Affiliate marketing is a stepchild of online marketing. Merchant can use this tried and trusted method to bring in sales by advertising their products on other websites. Several e-commerce merchants have made lots of money by following this marketing methods used by such giants as Amazon.com and CDNOW's WebBuy. Using revenue sharing marketing improves brand awareness and it can generate leads, both of which are efficient business strategies.

Affiliate marketing works thanks to "affiliates" or webmasters that sell or advertise a specific merchant's products or services on their websites and make money through a commission or revenue sharing system. Affiliate marketing started in late 1994. Back then, most merchants used a Cost-Per-Click (CPC) system that allowed affiliates to make money when visitors clicked on a link or advertisement that took them to the merchant's website. Bad management and fraud resulted in too many people abusing the system, so only a small share is now done this way (about 1%).

The largest share of affiliate marketing (80%) is done on a cost-per-sale (CPS) basis. With CPS, the affiliate only gets commission when a visitor accesses the merchant's website from the affiliate's website and then purchases services or products from the merchant. The rest of affiliate marketing (19%) is attributed to cost-per-action (CPA) programs. In CPA programs, the affiliate receives a small portion of the merchant's revenue (revenue sharing) if a visitor visits the merchant's site from the affiliate's site and this same visitor subscribes or registers with the merchant's website.

There are different techniques that can be used for this type of marketing: shopping and comparison websites, blogs and RSS feeds, loyalty websites and many others. Blogs and RSS feeds are becoming more popular every day.