Affiliate Marketing is a great piece of Internet business. The (online) retail customer is often unaware that they made the recent online purchase via an affiliate link. He/she sees a product of interest on a given website, clicks on the link, and completes the purchase wherever the link takes the customer. Every day people get familiar with affiliate marketing and want to make money from it. In many cases, these new affiliates don’t fully understand the affiliate world and make costly mistakes.
The following terms are important and every member should know what they mean:
1) The Merchant – The merchant is any website owner who wants to take advantage of performance-based marketing. The merchant maintains and operates the affiliate program. The merchant decides how much he is willing to pay for each sale/lead that results from a visitor sent from an affiliate. Sometimes the merchant uses a third party provider to operate the affiliate program.
2) The affiliate network: An affiliate network acts as a third party between the merchant and the associated affiliates. The affiliate network provides the technology to deliver the merchant’s campaigns and offers. The affiliate network collects commissions from the merchant and pays affiliates who are part of the program. The best known affiliate networks are Commission Junction, AzoogleAds and Linkshare.
3) The Affiliate – An affiliate is the owner of a website that promotes one or more merchants and their affiliate programs. The affiliate is paid a commission if they can generate a qualified sale/lead for the merchant.
4) In most cases, affiliate programs pay a commission per sale. This can be a fixed percentage or it can be a fixed dollar amount. Commission rates based on a certain percentage level per sale can be more rewarding to the affiliate for high priced items. Low priced items do not generate high income from affiliate sales. There are the following technical terms:
Cost per sale (action) – CPA
Cost per click – CPC
Cost per lead – CPL
Cost per 1,000 CPM
In general, affiliate marketing can generate a full time income for the affiliate. However, this is not an easy task to achieve. One of the best known affiliate programs is the program operated by Amazon.com.
