As the diagram below illustrates, there are three entities involved in typical affiliate program: the Merchant, the Affiliate and the Customer.
For example, if you join an Affiliate Program, you will be paid a referral fee for each visitor who (1) is directed to the merchant website through a link on your website and (2) who subsequently makes the required action on this merchant website. In this scenario you would be referred to as the affiliate, and the website hosting the affiliate program is referred to as the merchant.
Affiliates have quickly become veritable sales forces for merchant websites. As in a typical sales force, the affiliate sites receive their income from a pre-determined referral fee or commission rate that is based on a measurable action by the site visitor. This measurable action could be clicks, leads, an outright sale or any other action a merchant would like to reward.
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