What Is “Affiliate Marketing” is a question we are constantly being asked here at Affiliate X Files, below you will find a complete explanation of the different forms of affiliate marketing that are available to you as an affiliate marketer.
But First Lets Explain The Concept
Affiliate marketing is a large part of e-commerce, and part of the economic system that largely drives the ever growing number of internet businesses. The term refers to the practice of one business rewarding another for their marketing efforts that result in customer interaction.
In most cases the customer interaction is an actual purchase but in some cases it is simply defined by the customer being made aware of the product or service.
The idea of affiliate marketing does in fact out date the World Wide Web and the internet as a whole, but today the term is used most often only when referring to the online practice. This is both because of the vast amount of affiliate marketing that takes place over the vast internet world and because of the incredible efficient machine that practice was able to evolve into online.
What’s great about affiliate marketing is that the benefit, in theory, is extended to all parties involved. The person or people placing the advertisements on their website get to take part in a form of revenue sharing. The company that is selling the product or service gets more exposure at no extra effort.
The consumer benefits because they are more likely to find their way to a wanted product or service.
There are various types of affiliate marketing, which is also known as performance marketing in some branches. Some of these are more popular than others and some extend the benefits to various parties in ways that are better than others. All work well in their own way though, which is why they are still in practice.
Understanding Cost Per Click, Pay Per Click or CPC
Also known as pay per click, this is one of the most practiced types of revenue making streams on the internet. In terms of affiliate marketing, however, there are debates as to how popular it really is. The way it works is that an advertisement is placed on a web site and then every time a potential consumer clicks on it, that website earns a fee.
The problem with this type of advertising is that there has been a great deal of fraud associated with it. Google still practices CPC widely, but many choose not to define their practice as affiliate marketing.
Another Affiliate Payment Structure Is Called Cost Per Mille, or CPM
This is a lot like cost per click, only there is no clicking involved. In this case the website earns money for every thousand people who see the advertisement, no matter how many people actually click through. In this case the entire onus of conversion is placed on the end service provider and those placing the ad need not worry about who actually is taken in by it.
Most Online Vendors Prefer This Method Cost Per Sale, or CPS
The majority of affiliate programs prefer this method for obvious reasons. This practice is a flat out revenue sharing program that pays off affiliates only when an actual transaction is completed. What happens is that a retail website, for instance, will track whether or not a visitor came from an affiliate’s website. If the visitor makes a purchase, a percentage will be passed on to that affiliate.
This form of online affiliate marketing is very popular with the Clickbank Affiliate Network. Another form that is starting to grow in popularity is CPA Marketing.