Affiliate marketing occurs when a merchant or advertiser recruits a webmaster to place its ads on webmaster’s site. In return, webmasters get either a commission from the ad or a referral free whenever the ad gets clicks.
There are three basic kinds of affiliate programs:
- Pay Per Click (PPC)
- Pay Per Sale
- Pay Per Lead
Pay Per Click (PPC) marketing occurs when a user leaves the merchant’s site as a result of clicking on the ad on the webmaster’s website and a certain amount of money is earned by the webmaster. Depending on what is advertised and the commission, which is pre-arranged between the merchant and the webmaster, the money amount per click will vary. The amount per click may be earned immediately and transferred to the affiliate’s bank account electronically, or the total earnings may be transferred at scheduled times throughout the day. It could also be done non-electronically, with a mailed check every month or so.
With Pay Per Sale, an affiliate will earn money every time a sale is made as a result of clicking on a specific ad. Like with PPC, the affiliate may either receive a commission of the sales or an agreed-upon flat fee. How this fee is transferred to accounts also varies per merchant.
Pay Per Lead advertising occurs when an internet user registers at an affiliate site as the result of a specific ad shown on a webmaster’s site. The website would then collect an agreed-upon sum every time a user registers on the merchant’s site.
Affiliate marketing has its fair shares of both advantages and disadvantages.
Both website owners and merchants can benefit from affiliate marketing:
- Can earn extra money with very little or no work involved.
- Don’t have to actively “sell” another merchant’s product, but can simply place a banner ad on their site to reap profits.
- Can attract customers by using ads to appeal to people in places other than their own site
- Don’t have to pay unless they get results; whether it’s a click, an actual sale or a lead, one of these three actions must occur before a merchant has to pay the webmaster a dime.
Be forewarned, however, that affiliate marketing isn’t a totally perfect system and has a few disadvantages:
- Must research the merchant thoroughly before going into affiliate marketing. Webmasters can otherwise put themselves in danger of not receiving a commission or being on the bad end of a false trade.
- If the previous point occurs, webmasters have essentially wasted time and resources creating an ad that does nothing for the webmaster.
- Must share their profits with any third party.
- Are accountable for any of the shady means through which a webmaster might attract traffic to his own website. This may affect the merchants’ reputation.
Most affiliate programs enjoy profitable business together and rarely will an affiliate get conned as a result of this arrangement.
Our marketing professionals at Sticky Web Media can walk you through the process of affiliate marketing and answer any questions you might have.