the banner ads or other types of ads you'll be putting on your website (this HTML will have a tracking code appended to it so that you can get paid your commissions).

Once you put these coded ads onto your website you're in the affiliate marketing business. It's now just a matter of waiting for some of your visitors to click on those ads, then purchase the products or fill out the application forms. Every time this happens you get credited for the stated commission. The networks generally send out checks monthly.

So much for the good news... for the bad news – and much more -- please read on (see citation to complete article below).