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Article Series:
Affiliate Marketing Strategies
Understanding
Different Types
Of Affiliate Programs
Affiliate
programs have never been as popular before as they are today.
Why? There are a number
of reasons. The most probable reason, however, could be the
very fact that the benefits of affiliate marketing have become
clearer to a lot of people now than they were before.
Today,
both merchants and affiliates see that affiliate
marketing can work for both of them. The merchant
views affiliate marketing today as the chance to advertise
their products at a lower cost. The affiliates, on the other
hand,
view affiliate marketing as an easy way of earning profits
online by doing what they like most, and that is by creating
websites.
Just
as the popularity of affiliate marketing has grown to new
heights, so have peoples' outlook about it. No longer is
affiliate marketing considered an alternative method
for a merchant to advertise his
products, or as a source of additional income for the affiliates.
For merchants and affiliates alike, affiliate marketing
is now considered a main source of profits and revenues.
So
the question now is what type of affiliate marketing will
work best for you? Are all affiliate marketing programs the
same? Are the benefits the same? Or are there affiliate
programs that work better than the others?
There
are actually different types or classes of affiliate programs,
and the number of types will depend on how one will
classify them. The most basic affiliate programs,
however, fall under two categories: pay-per-click (PPC), and
pay-per-performance (PPP).
Pay
Per Click (PPC)
PPC
is the most popular type of affiliate program for affiliates
with small websites, and probably the easiest way for them
to earn money. In this affiliate program type, the merchant
pays his affiliate whenever a visitor is referred to his site,
that is whenever someone clicks on the merchant's banner
or text ads (from the affiliate's website). The affiliate gets
paid a certain amount even if the visitor he referred does
not
purchase
anything
from
the merchant's site. However, typical fees for PPC affiliate
programs are small, usually not exceeding a dollar for each
click.
Pay Per Performance (PPP)
PPP
affiliate programs are the most popular among merchants and
also the most lucrative type for the affiliates. In
this type of affiliate program, the merchant only pays the
affiliate whenever his referral translates into an action—that
is whenever the visitor he has referred actually buys something
from the merchant's site or when the visitor becomes a lead.
This means a lot of savings for the merchant. On the other
hand, it becomes the most lucrative type for the dedicated
affiliate, for commissions in PPP affiliate programs usually
ranges between 10% to 50% of the actual product sales.
Pay-per-performance affiliate marketing can be further classified
into two popular types: pay-per-sales (PPS) and pay-per-lead
(PPL).
Pay
Per Sale (PPS)
In
a pay-per-sale type of affiliate program, a merchant pays
the affiliate a certain fee whenever the visitor he has
referred to the merchant's site actually buys something. Affiliates
are often paid on commission basis, although other merchants
would opt to pay a fixed fee.
But no matter what the basis of the fee is, it is generally
higher than the fee paid to affiliates in a pay-per-click affiliate
program.
Pay
Per Lead (PPL)
The
pay-per-lead type of affiliate program is a slight variation
of the PPS type and is often used by insurance and finance
companies (and other companies who rely on leads for their
company to grow). In this type of affiliate program, the
affiliate
is paid whenever the visitor he referred to the merchant's
site fills out an application form or any similar form related
to the business of the company. 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.
Aside
from these three specific types of affiliate programs, a
lot of other affiliate program types exist. If the classification
is based on the depth of the affiliate network, it can be classified
as single-tier, two-tier, and multi-tier affiliate marketing.
Single-Tier,
Two-Tier, and Multi-Tier Affiliate Programs
These
types of affiliate programs are based on the different levels
or "tiers" in the
affiliate network by which payments
are made. In a single-tier affiliate marketing program,
affiliates are only paid based on the direct sales or
traffic he has referred to the merchant. All the previously
mentioned
affiliate marketing types (i.e. PPS, PPL, and PPC) fall
under the single-tier classification.
In
two-tier affiliate programs, the affiliate is not
only paid for the direct traffic or sales that he refers
to the merchant's site, but also on every traffic or sales
referred by various other affiliates who joined the affiliate
program through his 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 programs, an affiliate doesn't
only get paid once for every customer he has referred
to the merchant's site. Rather, an affiliate
gets
paid
each time
the customer he has referred returns to the site and purchase
another product. Compensation for such type of affiliate marketing
is based on either sales percentage commission or fixed fee
basis.
The
different types of affiliate programs work differently
for merchants and affiliates alike, and each
generally has their own list of benefits.
Which
type of affiliate marketing works best for you? It is not
really for me to
say. Instead, it is for you to choose which type of affiliate
program will suit your needs
best.
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SolveYourProblem.com : 2007
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