Affiliate programs can be an effective tool to use on your blog or website earn extra money for you. But it is important to choose the right affiliate program based on the nature and content of your site and one that offers the most earning potential.

• Customer: A customer is someone that clicks through from your website to to another website (a merchant site) from yours. A customer may or may not have to make a purchase for you to be paid depending on the terms of the affiliate program.
• Merchant: The merchant is the business that that you generate sales, click-throughs, or leads for. Simply put, merchants are the businesses that youare making money or generating business opportunities for.
• Affiliate: In an affiliate program, you are considered the affiliate (or you may also be referred to as an "associate").

Types of Affiliate Programs

1. Pay-per-lead: Affiliates are paid a fee for each customer they refer to a merchant site that completes some sort of information query. Information gathered from lead generations may be used by the merchant site itself, or sold to another party.
   In all fairness to your own site visitors, you should offer a disclaimer that the information they provide in a lead query is captured and could be sold to someone else.
   I find this type of affiliate program the least effective for generating income because unless you have a very specialized website that serves a focused purpose (i.e., offering information about insurance) most people are not going to take the time to fill out lead queries.
2. Pay-per-sale: The merchant site pays the affiliate when a customer referred by the affiliate makes an actual purchase. Pay-per-sale programs may offer a flat fee for each sale, or a percentage based on a variety of factors, or even a combination of flat rate and percentage payments.
   This is the most reliable way to earn income from affiliate programs. It is easy to track what people are buying, how much you are earning, and make adjustments in your affiliate program ads to maximum selling potential.
3. Pay-per-click: A merchant pays you for every click from your site to the merchant site whether or not a sale results. This may sound like an easy way to make money but it is not. Unless you have very high traffic to your site, this is not an effective tool to use and may actually detract from the quality of your own website.
   There are many flaws in the pay-per-click system and even Google was sued in a class action lawsuit for misleading advertisers by deliberately using “parked websites” to create an illusion of the number of paid ads being placed, and for failing to disclose click-through information on customer bills, thereby inflating AdSense profits for Google.
   Merchants are often targeted by individuals who sit and click repeatedly from their own sites or ask family and friends to click for them – people who have no intention of ever buying anything. This practice is unethical and unfair to other business owners.
   If a merchant believes you are artificially inflating click-throughs or using automated methods to increase clicks they have the right to refuse to pay you anything at all.