There is sometimes confusion about what exactly an affiliate program is, and how you can actually earn a residual income using one. Sometimes you may get confused because you are bombarded with ads telling how you can make large amounts of cash through an affiliate program. Then you receive ads saying that any program offering an unlimited income is a scam. Both are extremes. Affiliate programs are found almost everywhere you look, even with large companies starting to offer them. It is very important that you learn the truth about earning a residual income in an affiliate program before you write it off as a scam.

Affiliate programs have two basic functions:

The first function is to sell a product for a commission. Companies set up affiliate programs so they can get their product marketed by their affiliates. This is not only free marketing for the company, but also allows the affiliates to make a residual income. The company usually gives the affiliate a website where they send customers. The website is coded with the affiliates ID so that every sale made on that website is credited to them, which in turn results in a commission being paid to them. All the affiliate has to do is market their website.

The second function of an affiliate program is to build the program by recruiting new affiliates. Besides selling products, the website also gives people the chance to become an affiliate themselves. When people sign up on an affiliate website, the affiliate then gets a commission on anything the new affiliate sells from their new website. This continues as each affiliate signs up more affiliates. It is a win-win situation for everyone involved. The company is getting an amazing amount of free advertising and all they had to do was set up and monitor the affiliate program. The affiliate members do the rest. Many major companies are seeing the value of affiliate programs and are implementing their own programs.

Many affiliate programs advertise that you can make large amounts of money with their program. While it is true that an affiliate who sells a lot of products and builds a team of affiliates under them who also actively sell and recruit can make a large amount of money, it is not that simple.

First of all, setting up a stable and strong team is difficult. There are so many people looking to make a quick dollar with little effort, that half the people who sign up for these programs never even carry through and end up quitting. The commissions paid to affiliates on the product sales are usually rather low so you need the collective efforts of many team members in order to make substantial commissions. So, it is possible to make a good income, but it will take some time for you to grow your team of fellow affiliates.

Affiliate programs also scare some people due to their close resemblance to a pyramid scheme. Any of you who have been interested in working at home, or building a business have surely heard of a pyramid scheme. A pyramid scheme does involve recruiting people to sign up in order to make money from their efforts, but the main difference, and the reason affiliate programs succeed where pyramid schemes fail, is that affiliate programs have an actual product to sell. If a program has a product to sell that is useful and something people will buy, then it is a legitimate affiliate program and not a pyramid scheme.

Affiliate programs do offer a great way to build residual income, and I do urge you to investigate them more. You can be quite successful with them if you are willing to treat them like your business and work hard.