The ratio of visitors from your site that are “converted” into a sale, lead or click, and go on to earn the you a commission. A conversion ratio of 5% would mean that for every 100 visitors to your site, 5 would click-through, complete an action and earn you a commission. Many factors will influence the conversion ratio, including how targeted the affiliate program’s products are to your visitor’s interests, the price and value of the products being promoted, the merchant’s ability to track all sales, and the overall effectiveness of the merchant’s web site.
For instance: let’s just say, to use as an example for us all, you are promoting rustic cedar log furniture. You may show the differences between red cedar log furniture versus northern white cedar log furniture. Northern white cedar wood does not ooze sap, or attract insects. White cedar logs do not rot or mildew, even when untreated. You could describe what to look for in the quality and workmanship of log furniture. There is a lot of cheap deals for rustic log furniture out there with poor quality facade or metal supports, and / or cheap joinery. You might want to discuss the philosophy of “all log” construction. And then finally you list the websites of the rustic cedar log furniture for which you are an affiliate. Having many good images of various types of cedar log furniture is a smart idea for your affiliate site. Being an affiliate of quality rustic furniture is an advantage since customers are more likely to return for more sales.
The percentage of visitors who click – through on a link to visit the merchant’s web site. Higher click – throughs are preferable although not always a great measure of success. Pay – per – click earnings are highly dependent on the click-through ratios. Click-through ratios can often be improved through a variety of means: by making links more visible to visitors, adding personal comments or testimonials about the product, or even reducing the number of links a visitor can follow.
CPM: The practice of calculating a cost per 1000 ad displays. It is used by programs that pay on an impression basis – – with the CPM rate being the amount you earn for every 1000 times an advertisement is displayed. For example, a $5 CPM means you earn $5 every time 1000 ads are displayed on your site. CPM can also be calculated for pay-per-sale, pay – per – lead and pay – per – click programs by using this formula:
Amount earned / (number of impressions/1000)
Calculating the CPM of affiliate programs can be an effective means of comparing the results over time from various programs – – allowing you to put more emphasis on the strong programs, and dropping the poorly performing programs.
Two – tier, or multi – tier, refers to the practice of a merchant paying commissions to both the affiliate that referred a sale, lead or click, and the affiliate that referred that affiliate to the program. A descendent of network marketing, two – tier programs are generally quite legitimate and offer the merchant an effective means to promote their affiliate program quickly. However, be wary of any programs that try to charge startup or membership fees to join. These programs should be avoided, as there are hundreds of others that do not charge to become an affiliate. Some are simply pyramid schemes in disguise.