If you don’t know what referrals are, just visit the websites of these popular bloggers:

Dosh Dosh (http://www.doshdosh.com)

Caroline Middlebrook (http://www.caroline-middlebrook.com)

Daily Blog Tips (http://www.dailyblogtips.com)

Problogger (http://www.problogger.net)

Notice the 150 x 150 pixel square ads usually located at the right site of these blogs? These are known as referral ads. Working similar like Google Adsense ads, you get paid for each click you refer to the sites that these square ads link to.

Personally, I’m not entirely a big fan of referrals. People may notice them, and they may consider them, but they don’t get a whole lot of clicks. In fact, I get fewer clicks on referral ads, than on Google Adsense. However, with their attractive designs and animation, they do help to make your site or blog look more interesting.

In the end, referral ads do not help you make a lot of money online, but they can help to supplement your blog or site income if you happen to have a lot of traffic. Here’s a list of sites with referral programs, and my thoughts for some of them:

Widgetbucks

www.widgetbucks.com - You place a widget on your site that displays a revolving list of products each time your site loads. You can a percentage of a sale made if someone actually buys something from you list. Alternatively, you can also place a 150 x 150 pixel Widgetbucks referral ad.

I’ve not made much from Widgetbucks, and I believe the core money making product would actually be the widgets and not the referrals. Anyway, here’s an interesting post on how Jim Karter used a combination of Google Adwords and purchased signature links to draw traffic to his site. He made his profit from the difference between the ads and incoming links he paid for, and the payment received for clicks.

Google Referrals 2.0

As an Adsense user, you may be aware that Google launched their Referrals 2.0 program in mid 2007. Instead of just referring text links in Adsense, you now refer products on your website. The catch here is that Adsense does not allow you to draw attention to the referral ads shown with phrases such as “Check this Out!” or “Click here!” Of course, just like Adsense ads, you aren’t allowed to click on the ads on your own website.

The key for success in Google Referrals is to select the right ads that match the topic and audience of your blog or website. One idea to promote referrals is to actually write a review of the product on your website. Ideally, optimized keywords used in your review need to appeal to the target audience

Paypal Merchant Referral Program

This is a rather unique program in that referrers are offered 0.5% of each transaction made by merchants they refer. The maximum you can claim for each merchant is limited to a $1000 though.

I’m not sure how well this would work. Many people join Paypal by accessing their URL directly, as Paypal is already quite a popular brand. However, putting their logos on links on your site sure helps Paypal increase their visibility. In the end, you can’t be certain that someone who saw Paypal on your website would sign up through your link.

Google’s Firefox Referral

Now, here is something interesting that I read from Sabahan’s post. While you can promote Google Firefox by simply adding a graphic and a link to your blog or website, there IS a more CREATIVE way to do this.

Essentially, your purpose is to refer users to install the Firefox plus Google Toolbar on their Firefox browsers. Each user you refer will make you $1. However, you wouldn’t want to promote Firefox to users who are already using Firefox. In order to make the link appear ONLY to Internet Explorer users, you can use PHP code on your link. As Google does not allow you to modify the code, using PHP would be a workaround to only show the ad when an Internet Explorer browser is detected.

In conclusion:

Referrals work pretty much like Adsense. You’ll only make significant income if you manage to draw huge amounts of traffic to your website. However, this would be a good way to supplement revenue on your blog or website, while you work on building other products that will generate higher income value for you.

At the end of the day, I believe there are other internet marketing tools that would be more effective in making money online.