What if I told you affiliate marketing was basically unethical or that field is dominated by shady practices?

You disagree?

Well let's explore affiliate marketing from merchant, affiliate and customer viewpoints.

Affiliate marketing is a revenue sharing partnership between a web merchant and one or more affiliates, where affiliate is paid a commission for referring clicks, leads or, most often, sales to merchant.

The affiliate signs up to affiliate program via an online application form, receives an affiliate link, and can then promote products and services of web merchant via his own website, ezine, pay per click search engines or other advertising means.

The affiliate's role, then, is to introduce potential buyer to seller acting as a kind of middleman.

In return he is paid a commission of any sales resulting from referrals.

But haven't we always been taught to cut out middleman where possible?

Well, yes, but in affiliate marketing customer pays same price regardless of whether he arrives at web merchant's site directly or via affiliate's link.

Or at least that's how it should be.

How does web merchant benefit from running an affiliate program?

The main advantage to web merchant is that via his affiliate program he can recruit a large sales team of affiliates at zero cost and make many more sales in a way that his website alone could never hope to do.

How does affiliate benefit?

The advantages to affiliate are that he can make money in a business where he doesn't have upfront costs of creating his own product, and doesn't have to worry about ecommerce, bookkeeping, or customer support because that's all handled by merchant.

How does customer benefit?

The customer gets a solution to his problem (provided product or service does what it says it does) that he may not have found without affiliate's help and does not have to pay extra.

So it's a win-win situation for everyone involved.

Or at least it is in principle.

However in real world both affiliates and affiliate program owners can be involved in some shady practices.

Shady Practice #1

Google AdSense has rapidly gained a status of an independent online business model. Many average people with a little knowledge of HTML are earning a fortune with AdSense.

The AdSense comes under category of "pay per click affiliate" programs. This means you get paid when someone click on ad which resides on your website.

There are many reason for success of AdSense program. The very first reason is it is launched by Google, leaders of Search Engines. After establishing themselves in crowd of Search Engines they had a crown of credibility with them.

The second reason for popularity lies in fact that Google is not concerned about amount of traffic you are getting to your website.

They are more concerned about content. If content is really good your site will generate visitors over a period of time. This is unlike many other pay per click affiliate programs, which have a condition on number of visitors you are getting per day, before your application gets approved.

This creates an interesting situation for online entrepreneurs. The more traffic they generate to their site, more is possibility to get AdSense ad clicked and they get paid.

Now Google also benefits from this. Since AdSense ads are nothing but same ads from Google AdWords account holders, Google charges AdWords account holder of that particular ad which is being clicked and pays a small portion to webmaster on whose website AdSense ad resides.