Affiliate marketing is a close relative of online advertising, the use of affiliates to increase

Affiliate marketing is a close relative of online advertising, the use of affiliates to increase sales is a partnership between advertisers and publishers which goes beyond mere advertising. The concept is for business A to have other businesses sell their product or service for them - though not in the same way as a manufacturer would use wholesalers and retailers. Affiliate marketing is, essentially, a referral programme with partners in the affiliation agreeing to a fee that is paid when a referred customer completes a transaction. An offline example would be a car-hire firm that rewards a hotel for referring clients. Online, this means that the publisher of the web site that hosts the affil iate ad will benefit financially if a user follows a link from their site to the advertiser's site and subsequently makes a purchase. However, ad banners are passive, sitting on the web page waiting for the user to click on them, whereas for an affiliate programme to be successful, the affiliated organization (the one publishing the site containing the links) must be proactive - vigorously promoting the product or service that is on offer. Successful affiliate marketing is very much a partnership between advertiser and publisher, and so should be of benefit to both parties. The epitome of good affiliate practice is Amazon, who built its business using affiliates to promote - and sell - books on behall of the online bookseller. However, being an affiliate also produces a form of direct income, in much the same way that selling advertising space on a web site does. It is estimated that around 20 per cent of online retail sales originate with affiliates.