Different Types Of Affiliate Marketing

The benefits of affiliate marketing is more pronounced today than before. This is one of the main reason for the immense popularity of affiliate marketing programs among so many thousands of internet marketers.

The highly advanced web technology now has enabled the affiliate marketers to get all their statistics and income figures the moment they strike an affiliate sale. Companies like PayPal who are the most popular payment processors help you with payment and receipt processing. This has made the time gap that was required to get the payment after making the sale and now an affiliate marketer need not wait very long for his payments to be collected from the merchants.

Today, both the merchants and the affiliates can see clearly that affiliate marketing can work for both of them. The merchant sees affiliate marketing today as the chance to advertise their products at a lower cost. The affiliates, on the other hand, sees 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 reputation of affiliate marketing has gone up, similarly the attitude of people has enhanced with respect to affiliate marketing. Affiliate marketing is no more regarded as a inferior method of marketing by the merchants, or as an secondary source of income by an affiliate marketer. Both merchants and affiliates regard affiliate marketing as 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 marketing programs that work better than the others?

There are actually different types or classes of affiliate marketing, and the number of types will depend on how one will classify them. The most basic affiliate marketing programs, however, falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).

1. PPC - Pay Per Click is a highly promoted and used affiliate marketing method by affiliates with no websites or small websites. This is also the easiest way for them to start making money. Under this method of affiliate marketing, the affiliate is paid a commission by the merchant when a visitor visits the merchant's site through the affiliate's reference, that is, whenever a visitor clicks and goes to the merchant's site through the banner or text ads that the affiliate has put up. Pay Per Click method is basically used to capitalize on the traffic that arrives at the affiliate's site and the affiliate facilitates the flow of these traffic from the affiliate's site to the merchant's site and the affiliate gets paid for this effort. The merchant's product or services need not be purchased by the visitor, who is referred by the affiliate, for him to earn his compensation from the merchant. However, compensation for each click under PPC affiliate programs are quite small, usually in the range of 10 cents to 1 dollar.

2. Pay Per Performance (PPP) - PPP affiliate marketing is the most popular among merchant and is 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 marketing usually comes in the range of 15% to 20% of the actual product sales. And, in the case of e-products or e-goods, the affiliate commission can go as high as 75% of the sale price.

Pay-per-performance affiliate marketing can further be classified into two types: pay-per-sales (PPS) and pay-per-lead (PPL). Both these are highly popular.

a) Pay Per Sale (PPS) - In a pay-per-sale type of affiliate marketing, the affiliates get the commission from the merchants whenever the visitor he has referred to the merchant's site actually buys something from the merchant's site. Affiliates are often paid on percentage basis, although some merchants may opt to pay a fixed fee. But, whatever be the basis of the fee, it is generally much higher than the fee paid to affiliates in a pay-per-click affiliate program.

b) Pay Per Lead (PPL) - The pay-per-lead type of affiliate marketing 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 marketing, the affiliate is paid whenever the visitor he referred to the merchant's site fills up 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. Generally, the sales conversion rate is the highest in the case of PPL, because, the visitor is not required to purchase anything but only complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, etc.

Apart from these three types of affiliate marketing, several other types of affiliate marketing 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. There is another type of affiliate marketing that pays the affiliate every time the customer he has referred purchases an item from the merchant's site.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on various levels or tiers in the affiliate network for which different affiliate payment structures are devised.

A) Single Tier - In a single-tier affiliate marketing program, the 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.

B) Two Tier - In two-tier affiliate marketing programs, the affiliates are not only paid for the direct traffic or sales that he brings to the merchant's site, but also on every traffic or sales referred by other affiliates who joined as sub-affiliate of the above affiliate marketer.

C) Multi Tier - 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.

D) Residual Income Affiliate Marketing - In this type, the affiliate gets paid not only once for every customer he has referred to the merchant's site. Rather, the affiliate is also paid whenever 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 challenge to the affiliate marketer is in finding the best affiliate marketing methods that would work for him. For instance, multi tier affiliate marketing, also called Multi-Level Marketing (MLM) is a highly difficult type of internet marketing and it does not work for everyone. Some of them even consider MLM as illegal or something which is undesirable.

Every affiliate marketer will have to try out different marketing methods and choose that which will work best for him. He should then concentrate all his energies in promoting those types of affiliate marketing methods which he is comfortable with and on which he has full confidence.