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Think you need your own product to make money on the Internet? Well, you don't. There are several ways around it. Here I will discuss one of them, called "affiliate marketing".

Many entities offer an affiliate program, which you may join to promote their product or service. The provider of said product rewards their affiliates based on performance.

In order to track performance, most affiliate programs supply you with a URL, specially coded with your unique affiliate ID. Your ID may be a name or number that you choose, or it might be assigned by the merchant.

Your new URL is the address you will send potential customers (prospects) to. When your prospects reach the vendors website via your coded URL, their purchases are credited to you, the referrer. Then, the vendor can pay you the appropriate commission, based on either a percentage of the sale, or a set bounty.

Commissions may also be paid for referring leads. This is when you earn a commission by referring a prospect to sign up for a service, or fill out a form. Commissions for generating leads are usually a fixed amount.

For example, you are promoting a real estate company that pays $10 per lead. The prospect clicks on your link to visit that companies website. Once there, they fill out a form to receive more information about buying a house. According to the terms of the affiliate agreement, this is a qualified lead. The company knows to pay you $10 for the lead, thanks to your ID code embedded in the URL.

Most vendors will use cookies to track referrers. Cookies are little bits of information placed on the user's computer when they visit a site. If a customer leaves the vendor's website without purchasing, they can return later and the vendor's computer will recognize the cookie. These cookies tell them that you are the referrer, so you will be awarded the commissions due for a sale.

The specific details and structure of affiliate programs can vary, but are usually built around the above basic processes. Other systems include MLM or Multi-Level Marketing (aka Pyramid schemes), Network Marketing, Two-tier programs, and Pay-Per-Click or Pay-Per-Thousand impressions advertising (i.e. Google Adsense).

The best way to choose your program(s) is to pick something you are passionate about, such as a favorite hobby. This way you will have plenty of information to offer customers, and increase your chances of making sales.

There are other factors to look at and work into the equation:

* Find out if there is a demand for what you will be promoting.

* See how much competition there is in that niche.

* Make sure the vendor has an effective sales letter or sales page, to convert prospects into paying customers.

* Look for products which are not overpriced, but pay high commissions.

* The best vendors to use will be well established, with a low return rate.

While the popular choice is to have your own website for advertising affiliate links and banners, it is not always necessary. A lot of people have made money simply advertising their affiliate URL with Google Adwords, Yahoo! Sponsored Search, etc.

With the right affiliate marketing programs and your own creative promotion techniques, you can earn a good living on the Internet without personally selling or shipping a product.