This is one rule that definitely rules world of Affiliate marketing. While a company may boast of a high volume of affiliate base it enjoys, fact lies that only 20% of that base are actual driving force for sales of that company.

Leaving that cliched statment, lets talk about more obvious question which is, Why does it hold true and more revelant for affiliate marketing.

The answer to that lies in fact that most companies always tread usual road and well, slowly dissolve into already burgeoning pit of companies that are into afiliate marketing.

How often have you seen a company that is proactively involved in affiliate marketing promotions? Not many right?

One major mistake made by most companies, rather almost every other company is that they do not experiment with new ideas. True affiliate marketing is a vast subject and at some point company does lose its focus once affiliate base starts to build up.

A few suggestions for companies that are into affiliate marketing.

1. Eliminate 80:20 Rule.

Lets take an example of a company that would want to launch its affiliate marketing program. The usual way is to do an e-mail campaign coupled with some CPM deals on portals. The end result of this exercise would be to just increase affiliate base. While above 2 exercises would be a good way to begin program, it does point to one gaping loophole. It opens doors to 80% of junk. By junk, I mean to say sites/webmasters who sign up just for kick of it. They promote product with enthusiasm initially and later it dies down.

To eliminate 80:20 rule, companies should focus on building a niche market rather than concentrate on increasing its reach to more affiliates. To begin with, proper research needs to be done with regards to really good quality sites. These sites are ones which enjoys a good viewership, good hits, a loyal and a targeted customer base.

When a company focuses on sites and has a proactive approach, what they can discover is an entirely different market which is more focussed and sales driven. These sites could vary from portals, information sites to personal webpages. Although downside in this is that you would not be able to see a great increase in your affiliate base. The advantage though is that you just get a step closer to a better balanced ratio of sales versus total workforce.

2. Personalization from beginning.

Getting Started

First, you will need to register your business name with city government. When I registered my business name with city I was charged $11 -- so expect to pay a small fee when filing this legal document with your local goverment.

Second, you need to apply for an Employer Identification Number with Department of Treasury (IRS). To file for an EIN, you will need to complete Form SS-4. You can find these forms in post offices, public libraries, online, or by contacting IRS.

Once you receive this document, keep it in a safe place -- in other words, don't crumple, stomp, or throw away -- this identifies you and your business with U.S. government and you will need this number when you file your taxes.

Third, you will need to check with your state government to determine if you need any specific licenses. Such as Retail Sales Tax Permit -- if you are planning on selling items offline or online.

Fourth, you may want to open a Business Account at your local bank once money starts to roll in. Keeping your money separate from your family account -- helps you to keep your accounting accurate for your business.

What percentage of your income will go to your State and Federal Government?

You will need to pay following taxes, at following rate, on a quarterly basis:

States Taxes -- 3.7% Federal Taxes -- 11.3% Social Security -- 12.4% Medicare -- 2.9%

The first year in business is difficult, because you have no idea what you will be making--You will need to make a conservative guess. However, you will only pay what you owe against that of your expenses (your net income). For example, if you believe you will have $3000 in expenses during year -- and you believe in your first year, you will make $6000-- you would report following:

$6000 (Money Made)- $3000 (Expenses) = $3000 (What you owe)

This amount would be divided among four quarters within year and paid to your State Government and Federal Government. If you find that you will be making more and you have paid in for one quarter -- you will have to adjust balance and divid it between remaining quarters.

The following is what you will submit to Federal Government: 1) Federal Taxes-11.3%, 2) Social Security-12.4%, and 3) Medicare payment-2.9%.