Web-based businesses use affiliate marketing as a popular marketing method, which rewards affiliates for visitors, subscribers or sales acquired through their efforts. Basically, it is an advanced take on the old 'finder's fee' method for introducing new clients to a business. The concept was pioneered by Amazon.com in the 90s and since then has become a huge industry. Affiliate marketing programs are usually free to join and don’t require that you buy stock.
Compensation varies, with the three most popular methods including PPC (a certain value paid per click generated), PPL (pay-per-lead) or a sales commission paid per new customer.
The most appealing part of affiliate marketing, for the merchant (affiliate company) is that they don't have to pay until they see results.
Popular e-commerce sites run their own affiliate programmes while other vendors work through third-party affiliate services. The intermediate services provide them with additional services, such as tracking the sales and traffic from various sources.
A few years ago, internet users had a negative opinion of affiliate marketing, due to the fact that affiliate marketers used spam to promote their programmes. However, since the system has grown and companies now use strict methods to ensure that affiliates don't harm the companies' reputations by using unethical practices.
Find out more about Affiliate marketing here: http://en.wikipedia.org/wiki/Affiliate_marketing