Aspects of the Affiliate Marketing Business

By | 11/14/2015


Affiliate marketing programs were as popular a decade ago as they are today, and there are a number of reasons for this enduring popularity, the most important of which is, advantages offered by these programs are many. First and foremost, is the very low investment requirement to become an affiliate marketer: no product to create; no adminstrative costs, no product maintenance or other such costly items. Just a website, a catchy domain name, reliable web hosting and interesting (if not compelling) content; and the advantages for product owners (or merchants) are also plentiful.

Affiliate Marketing: How to make money and create an income

Benefits which can be derived from affiliate marketing for the affiliate, as well as the merchant are many; and where there are plenty of benefits and advantages existing in any business model, there is bound to be a high level of interest from all manner of enterprising individuals who wish to avail themselves of such opportunities. In fact, the benefits of affiliate marketing have become clearer to more people today than in the early days when Amazon.com began paying commissions to “Associates” for sales made of their products. Today’s Affiliate is a direct spin-off of yesterday’s Associate.

Affiliate marketing: Mutually beneficial

Both merchants and affiliates can clearly see that affiliate marketing can work for both of them in the sense that a merchant sees affiliate marketing as a chance to advertise their products at the lowest possible cost, while affiliates view affiliate marketing as an easy way of earning profits online by doing what they like most, and that is by creating websites and producing content in the way of interesting articles, videos, podcasts and attractive graphics.

Just as the popularity of affiliate marketing has shifted into high gear, so has the outlook of those most interested in it as a business, and how it has changed. Today’s affiliate marketing is no longer considered an alternative method for merchants to advertise their products, or as a source of additional income for affiliates; it has, in fact, become a main source of profit and revenue for merchant and affiliate alike, and there is no reason to believe that the popularity of this program will not continue to soar, even as competition increases.

So the question now is what type of affiliate marketing will work best for you, if you have interest in this kind of business? And if you are, then you will most likely need answers to questions like:

  • Are all affiliate marketing programs the same?
  • Are the benefits the same?
  • Are there some AM programs that work better than the others?

Affiliate Marketing: How to make money and create an income

The following paragraphs are intended to address these questions as well as some other, more basic questions we believe might be helpful to most affiliate marketing newcomers; and we’ll begin by answering the first question from above. There are actually different types (or classes) of affiliate marketing; but the number of types will depend on how an individual might classify them. For example, the most basic affiliate marketing programs falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).

PPC and PPP affiliate marketing models

PPC is the most popular type of affiliate marketing for affiliates with small websites, and is probably the easiest way for them to earn money. With this type of affiliate marketing, a merchant pays his affiliate whenever a visitor is referred to the merchant’s website by clicking through a product banner or text ad placed on the affiliate’s website. The affiliate gets paid a certain amount even if those visitors s/he referred do not make a purchase from the merchant’s site. However, typical fees for PPC affiliate programs are small, and usually do not exceed a dollar per click.

PPP affiliate marketing is the most popular among merchants and is also the most lucrative type for affiliates, because this type of affiliate program allows for merchants to pay affiliates only when the affiliate’s referral translates into an action —that results in the purchase of something from the merchant’s website or when the visitor becomes a lead. This means a lot of savings for the merchant; but it becomes the most lucrative type of compensation for dedicated affiliates since commissions in PPP affiliate marketing are usually in the range of 15% to 20% of the actual product sales.

Affiliate Marketing: How to make money and create an income

Digging deeper: The PPS and PPL models

Pay-per-performance affiliate marketing can be further classified into two other types, which are just as popular: pay-per-sales (PPS) and pay-per-lead (PPL). In a pay-per-sale type of affiliate marketing, merchants pay affiliates a certain fee whenever a visitor s/he has referred to the merchant’s site actually buys something from that site. Affiliates are often paid on a commission basis, although other merchants would opt to pay a fixed fee; but no matter what the basis of that fee, it is generally higher than fees paid to affiliates in a pay-per-click affiliate program.

The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies, as well as other companies who rely on leads for their company to grow. With this type of affiliate marketing, an affiliate is paid whenever a visitor s/he referred to the merchant’s site completes an application form or other similar form related to the company’s business. Compensation for this type of affiliate marketing is based on a fixed fee with rates that are approximate to those of fixed fees in the PPS type.

Aside from these three specific types of affiliate marketing, there are several other affiliate marketing types in existence today. If classification is based on the depth of an affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing; and there is also another type of affiliate marketing that pays an affiliate each time a customer s/he has referred purchases something from the merchant’s site.

•From single to multi-tier affiliate marketing

These types of affiliate marketing programs are based on the different levels or tiers in an affiliate network by which payments are made. In a single-tier affiliate marketing program, affiliates are paid based only on direct sales or traffic s/he has referred to the merchant. All previously mentioned affiliate marketing types (i.e. PPS, PPL, and PPC) fall under the single-tier classification.

With two-tier affiliate marketing programs, an affiliate is paid, not only for direct traffic or sales that s/he refers to the merchant’s site, but also on every visit to, or purchase made by leads and customers referred by the various other affiliates who became affiliates through the original affiliate’s recommendation. Keep in mind, hopwever, that multi-tier affiliate marketing works the same way as the standard type, although affiliates are paid additional commission for a wider number of affiliates in different tiers of that affiliate network.

Affiliate Marketing: How to make money and create an income

Residual income affiliate marketing

In a residual income affiliate marketing program, affiliates are paid, not only once for every customer s/he has referred to a merchant’s website or product page, s/he is also paid whenever customer s/he has referred returns to the merchant’s website and makes another product purchase. Compensation for this type of affiliate marketing is based either on a sales percentage basis or a fixed fee basis; but either way it is an attractive method of compensation to affiliates because one positive action upfront can result in a lifetime of payments.

The various types of affiliate marketing programs would obviously work differently for merchants and affiliates, depending on the particular program; and each would generally have its own list of benefits. However, to make a determination of which type of affiliate marketing will work best for you is a question that only you can answer once you have all the relevant information. Simply determine which type of affiliate marketing program will suit your needs and characteristics best, and proceed from there. Hopefully what you’ve read here will be helpful in some small way. Good luck!

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