You've probably heard it a hundred times...affiliate marketing is a great way to make money online.

What if I told you affiliate marketing was basically unethical or that the field is dominated by shady practices?

You disagree?

Well let's explore affiliate marketing from the merchant, affiliate and customer viewpoints.

Affiliate marketing is a revenue sharing partnership between a web merchant and one or more affiliates, where the affiliate is paid a commission for referring clicks, leads or, most often, sales to the merchant.

The affiliate signs up to the affiliate program via an online application form, receives an affiliate link, and can then promote the products and services of the web merchant via his own website, ezine, pay per click search engines or other advertising means.

The affiliate's role, then, is to introduce the potential buyer to the seller acting as a kind of middleman.

In return he is paid a commission of any sales resulting from referrals.

But haven't we always been taught to cut out the middleman where possible?

Well, yes, but in affiliate marketing the customer pays the same price regardless of whether he arrives at the web merchant's site directly or via the affiliate's link.

Or at least that's how it should be.

How does the web merchant benefit from running an affiliate program?

The main advantage to the web merchant is that via his affiliate program he can recruit a large sales team of affiliates at zero cost and make many more sales in a way that his website alone could never hope to do.

How does the affiliate benefit?

The advantages to the affiliate are that he can make money in a business where he doesn't have the upfront costs of creating his own product, and doesn't have to worry about ecommerce, bookkeeping, or customer support because that's all handled by the merchant.

How does the customer benefit?

The customer gets a solution to his problem (provided the product or service does what it says it does) that he may not have found without the affiliate's help and does not have to pay extra.

So it's a win-win situation for everyone involved.

Or at least it is in principle.

However in the real world both affiliates and affiliate program owners can be involved in some shady practices.

Shady Practice #1

Unscrupulous merchants close down programs without warning and without paying commissions or tempt new affiliates with high commissions then drop those commission rates dramatically a week later.

Affiliates - protect yourselves from this situation by selecting the affiliate program carefully.

Ask yourself these questions.

Has the site existed for more than a year? Is it clear what the site is providing and are the terms and conditions of the affiliate program explained clearly and comprehensively in simple language? Are there good online reviews of the program in websites or discussion forums? Does the program provide realtime commission stats online? Are ready-to-use affiliate marketing tools available?

Shady Practice #2

Affiliates are sometimes guilty of misleading or false advertising - making claims or promises about the product or services which are totally untrue or greatly exaggerated.

Shady Practice #3

Illegal use of logos, trademarks or other branding. This includes infringement of intellectual property rights and violation of copyrights.

Shady Practice #4

Spamming.

While legitimate affiliates are jumping through hoops to comply with the can-spam laws, the shady characters continue to find their way around it.

Shady Practice #5

Affiliate link hijacking is the replacement of your affiliate id with the hijacker's in the affiliate link.

You don't get your rightful commission - the hijacker gets it instead by buying through his own affiliate link.

It's best if you can avoid displaying your affiliate link and affiliate ID in the browser address bar.

One technique uses a zero-frame or invisible frame to make it appear you are sending visitors to a page on your website when, in fact, you are really sending them to your affiliate link.

To prevent the hijacker from viewing the web page's source code to see that you've loaded an affiliate link, use javascript encryption to scramble the page code or software to prevent the source code from being viewed.

Make no mistake about it...

In any area of human activity, particularly where there is money to be made, there will always be people who try to cheat, exploit the gullible and do harm.

The proper way to engage in affiliate marketing is to act ethically, build a relationship of trust with your prospects and customers then provide value by consistently exceeding your customers expectations.

And this applies to any business either online or offline.