It refers to an arrangement wherein there exists sharing of revenues between salespeople/publishers and merchants/advertisers.

One real benefit associated with affiliate marketing is that they allow users to automate different processes associated with advertising. Few such processes include applications approval, tracking of results, generating sales links and so on. The option of paying only based on performance transfers the risks associated with merchants to affiliates. However the merchants still do retain their share of risks if at all they are related to partner sites that are fraudulent. Affiliate marketing has made it possible for many online companies to grow. Amazon.com is one such company that has managed to garner hundreds of affiliate programs. Hence a number of major players have restructured their programs to remain competitive over a period of time.