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Affiliate Marketing
Affiliate marketing is a method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts. Compensation or commission may be made based on a certain value for each exposure (CPM), visit (Pay per click), registrant or new customer (Pay per lead), sale (usually a percentage, Pay per sale or revenue share), or any combination of them.
Affiliate Marketing and Web 2.0
The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other.
Compensation Models
The following compensation models are relevant for affiliate marketing.
- Pay-per-impression (PPI) / Cost-per-thousand (CPM) Cost-per-mil (mil/mille/M = latin/Roman numeral for thousand) impressions. Publisher gets from Advertiser $x.xx amount of money for every 1000 impressions (page views/displays) of the Ad. The Ad can be text (AdSense), banner image or rich media.
- Pay-per-click (PPC) / Cost-per-click (CPC) Cost-per-click. Advertiser pays publisher $x.xx amount of money, every time a visitor (potential prospect) clicks on the advertiser's Ad. It is irrelevant (for the compensation) how often an Ad is displayed. commission is only due when the Ad is clicked. See also click fraud.
- Pay-per-lead (PPL) / Cost-per-action/acquisition (CPA) / Cost-per-lead CPL)
- Cost-per-action or Cost-per-acquisition (CPA), Cost-per-Lead (CPL). Advertiser pays publisher $x.xx in commission for every visitor that was referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services.
- Pay-per-sale (PPS) / Cost-per-sale (CPS) Cost-per-sale (CPS). Advertiser pays the publisher a percentage (%) of the order amount (sale) that was created by a customer who was referred by the publisher. This model is by far the most common compensation model used by online retailers that have an affiliate program. This form of compensation is also referred to as Revenue sharing.
- Pay-per-call (no abbreviation exists yet) This is a new compensation model. No official abbreviation exist yet. Advertiser pays publisher a $x.xx commission for phone calls received from potential prospects as response to a specific publisher Ad. Recently developed call-tracking technology allows to create a bridge between online and offline advertising. Pay-per-call advertising is still new and in its infancy. The following abbreviations are commonly used in affiliate marketing.
Affiliate Marketing Abbreviations
- AD - Advertisement, text, banner, flash, video etc.
- CJ - Commission Junction (Network)
- CPA - Cost per action
- CPC - Cost per click
- CPL - Cost per lead
- CPM - Cost per mil (mil/mille/M = latin/Roman numeral for thousand)
- CPS - Cost per sale
- CR - Conversion rate
- CTR - Click through rate
- DRM - Dynamic rich media (type of Ad, technology). It has nothing to do with DRM as in digital rights management
- EPC - Earnings per click / earnings per 100 clicks
- LS - Linkshare (Network)
- OPM - (or APM) - outsourced (affiliate) program management
- PFI - Pay for inclusion
- PID - Publisher ID (Affiliate/Affiliate site ID)
- PF - Performics (Network)
- PFP - Pay For performance
- PPA - Pay per action
- PPC - Pay per click
- PPCSE - Pay per click search engine
- PPI - Pay per impression
- PPL - Pay per lead
- PPS - Pay per sale
- ROI - Return on investment
- SAS - ShareASale (Network)
- SE - Search engines
- SEM - Search engine marketing
- SEO - Search engine optimization
- SERP - Search engine result page
- SID - URL parameter the affiliate can pass to get tracked with sales and leads