Whether you realize it or not, if you've been on the Internet today, you have encountered affiliate marketing. If you have ever “clicked thru” one site to order something from another, the first site probably received a portion of the sale. For instance, independent booksellers have limited shelf space for books. But they can offer their customers an almost unlimited inventory of titles by affiliating with companies like Amazon or Powell's. The more orders, the bigger the affiliate percentage.

Visitors to your site are interested in lots of things that may or may not be related to your product. But when you know your customers well, it's simply a matter of affiliating yourself with sites that offer what they want. What you receive is just a small percentage of the sale, but it adds up, especially when you consider that all it costs you is a link on your web page. And usually, the more sales your affiliate makes from your “click thru” traffic, the bigger your percentage will be.

The key to success in affiliate marketing is being able to track referred customers. As an affiliate manager, you want a system that reliably tracks what you want, with minimal effort on your part, and without affecting the performance of your site or server. Over the last few years a variety of technologies and strategies have been developed in an attempt to improve accuracy, convenience, and flexibility.

There are at least half a dozen methods, but by far the most preferred method is Cookie Tracking. It's popular because it makes tracking affiliate-referred sales so convenient, without negatively impacting your site. This system writes a small text file, called a “cookie,” to a user's browser when they click on an affiliate link. When you are the referring affiliate, the cookie holds your ID, so that at the merchant's order page, you get credit for referring the sale. One drawback is that many computer users disable cookies, although most choose not to, since their favorite sites require them. One bonus is that the merchant can save the information, so that even if a customer buys long after clicking through your site, you still get credit for the sale.

Affiliate marketing, at its best, is a win-win scenario. It's an easy way to offer your customers more of what they want, while you benefit, both in terms of building goodwill and making money.