It may not be quite the same underground economy as organized crime and the Mafia, but Don Vito Corleone might have a thing or two to say about the emerging trend online known as affiliate marketing. Those affiliated with this world, no pun intended, are getting very well versed in “playing the game.” Many of the most successful Internet marketers, in fact, work behind the scenes and under a shroud of secrecy. What’s this about keywords? Arbitrage? Conversions?

Continuing with our passion for a digital lifestyle (there’s more to it than just gadget hunting, we take a look at the once secret society of affiliate marketers and how they can open up a whole new world to a new generation of entrepreneurs.

What is Affiliate Marketing?

Especially under the circumstances of the current recession, many people are looking for new and innovative ways to make a living. More specifically, they are looking to make money online. You don’t need to be tied to a single company, a single office, or the economy of a single country. The Internet is at once everywhere and nowhere. It is where you are.

Affiliate marketing is the result of the natural evolution of online advertising. The first ads were paid based on a flat rate, so webmasters had no motivation to improve the sales of the advertiser. As the web matured, the preferred model became based on the number of ad impressions. From there, it went be being based on the number of clicks. Webmasters had to start caring. With affiliate marketing, this philosophy is taken one step further.

Instead of being based on a simple impression or click-through, webmasters only get paid when a site visitor “converts” on an affiliate offer. This could be in the form of a purchase on the advertiser’s site, the subscription to a newsletter, or the submission of a contact form. In essence, this becomes a win-win situation for all parties involved.

On the one hand, advertisers only have to pay based on positive results. They pay a commission based on a sale, just like with a commissioned sales staff. On the other hand, the most successful and efficient webmasters are able to make more money, because they are helping to generate more revenue for the advertisers. This, in essence, is how affiliate marketing works.

Looking for Offers in Lucrative Niches

As with most other forms of advertising, affiliate marketing can approach just about every conceivable niche in the universe. For example, shopping sites like LogicBUY are largely monetized through affiliate links. In other words, LogicBUY makes money went a site visitor clicks through on a “deal” and completes a purchase. The site visitor gets the value of finding a good deal, the webmaster makes money on the sale, and the advertiser increases sales. Everyone wins.

While some companies offer their own affiliate programs, a much larger number rely on what are known as affiliate networks. These networks cull together (and manage) a large number of affiliate marketing offers. This eases the process for webmasters to find the best offers and reduces the administrative load for the advertiser.

What kind of offers can you expect through these networks and how much do they pay? Looking at the list from Market Leverage, some of the top offers include government grants, satellite television, teeth whitening, online surveys, money-making programs, and health supplements. Payments vary considerably, but some have commissions of $30 or more per sale.