Affiliate Marketing is a program between Merchants / Advertisers and Affiliates. This sales concept is characterized by a success-based commission paid by the Merchant. The commission amount is agreed between the Merchant and his partner. The Affiliate is responsible for Affiliate-Portal and running of advertising space. Affiliate Marketing can be implemented online, but also offline.
How Affiliate Marketing Works
Affiliate Marketing is a method of Online Marketing and how companies can advertise their products and services. Therefore, companies look for Affiliates – sales partners – who place ads on their own sites, e.g. as a link or banner. The advertisement was created by the Merchant, so Affiliate is an advertising medium. Partners get paid in various ways described in the cost-per-action model in the following text.
Affiliate programs can be created by the Merchant itself in collaboration with selected Affiliates. Or, Affiliate networks offer a large number of Affiliates to merchants for a fee. Such networks often support both partners as well as campaign creation and commission payments.
Merchants and Affiliates
Merchants, also called “sellers” or “advertisers”, are one of the two components of the partner program for Affiliate Marketing which is a sales collaboration and network partner. This is a component that offers partner programs and advertising material.
As an online merchant, the Merchant works closely with website providers, also called publishers or Affiliates who usually offer their websites as advertising media, e.g. for banners.
So through this collaboration, Merchants know that their products are presented to more potential customers, so in return, their reach will increase. To make the partnership as efficient as possible, Merchants must choose an advertising partner that has high popularity. In addition, the interest of the target group must be similar to achieve high advertising effects. Affiliates are a great complement to Merchants who are sales partners of campaigns that will benefit from Merchants, so they get paid for ad space.
There are various models to get cash for example Pay Per Click, Pay Per Lead, Pay Per Click, Pay Per Click, Pay Per Link, Pay Per Print, Pay Per Impress, Pay Per Registration, Pay Per Install, Pay Per Lifetime, Pay or Airtime Payment . “Pay” is often replaced by “Cost”. The most widely used models are:
COST PER CLICK
With Cost per Click / Pay per Click, ad customers don’t pay a fixed Affiliate rate, but a certain amount becomes due for advertisers if the user clicks on the ad. So payments only fall because if the user really reacts to the ad by clicking on it which directs it to the advertiser’s website. So with this model the company only has to pay if the user really recognizes the ad.
COST PER LEAD
With this method, payment will be calculated as a Cost per Prospect. Each Lead is a contact that is obtained. This model is mainly used in fields that are not used to selling things directly to anonymous customers, e.g. insurance broker. Leads can also be obtained through catalog requests or subscription to bulletins.
COST PER SALES
The CPS model cashed in every time a customer bought something by clicking on a banner. With Unique Identifiers (UID), user actions can be identified so that it can be ensured that the purchase is made immediately after clicking on the ad. This system is also called a cost per order (CPO), but this causes a fee for each order. Other models that do not follow cost per action, e.g. cost per thousand / mile (CPT / CPM) or cost per impression (CPI).
Affiliate Marketing benefits both parties. Advertising companies can get cheap client acquisitions and achieve an increase in recognition, because with an Affiliate system partners can develop sales. If used correctly and the Affiliate is chosen fairly, web presence can generate significant sales. To be able to use Affiliate Marketing effectively, patience, planning, and inventiveness are needed, because the better the place to advertise, the more clicks can be generated.
Affiliate Marketing can also be useful for blogs, e.g. if a profitable arbitration transaction is used to generate traffic.