An affiliate network is essentially an intermediate amongst publishers and merchant affiliate programs. Affiliate networks help publishers or affiliates as they are commonly recognized, to easily find out the affiliate programs that will generate more traffic and hence more revenue for their web sites. This also allows the online merchants to promote their affiliate programs to all publishers who are taking part in the affiliate networks. It is a mutually beneficial scheme for publishers and internet merchants to gather at one place and reap in the benefits.

Affiliate networks are based on the idea of revenue sharing that is, they let merchants give a part of revenue generated to him from traffic to the publisher's site. There may also be a fee for each visitor on the site that undertakes and performs a particular action like making a purchase, or for registering and subscribing for a newsletter or a magazine. But usually revenue sharing is the standard method as compared to or contrary to a fee-per-action model. Affiliate networks with many advertisers also attract a large pool of the publishers. Big affiliate networks usually do not need to recruit publishers as the publishers already flock to them on their own. Normally websites that draw in the same kind of target audience as the advertisers but without any competition in them are standard affiliate network partners.

Affiliate networks have grown rapidly since their debut. Viewed as marketing toys in early days of internet, they have become an essential part of business plans of many companies around the world. In fact they have been so profitable that they have grown into bigger businesses than the existing offline business. The total revenue amount generated according to one source by affiliate networks is £2.16 billion in UK alone for the year 2006. In the same year for the USA the overall bounty amounted nearly US $ 6.5 billion.

Affiliate networks are primarily used in assortment of sources like retail, gaming and gambling, personal finance, travel, education, telecom and publishing. Typically the affiliates are allowed to join the network free of cost while there is generally a minimal fee for the merchants in order to participate. The network also charges an initial setup or a membership fee which are recurring. Although affiliates join for free but they pay a particular percentage of their earnings as commission to affiliate network.

Affiliate networks are a large conglomeration of publishers and suppliers working towards a common objective; profit realization. Merchants derive benefits like tracking technology, payment processing, reporting tools as well as a large pool of publishers from the affiliate network. However, affiliates derive services and benefits like affiliate programs, reporting tools and payment aggregation by using the network.

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