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

Affiliate networks are based on the concept of revenue sharing that is, they let merchants offer a part of revenue generated to him from visitors to the publisher’s site. This may also be a fee for each visitor on the site that undertakes and completes a particular action like making a purchase, or for registering and subscribing for a newsletter or a magazine. But generally revenue sharing is the common method as compared to or opposed to a fee-per-action model. Affiliate networks with many advertisers also attract a large pool of the publishers. Big affiliate networks generally do not need to recruit publishers as the publishers already flock to them on their own. Generally websites that attract the same kind of target audience as the advertisers but without any competition in them are typical affiliate network partners.

Affiliate networks have grown rapidly since their inception. Viewed as marketing toys in early days of internet, they have become an integral part of business plans of many organizations around the world. In fact they have been so successful that they have grown into bigger businesses than the existing offline business. The total sales 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 total bounty amounted close to US $ 6.5 billion.

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

Affiliate networks are a large conglomeration of publishers and merchants working towards a common goal, profit realization. Merchants derive benefits like tracking technology, payment processing, reporting tools and a large pool of publishers from the affiliate network. On the other hand affiliates derive services and benefits like affiliate programs, reporting tools and payment aggregation using the network.