The easiest way to explain what is affiliate program does is to go back to the portal example again...

When you arrive at the portal (www.nyc.com is a great example) you will encounter many banners on the page. Those banners are supplied by the advertiser. When you click on a banner you are again taken away to the website of choice. A numerical code (www.nyc.com's account number) travels with you as to accumulate items in your shopping cart. Upon checkout, you are sent a receipt is e-mailed to you. www.nyc.com receives a similar document except it tells www.nyc.com how much commission they earned from the purchase you just made.

Pretty cool if I do say so myself!

It is one of the most cost effective ways to advertise on the Internet. If the visitor to your website does not make a purchase you do not pay the affiliate any money!