Internet Affiliate Marketing is the system of promoting web based businesses in which a third party usually referred to as an affiliate is rewarded for every visitor, customer or sale he/she provides. In layman's term, Affiliate marketing is using one site to drive traffic to another.
Multi tier programs
In single tier Marketing programs the affiliates are paid based on the direct sales he has referred to the merchant. In two tier marketing, the affiliate is not only paid for the direct traffic he/she has referred to the merchant site, but also on traffic/sales made by other affiliates who joined the program through his/her recommendation. When this chain extends to a number of different tiers, it's known as Multi-Tier affiliate marketing. The process is referred to as snowballing, and occurs with or without the affiliate's being aware of each other's existence.
This marketing structure has been successfully adopted by a company called Quixtar, a division of the hugely successful Alticor. Quixtar website has implemented the structure for Major Corporations such as Sony and Office Depot. Multi Level Marketing and Multi Tier Affiliate Marketing share a similar modus of operandi, but unlike MLM there are no legality strings attached to affiliate marketing. Conventional direct selling firms are on a Multi-tier program adoption spree. The reason is that they have such a huge turnover that they have to pump enormous capital into recruiting new reps.
The new recruits were better and stuck around longer and also the price tag for an upstream rep was far less than what the companies had been paying in the conventional model. Most active online affiliates are part of a multi tier chain without being aware of it. The base commission with a multi-tier affiliate grants you 30% .Other online affiliates who sign up using your affiliate code generate sales of which 10% finds its way to you.
They key in Multi-Tier affiliate programs is to craft a second tier with people who are known to work hard and provide substantial results. If the second tier affiliates screw up they could easily suffocate a successful income stream for the upper level affiliates. It can be extremely rewarding as one can build on many different models and positives of other web marketers to drive their message, thus increasing their profit.
Not as easy as made out to be
Most sites would like you to believe that multi tier program is about lazing around and partying with friends while your sub affiliates mint money for you, nothing can be further from the truth. Multi-tier affiliate marketing is not the self-dynamic entity it's hyped out to be.
The major flaw with multi-tier internet marketing is that higher up reps are literally digging their own grave by promoting those below them. This cannibalization of one's productivity by spawning competitors against self makes little sense. The trick is to know a number of productive affiliates, so that you don't saturate the market.