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Various Models of Affiliate Marketing

By Charles Hopkins Published 08/30/2006 | Affiliate Programs
 

Want to sell some product or service through the internet? The first thing you have to do is to make your products presence felt in the internet. And for that, affiliate marketing is just the solution you were looking for. Today, affiliate programs are all over the internet and it is widely believed, that affiliate programs are behind all successful web businesses. Also known as Associate Programs or Partner Programs, it is a two-way game. It is the trick of the websites to make money by directing traffic toward other sites and in the process the other websites gain in traffic consisting of the possible customers and that adds to its revenue. To put it in the simplest way, affiliate marketing is all about connecting buyers and sellers and the affiliates as the conduit through which the connection is accomplished. The affiliates are rewarded for facilitating the connections between the manufacturer and the customer.

It is the commission for sending traffic to the merchants website that generates revenue for the affiliates. Now, the merchant's pay off only when some of their performance objectives have been fulfilled. What can be the performance objectives? For some, it is as simple as only a lead to the advertising website, while for some it means filling up a form. Some websites pay their affiliates for signing up for news letters and for the rest payment is made every time there is a purchase from the merchants site.  Thus you can see, the compensation schemes for affiliates are as varied as the types of advertising websites themselves. However there are four basic models of affiliate programs through which the affiliates are compensated by the merchants and they are: Pay-Per-Impression, Pay-Per-Click, Pay-Per-Lead and Pay-Per-Sale.

Pay-Per-Impression: This model involves paying the affiliate a specified sum for every 1000 Impressions including the Page Views or Displays of the advertisement. The advertisement may appear in the affiliates website as Text (AdSense), Banner Image or Rich Media. Because of increasing frauds, this model became inoperative for some time. But it was revived by the Google AdWords in 2005. It is now better known as "Site-Targeting" allowing you to display your Adsense Ad on a website that has the AdSense Ads feature.

Cost-Per-Click: In this model, an affiliate is paid by the advertiser every time the visitor clicks on the advertisement. The compensation amount however does not vary with the number of times the ad is displayed in the site.

Pay-Per-Lead: This is a popular model in cell phone, banking, credit card or mortgage sectors where the affiliate earns a commission for every visitor that was redirected by the affiliate to the advertisers website and performed some action, like filling out a form or opening an account and so on.

Pay-Per-Sale: Here the affiliate earns the commission every time a purchase is made on the advertisers website by a visitor, referred to by the affiliate. Till date this model is by the most accepted model among the sellers offering affiliate programs.

Affiliate Network: Instead of building up an affiliate program themselves, the manufacturers are nowadays taking help of the third party services which has acquired the term, affiliate network. These networks have all the necessary infrastructures to track the traffic and referrals to your website. They also make your job easier by finding for you the websites willing to promote your products or services.

So these are the most popular models, through which thousands of the websites all over the world are running their affiliate programs. Your decision regarding the choice of the particular model should be guided by the nature of your business.