I think for a smaller shop / startup the easiest way to go would be to have users enter their own google adsense client number and use that a certain portion of the time.

By making them sign up for Google you get G to do the footwork of verifying they are eligible, and managing payments...etc

Take a look at what Revver has done with user accounts. Or Jellyfish.

There's usually a float involved which can be fun for cash flow (time between affiliate payout >= time your affiliates need to be paid).

Some companies won't let you / have rules about compensating users. For ex: WalMart doesn't like it, on the grounds that they feel their brand is strong enough to attract people without affiliates having to offer a monetary incentive.

Float is good. Also usually the deal is "Minimum payout $20" for example.

Reward sites actually make most of their money by relying on the fact that most people earn a few rewards, give up, and never claim because they don't get to the minimum payout threshold.

Not a great business, but that's how that sort of thing works...

Well, just give it to them.

Cut checks, use PayPal, or Amazon FPS.

Accounting would be your biggest hassle. You need to file a separate 1099 with IRS for each person you pay more than $650.

But how do you easily measure what pages the clicks are coming from?

Oh and if a ton of people were making me 1200 each (@50%) then I wouldn't mind filling out 1099s all day:)

Thanks for the feedback everyone - some nice leads.