The idea behind this is, as an affiliate yourself, you have the ability to sign up other affiliates under you.
In an ideal world, the more affiliate you sign up on your second tier below you, the more money you can make. It is really a win-win situation for everyone. The affiliates will have to then decide if it wants to grow their affiliate base to get more people selling their products. So, they introduce a second tier affiliate program.
Each affiliate still gets the same 10% commission per sale, but now, the same affiliate can earn 4% on the sales from affiliates they refer to the system. It also enables the company offering the affiliate program the ability to rapidly grow their affiliate base. Two tier affiliate programs are set up to maximize the income for the affiliates who use them.
There are hundreds of thousands of people marketing affiliate programs online these days. Amazon, among many other websites most certainly have way more than 100,000 affiliates. There wouldn't be that many people doing this if nobody was making money with it.
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However, not every affiliate will make bucket-loads of cash. It takes a little work and desire to constantly learn to be really successful. Affiliate programs aren't get-rich-quick businesses, but rather more deeply rooted business systems which can make long term incomes for the website owners.
If you take your affiliate program business seriously, it can easily surpass the income generated from a 9-5 job. It really depends on the market you are going after, how popular your site is (number of visitors you get), how targeted your ads are to your visitors and so on.
It can be confusing to understand all of this but once you begin to grasp this concept you are most definitely going to want to become a big part of some type of affiliate program in your area or surrounding area because the benefits are really going to be worth any amount of hard work being put forth towards your financial and business achievements.
Many small streams create a large river. Same things are true with multiple small revenue streams. If you want to have many target markets, build a separate website for each market, and target smaller niches with each site. Even though you will get less traffic and income from a smaller site, you will have several smaller sites working together, which combined will earn more than one massive, end all site.
Knowing more about an affiliate program before you become involved in one is so very important and it will mean all the difference in the world when it comes to how successful of a future you have in store for you and for your businesses longevity as well.