For those of you new to affiliate programs this guide should help you quickly get up to speed on how affiliate programs can make an excellent, and profitable, addition to your web site. Here are some of the more common affiliate program terms you’ll likely run into, and their basic definitions:
Affiliate: An independent party that promotes the products or services of a merchant in exchange for a commission. Also an associate, partner, reseller, or referral partner.
Merchant: A company that has set up an affiliate program and has agreed to share a commission with affiliates who promote their web site, products and/or services. Also termed an advertiser, vendor, or simply referred to as an “affiliate program.”
Commission: The income you receive for generating a sale, lead or click-through to a merchant’s web site. Sometimes called a referral fee, a finder’s fee or a bounty.
Affiliate Program: Used in a broad sense, an affiliate program is any type of revenue sharing program where an affiliate web site receives a portion of income for delivering sales, leads, or traffic to a merchant web site. In a narrow sense, affiliate programs are commonly considered those programs that use a pay- per-sale model like our own. Also termed associate, partner, referral, reseller, or sponsor programs (Top 5 Affilliate Programs) .
Pay-Per-Sale: A program where you receive a commission for each sale of a product or service that you refer to a merchant’s web site. Pay-per-sale programs usually offer the highest commissions and the lowest conversion ratio. Also referred to as Cost-per- Action (CPA for short) and generically as an Affiliate Program.
Pay-Per-Lead: A program where you receive a commission for each sales lead that you generate for a merchant web site. Examples would include completed surveys, contest or sweepstakes entries, downloaded software demos, or free trials. Pay-per-lead generally offers midrange commissions and midrange to high conversion ratios (since visitor purchases are not required for you to be able to earn a commission). Like pay-per-sale, pay-per-lead is also referred to as a Cost-per-Action or CPA for short.
Pay-Per-Click: A program where you receive a commission for each click (visitor) you refer to a merchant’s web site. Pay-per-click programs generally offer some of the lowest commissions (from $0.01 to $0.25 per click), and a very high conversion ratio since visitors need only click on a link to earn you a commission (Top 5 PPC Sites) .
A program where you receive a commission each time that a merchant’s ad or link is displayed on your site. Pay – per – impression generally offers the lowest commissions, but a nearly 100% conversion ratio since a visitor merely has to view the ad to earn you a commission – – and this often results in the highest earnings potential. Pay – per – impression programs are generally measured in CPMs (see below) and form the standard of banner advertising for larger web sites.