Thanks to a discussion on blogcatalog.com, a really good blog community, I found out that you cannot add affiliate ads to wordpress.com. Now please note that I said wordpress.com not wordpress.org. If you recall wordpress.com is hosted by wordpress but if you do wordpress.org that is open source software hosted by you.
So, in case you were thinking about putting up a free blog using wordpress.com and putting affiliate links do not do it! Please read the narrative below which comes directly from the wordpress documentation.
permitted.Sponsored / paid links are not permitted.
Affiliate and pay-per-click links such as Usercash and Clickbank are not permitted.
Text ads are not permitted.
A discreet link to your business in the sidebar or an About page is permitted.
One discreet link to Amazon per blog is okay, but if the primary purpose of the blog is to drive traffic to affiliate programs that’s not allowed. If you’re not sure, contact support.
Clicktrackers and any promotion of the “I made a million on the internet and so can you” type of advertising are expressly forbidden.
We have a very low tolerance for blogs created purely for search engine optimization or commercial purposes, machine-generated blogs, and will continue to nuke them, so if that’s what you’re interested in WordPress.com is not for you.