What is Affiliate Marketing?
Affiliate marketing is a form of online website promotion that requires another website or person, called an affiliate, to perform promotions for the client website based solely off of commissions. The client website then pays the affiliate website depending on the increase in traffic to the clients website caused by the promotion done by the affiliate.
Affiliate marketing takes the form of profit sharing or commission that is dependent on advertising. However, since the name
affiliate marketing gives the idea of network or mesh marketing and can exist on many levels, companies more commonly use the name performance marketing. Affiliate marketing serves as one of the most effective and most efficient tools for internet marketing. This is why there are many companies that invest in this endeavor. It has become the norm in promoting your products and services through websites.
Payment in affiliate marketing can happen in three methods, depending on how the client identifies the benefits given by the affiliate website. The first is cost-per-click or cost-per-mil (CPC/CPM). Here, the client website pays the affiliate according to the number of clicks that the advertisements (in the form of hyperlinks or banner ads), in that website generate for the client. This is results-based, but there are also costs associated with the placement of advertisements. However, there are some people who have learned to abuse the CPC/CPM method by configuring certain software to do the clicking for them. This is the reason why some companies have veered away from using this payment method, and preferred other alternatives.
The first of these alternatives is cost-per-action or CPA. The CPA payment scheme depends largely on the actions that a consumer makes once redirected to the clients website. An affiliate may earn if the consumer registers on the website or if a purchase is made, for example.
The second alternative is cost-per-sale or CPS. This is exclusive to the number of sales that the affiliate can generate for the client. Often times, this is a commission that is a percentage of the sales for a particular product or service offered on a website. This is very widely used since it translates directly into money for both parties.
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