What Is Affiliate Marketing?

What is Affiliate Marketing?

An affiliate marketing, or longer, an affiliate marketing program, is an online revenue-sharing plan wherein a merchant (or parent) advertiser or company website introduces and provides marketing assets and variables such as buttons, links, banners, and other advertising materials to a webmaster (child) to be used for generating more marketing leads.

Generally speaking, affiliate marketing allows a merchant company to generate more sales and even traffic through the help of a webmaster.

In return, a webmaster is promised of a revenue or referral commission, which can come after completion of one or all of the different methodologies like Pay-per-click (PPC), Pay-per-lead (PPL), and Pay-per-sale (PPS), depending on the terms supplied.

How does the program work?

The webmaster, which is now agreed to be the affiliate, aside from being given marketing materials, is also given a unique tracking URL which is to be used to lead customers to a product or website.

The unique URL is also being used by the merchant to identify the affiliate as an ID, and thus allowing the merchant to monitor and calculate the generated leads.

In web terminology, the generated lead which depends on the method being applied is called a conversion.

Each conversion using the unique URL equates to an agreed amount and is subject to accumulation over time.

Both parties may agree as to how often the affiliate will be paid, together with the payment method which is generally automated and immediate.

The Three Methodologies

As introduced, affiliate marketing program can run on three different ways: PPC, PPL, and PPS.

Generally, as the name of each methodology suggests, an affiliate is paid based on a requirement or trigger. The trigger can be a simply click, or a lead, or a sale.

With the Pay-per-click or PPC, an affiliate is paid quickly and easily within each and every click occurring in an ad or link.

Though considered to be the lowest-paying within the three methods, every click equates to an agreed amount, and this is regardless of whether the following actions will generate a sale or not. Different ads or links can come in different prices or rates, and this is known as cost-per-click or CPC.

The Pay-per-lead or PPL, on the other hand, an affiliate is paid whenever there is a generated lead or whenever there is an accumulation of such.

Leads come in different forms such as a simple membership to the merchant’s website, a download, a sign-up for a newsletter, acceptance of an offer, or any other action that is validly considered as a conversion.

Lastly, the Pay-per-sale or PPS is usually the highest-paying method among the three, but the conversion rate can also be proportionally lower as well. Payment is based on the number of sales which is harder to achieve, and sale can take an amount of time and process to be verified before actually issuing the equivalent payment to the affiliate.