Learn The Basics about Affiliate Marketing

Many customers are surprised at the amount of sophisticated ways advertisers experiment with to reach them. Most Internet surfers could identify a banner or text ad, but the majority could not say to you about performance marketing also known as affiliate marketing and pay-for-performance marketing.

Affiliate Marketing is one channel of marketing products and services online. It traditionally includes a retailer and a publisher, sometimes known as an affiliate.

For this article, we define a publisher, as an independent party that promotes the services or products of an advertiser in exchange for a commission on leads or sales.

An affiliate displays ads, text links, or product links on its Website, in email campaigns, or in search listings and is paid a commission by the advertiser when a visitor takes a specific action, such as submitting a form, making a purchase or subscribing to a service.

A merchant, also called an advertiser or retailer, is a Web site or company that sells a services or product online, accepts payments and completes orders.

If you place an ad or connect to the merchant’s products and/or services on your Web site and the merchant pays you a commission for leads or sales that result from your site.

What it Needs to Succeed

Those publishers suited best for affiliate marketing have some consistent characteristics:

  • They must have a Web site designed for a specific niche of consumers or audience. While not all affiliates have content sites, it is a simple way to enter into the affiliate marketing industry and a solid foundation to depend if you later branch off to other marketing channels such as online search engine marketing
  • You should have basic HTML skills to be able to insert and track advertisements such as banners, buttons and links
  • A set amount of time per day to dedicate to the program depending upon number of Internet site
  • Learn the Language– Affiliate Marketers Speak

Just like in any industry, affiliate marketing has its own language. Don’t be intimidated; pretty soon these terms will be second nature.

Application Service Provider (ASP)– An ASP is an online network that is accessible through the Internet instead of through the installation of software. It is quickly integrated with other Web sites and the services are easily implemented and scalable.

Commission Payout– An amount of income received by a affiliate for some quantifiable action such as selling an advertiser’s product and/or service on the publisher’s Site.

Click-through Ratio (CTR) – Also known as a click. The action a consumer takes when they are referred from a Website through a link or advertisement and is required to another Web site.

Click-through ratio is the percentage of click for the amount of advertising impressions displayed.

Cost per action (CPA) – A metric for online advertising where a rate is set for each action that is taken by an end-user. It is also known as pay for performance.

Cost per thousand impressions (CPM) – A metric for online advertising where a rate is set for every thousand impressions.

Conversion rate- 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 Web site, a completed lead form, or another action.

Impression- The viewing of an advertising banner, link, or product.

Search Engine Marketing (SEM) – The act of marketing a Website via online search engine. This can possibly be done by “natural” or “organic” search which refers to all unpaid search results based on relevance in the content site or “paid” search which refers to all pay-per-click advertising (such as on MSN, Yahoo! or Google).

Search Engine Optimization (SEO)- The process of increasing the amount of visitors to a Web site by ranking high in the search results of a search engine. Varied techniques are used by content site publishers to improve a Web page’s results.

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