The internet has come a long way since its early days. This has lead to more individuals turning to the internet to generate additional revenue streams. Many of these new internet marketers have discovered that an affiliate network is the place for an individual with no products or services of their own to sell. Basically, an affiliate network is an online venue who brings advertisers into contact with internet marketers, also known as affiliates, to market their products in exchange for a commission. Such an exchange is common what is referred to as affiliate marketing.
The great think about affiliate marketing is that it sets expectations very clearly for all parties involved. Essentially, it really sets the stage for the performance under what is in all honesty a contractual agreement. The affiliate is aware that the advertiser is willing to offer (X) is they perform (Y). Hence, an affiliate who owns no product or service can generate a substantial revenue for promoting offers which belong to others. Moreover, advertisers who need exposure to their offers, but do not have the budget to spend on an advertising campaign which proves to be fruitless can pay affiliates only when they perform. However, how affiliates are paid will be determined by the structure which is utilized.
The following cover the four most common compensation methods which are utilized by affiliate marketing:
1. Cost Per Sale or CPS: This is the most cut and dry form of affiliate marketing in which the affiliate is given a unique tracking link. If the affiliate program comes from an affiliate network, then the affiliate network will provide the tracking link. Otherwise, it will be provided by the actual owner of the product or service. Nevertheless, whenever a sale is made via the affiliate’s link, the affiliate receives credit for the sale, and they earn a commission. So when we say, “Cost Per Sale”, we are referring to how much it costs the advertiser for every sale which is made. Thus, if an affiliate sells a product which sells for $75, for which the affiliate is compensated $45 for each sale, the cost per sale is $45.
2. Cost Per Action or CPA: This is just how it sounds. A predetermined action is specified for which the affiliate is compensated. I really view this one as all encompassing, as the other three main compensation methods are based upon an action. Nonetheless, whatever the agreed upon action is, the affiliate earn compensation once it takes place. This if the action constitutes bringing customers to sign up for a free trial which the advertiser is promoting, the affiliate will be compensated for each new subscriber.
3. Cost Per Mille or CPM: This is actually used quite frequently by affiliate networks. Basically, for every 1000 visitors sent to an advertiser’s website by an affiliate, the affiliate is compensated in a predetermined amount. Many larger advertisers utilize this method.
4. Pay Per Click or PPC: I am almost certain that you have heard of this before due to its popularity. However, probably not from the perspective of an affiliate network. This mode of marketing is used by advertisers who wish to pay less for PPC costs than what is being offered by the search engines. Essentially, an affiliate will place the link or banner of an advertiser on their website, and will be credited a predetermined compensation each time the link or banner is clicked.
Just realize that the central peg to any affiliate network or affiliate program is your ability to attract targeted customers. What works best is building a customer base through an email marketing list, and marketing new offers to your customer base over and over again. This is what real businesses do. You must treat your affiliate network marketing as a real business.
Before joining an Affiliate Network, educate yourself on what constitutes a conversion. The fact of the matter is that many Affiliate Programs better lend themselves to a particular structure. This article covered the main four. Do not forget to check us out at SOSComplete.com