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As the Internet replaces newspapers, magazines and even the television for how people inform and entertain themselves, affiliate marketing is becoming a hot way for people to make money online.

Converting the traffic on the Internet into cold, hard cash might seem like an impossible venture, but the reality is a lot of people are doing it very successfully. Creating an affiliate business is one of the best ways to go.

Learning how to get "into the game," will take a little time and some understanding of how the different affiliate programs work. Perhaps the most important thing to understand for most website owners is how these programs pay out. There are three main forms of how an affiliate website can make money for its owner. In general, affiliate advertisers pay when:

1. Traffic numbers to your site - While this is not the most common of the payout forms, it is one that some advertisers use. This form of affiliate marketing involves having an advertiser's ad or banner on your site. That advertiser pays you per impression of his banner on your site, not the click through rate to his or her site. So, essentially the more traffic YOU get the more you get paid.

The ads on your site are also promoting the brand of the advertiser. The advertisers pay you to get their brand in front of your visitors. Visitors will click through to the advertisers' site depending on the effectiveness of their ad creative.

2. Pay per click - In this form of affiliate advertising, also known as ppc, an advertiser pays for every person who clicks through from your website to theirs. Special affiliate software or affiliate tracking programs are needed to keep up with the revenue, but when a web site affiliate program is set up right, this can be a real big moneymaker.

3. Direct Sales Commissions. Most affiliate programs will only pay out when traffic goes from your site to theirs and then makes a purchase of something. This form of advertising generally offers a higher payoff, but the conversion rate can be rather low. It's one thing to entice a visitor to check out another site, it's a completely different ball game to convince them to buy a product.

Some affiliate program websites use a combination of the three different payouts to generate a steady flow of income. They do this by choosing a niche and building their website around that niche. Everything from the content to the ads fits the theme.

While the traffic-only payout is generally the easiest to produce revenue from, it doesn't always pay the most. Since this requires no real action on the part of the viewer, this can be a great base stream of money for a site owner.

The pay per click ads can produce very good revenue streams if materials on the website entice visitors to click through or if the ads themselves are interesting enough that people do.

The last form of making money can be the hardest to see returns from, as you need to send a fair amount of traffic to see good returns, but the commissions tend to be a lot higher.

I personally make most of my affiliate commissions from sales rather than pay per click or banner ads.

Making money using affiliate programs is a possibility for anyone with a website. It does take some time and study to master, but the effort is generally well worth it for the rewards.

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