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An affiliate program is a marketing arrangement by which an online retailer pays a commission to an external website for traffic or sales generated from its referrals. This is a common tactic for businesses to promote their products or services through individuals or companies (known as affiliates) who market to their own audiences. Here's a more detailed breakdown:

1. Merchant or Advertiser: This is the company that wants to sell its products or services. It creates the affiliate program.

2. Affiliate or Publisher: An individual or company that promotes the merchant's offerings. Affiliates use their own marketing resources – such as blogs, social media, and email lists – to advertise the merchant's products and direct their audience to them.

3. Affiliate Network (optional): Sometimes, a third-party platform is used to facilitate the relationship between merchants and affiliates. This network offers tools for tracking, reporting, and payment.

4. Consumer: The end user or customer who clicks on the affiliate link and makes a purchase or completes the desired action.

5. Affiliate Link: A unique tracking link given to the affiliate by the merchant or the affiliate network to track the progress of their referrals.

6. Commission: The financial reward given to the affiliate for generating a sale, lead, or click. It's typically a percentage of the sale or a fixed amount per transaction.

Affiliate programs can be very effective for increasing sales and generating online revenue, beneficial to both merchants and affiliates. They're performance-based, which means affiliates are only paid when their promotional efforts result in a transaction.