Did you know that a large percentage of the millions of products that are sold on the Internet everyday are sold through affiliate networks? That’s right. You know that banner ad you clicked on for more information? That was likely an affiliate partner that pays to have that ad there and “gets paid” on a performance basis (a commission if you buy or take whatever action the merchant was looking for).
What Is Affiliate Marketing?
Simply put, with an affiliate marketing program, a publisher receives a commission for generating a transaction, such as a lead or sale, for an advertiser that the publisher is promoting.
The advertiser provides its ads to publishers and assigns a commission for each action it wants to accomplish. Publishers place the tracking code for these ads on their websites, in their email campaigns, or in search listings. Whenever a visitor uses these links to generate an action on the advertiser site, that transaction is tracked online.
If a product or service is purchased, the customer pays the advertiser directly, and the publisher is paid a commission for that transaction.
Who are some of the main players?
Although there are many affiliate networks, this overview focuses on these key players. They have the broadest distribution reach to publishers.
Program definitions:
What is a publisher?
A publisher, also known as an affiliate or reseller, is an independent party that promotes products and services of an advertiser in exchange for a commission on leads or sales. A publisher displays an advertiser’s ads, text links, or product links on their website, in email campaigns, or in search listings. The publisher is paid a commission by the respective advertiser when a visitor takes a specific action such as filling out a form, subscribing to a service (both lead examples) or making a purchase (a sale).
What is an advertiser?
An advertiser, also known as a merchant or retailer, is a website or company that sells a product or service online, accepts payments and fulfills orders. Advertisers partner with publishers to help promote their products and services. Publishers place advertisers’ ads, text links, or product links on their websites or include them in e-mail campaigns and search listings in exchange for commissions on leads or sales.
Affiliate Networks – The Basics
What are affiliate networks?
Affiliate networks are third-party clearing houses that connect advertisers with publishers together for the purpose of placing website ads for the purpose of generating leads, sales, etc. generally on a “pay-for-performance basis”.
Why do advertisers use affiliate networks?
Every imaginable brand, product and service the is marketed on the Internet uses affiliate network marketing. From auto insurance to mobile apps, games, free offers, etc. advertisers use these networks to dramatically expand their distribution capabilities. They provide advertisers market reach with measurable results while limiting cost exposure with pay-for-performance.
Why do publishers use affiliate networks?
Publishers (website owners or brokers) use the networks to connect to the hottest trends that match the demographics of the web traffic that they are targeting at any given site. They are guaranteed payment for their efforts so they are much more inclined to promote advertisers through the networks.
What is performance-based marketing?
Paying for actions taken by a consumer as they occur on the Internet, rather than paying up front for advertising space. Any type of revenue sharing program where a publisher receives a commission for generating a lead or sale for an advertiser.
What is click-through (also called click)?
A click-through refers to the action a consumer takes when they are referred from one website through a link or advertisement and is taken to another website . Click-through ratio is the percentage of clicks for the number of advertising impressions displayed.
What is CPA (cost per action)?
CPA is a metric for online advertising where a rate is set for every action that is taken by a user.
What is CPM (cost per thousand impressions)?
CPM is a metric for online advertising where a rate is set for every thousand impressions.
What is EPC (earnings per click)?
EPC is a metric given for publishers, advertisers, and individual ads, and is a relative rating that illustrates the ability to convert clicks into commissions. For publishers, an advertiser’s EPC shows how well that advertiser converts traffic into actual sales or leads. For advertisers, a publisher’s EPC shows how well that publisher sends relevant traffic to advertisers’ sites. EPC is one of the best metrics to measure risk/reward for publishers.
What is an impression?
An impression is the viewing of an advertising banner, link, or product on the Internet.
What is conversion rate?
The conversion rate is the percentage of visitors who take a desired action. The action that determines conversion is determined by the advertiser and may be a sale on the advertiser’s website, a completed lead form, or another action.
