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:: Affiliate Programs
Types of Affiliate Programs
As the affiliate marketing industry continues to grow, merchants
and affiliates are now seeing that affiliate marketing can work
for both of them. The merchant sees affiliate marketing as a
chance to advertise their products at a lower cost. Affiliates, on
the other hand, see this lucrative marketing opportunity as a way
to earning revenue online by doing what they enjoy the most --
creating websites.
The general outlook has certainly changed since Amazon.com started
the first affiliate program almost ten years ago. Affiliate
marketing is no longer considered an alternative method for
merchants to advertise their products, or as a source of
additional income for the affiliates. For many it's now a main
source of profits and revenue.
Are all affiliate marketing programs the same? This is a question,
of course, that many marketers ask as they strive to understand
which program might work best for them.
There are actually several types of affiliate programs, but they
typically fall under two categories: pay-per-click (PPC), and
pay-per-performance (PPP).
• Pay
Per Click (PPC)
PPC is probably the easiest way for affiliates to earn money, but
it requires large volumes of traffic to produce substantial
profit. In this type of program, the merchant pays his affiliate
whenever a referred visitor clicks through the merchant's banner
or text ads. Even if the visitor doesn't purchase anything from
the merchant, the affiliate still gets paid. For this reason the
cost per click is usually small and rarely exceeds a dollar per
click.
• Pay Per Performance (PPP)
The most popular and lucrative program for affiliates is Pay Per
Performance, where the merchant only pays affiliates when a
referral results in either a sale or a qualified lead. Merchants,
of course, save more money in this arrangement, but with
commissions ranging from 15% to 50%, the dedicated affiliate can
earn lucrative commissions.
Pay-per-performance affiliate marketing can be further classified
into two popular types: pay-per-sales (PPS) and pay-per-lead (PPL).
o Pay Per Sale (PPS)
With pay-per-sale, merchants pay affiliates either a commission or
a fixed fee whenever a referred visitor purchases something from
their site. Fees paid to affiliates are generally much higher than
in pay-per-click affiliate programs.
o Pay Per Lead (PPL)
The pay-per-lead is a slight variation of the PPS type and is
often used by insurance and finance companies that rely on leads
for their company to grow. In this arrangement, the affiliate is
paid whenever a referred visitor fills out an application at the
merchant's site. Compensation for this type of affiliate marketing
is based on a fixed fee whose rates approximate that of the fixed
fee in the PPS type.
• Single-Tier, Two-Tier, and Multi-Tier
Affiliate Marketing
Some programs are based on the depth of the affiliate network and
can be classified as single-tier, two-tier, and multi-tier.
In a single-tier affiliate marketing program, affiliates are only
paid based on the direct sales or traffic they refer to the
merchant. The previously mentioned affiliate marketing types
mentioned thus far (i.e. PPS, PPL, and PPC) all fall under the
single-tier classification.
In two-tier affiliate marketing programs, affiliates are not only
paid for the direct traffic or sales they refer to merchant's
site, but also on traffic or sales referred by various other
affiliates who joined the affiliate program through their
recommendation. Multi-tier affiliate marketing works the same way,
although the affiliate gets additional commission for a wider
number of affiliates in different tiers in the affiliate network.
• Residual Income Affiliate Marketing
In residual income affiliate marketing, affiliates get paid
whenever a customer they've referred returns to the site and
purchases another product or continues a monthly service.
Compensation is based on either sales commissions or fixed fees.
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