Quick answer: For most builds, hire the Act 2 Desert Mercenary — Might aura for physical builds, Holy Freeze for casters who want crowd control. Weapon progression is Insight in an ethereal elite polearm (budget mana engine) into Infinity (endgame elemental support). Use the Act 1 Rogue with Faith for physical attackers, the Act 3 Fire Ironwolf for Enchant, and the Act 5 Frenzy Barbarian with Lawbringer against physical immunities.

How mercenaries work

Each act has a special NPC who hires out that act's mercenary type: Kashya (Act 1 Rogue Scout), Greiz (Act 2 Desert Mercenary), Asheara (Act 3 Ironwolf), and Qual-Kehk (Act 5 Barbarian). Act 4 has no mercenary. Any of these NPCs can revive a fallen mercenary for gold, capped at 50,000 depending on the merc's level.

Mechanics worth knowing:

Act 2 Desert Mercenary — the default choice

The Desert Mercenary is the most-used merc in the game because of his six auras. Only three are available in Normal difficulty; Nightmare and Hell hiring pools offer all six: Prayer, Defiance, Blessed Aim, Thorns, Holy Freeze and Might.

He attacks with Jab and equips spears, polearms or javelins — which is exactly what the best mercenary runewords are made in.

The gear path: Insight to Infinity

Act 1 Rogue Scout — for physical attackers

The Rogue comes in Cold and Fire variants. Her role is delivering an aura bow: Faith grants Fanaticism — a major attack speed and damage boost for Bowazons, Frenzy Barbarians, summoners and other physical builds — while Harmony provides Vigor for movespeed. Note she uses her attack rate (not FCR) to cast Inner Sight, and she cannot block.

Act 3 Ironwolf — the Enchant support

Ironwolves come in Cold, Fire and Lightning variants, but only two see real use:

Despite carrying a shield, Ironwolves cannot block — and the Cold variant provides so little damage that he is best avoided.

Act 5 Barbarian — the specialist

Available from Qual-Kehk after the Act 5 rescue quest, in one-sword (Bash) and two-sword (Frenzy) variants. The Frenzy Barbarian is a toolbox of weapon procs:

Keeping your merc alive

A dead mercenary is an aura you paid for and don't have. The essentials: give him life leech and resistances on every slot, feed him potions with shift+1–4 (or drop a rejuvenation in dangerous pulls), and remember that monsters killed by your merc also use your MF plus his — see the Magic Find guide for why that matters when gearing him. Revives cost gold based on his level, capped at 50,000, so a well-geared merc is cheaper than a dead one.