Two Tier affiliate programs pay you commissions both on your own activity (Pay Per Click, Pay Per Lead, Pay Per Sale, or Residual Income) and based on the activity of affiliates that you refer to the program.

Very often (but not always) your two-tier commissions are calculated as a percentage of your referrals' earnings. (Another popular approach is to pay a flat bonus when you refer an active affiliate).

Many webmasters imagine two tier affiliate programs as an easy way to make lots of money, thinking they will refer lots of other affiliates, and live off their referral earnings. But, based on experience (having referred hundreds/thousands of affiliates to various programs), I would say it rarely works out that way:

Most affiliates generate little or no revenue (and unfortunately that is likely to include your referrals - and remember you are receiving only a percentage of their commissions if any).
Many affiliates, even good ones, drop out or become inactive in affiliate programs.
Many affiliates join two tier programs with the intention of referring affiliates themselves. As these affiliates generate no clicks/leads/sales, they will generate no two tier commissions for you.
Realistically, it's exceedingly unlikely that Yahoo! or one of the other major web sites will sign-up under your site as a two-tier affiliate.

In short, I would opine that it is usually better to regard any two tier commissions that you might earn as a nice bonus - rather than something that you can necessary build a steady income around.

An example of a two tier affiliate program is AllPosters.

Two Tier Affiliate Programs

Note: The

symbol indicates: Recommended and Verified, we have received commission payments from the particular affiliate program.

Affiliate Program	Pay Per Click	Pay Per Lead	Pay Per Sale	Residual Income	Two Tier
AllPosters Posters	-	-	Yes	-	Yes
Art.com Art/Posters	-	-	Yes	-	Yes
AWeber Autoresponders	-	-	Yes	Yes	Yes
Commission Junction Various Products	-	Yes	Yes	-	Yes
DishPronto Satellite TV	-	-	Yes	-	Yes
IMC Internet Marketing products	-	-	Yes	Yes	Yes
MyTemplateStorage Web Templates	-	-	Yes	-	Yes
QuickCommerce Merchant Accounts	-	-	Yes	-	Yes
RegNow Shareware Software	-	-	Yes	-	Yes
Searchfeed Show Ads	Yes	-	Yes	-	Yes
SiteSell Webmaster Tools	-	-	Yes	Yes	Yes
Spam Arrest Stop Spam	-	-	Yes	Yes	Yes
TAF Master Tell-A-Friend	-	Yes	-	-	Yes

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