Affiliate Marketing - does it pay back?

Like you my experience with affiliate marketing is all bad.  A previous post made the point that most affiliate sites make money from the fact that they are better at SEO than the host site.

My 10c worth is that if I had £3.5k to spend I would probably spend it on figuring out why every page on both sites (except the picnic home page) has a zero page rank.  In the case of the picnic site I think it is down to the session code at the end of every URL in the extended path.  This would confuse google no end. 

Use a cookie to save the session code and live with less than perfect instrumentation and you could see a leap in traffic because people searching for 'picnic backpacks' might find your site via organic results which are free and much more effective than the sponsoored links you have.