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Affiliate Webmaster Glossary
Marketing and Advertising People have
a great habit of creating confusing terms that we all
have to try and understand.
If you are going to become involved with Affiliate
Programs you need to understand what these different
terms mean. The following terms are not only used with
affiliate programs but used on the web generally in
the area of advertising, but the chances are you will
come across quite a few of them! Here is a 'brief' summary
of what the different terms mean: -
Affiliates:
An affiliate site is a web site that has placed links
(HTML) to promote a merchant's products or services.
As an affiliate, you partner with merchants in order
to enable your web site to sell or promote things online.
Like: products, services, sweepstakes or technology.
In exchange, you receive a commission for all the valid
transactions that you have referred to the merchant.
This can take place on a pay per click, pay per lead,
pay per sale or other basis.
What is an affiliate program?
An affiliate program is a way for merchants to extend
and the distribution of their products and services
through a virtual sales force made up of any number
of any kind of other web sites. In other words, having
other web sites promote your products and services.
By setting up an affiliate program for your products
and services you can greatly extend your marketing reach.
Imagine web site owners coming to your automated web
site that allows them to sign up for your affiliate
program so they can start advertising your products
and services on their web sites. Imagine that computers
track everything that is needed so you know how much
to pay these site owners in the way of a predetermined
commission.
Banner Links
The image that you see to the right is a banner link.
It is coded to have an address built into it. If you
click it, your browser will show the page that the address
points to.
Category Specific Links
Links that take a web sites viewers to a specific category
of products. Example: Being able to direct ones viewers
to a category of products.
Click Through
This is the simple process of someone clicking on a
link or a banner advertisement or search box or similar
from your site to the merchants site.
Click Through Rate (CTR)
This is the percentage from all your online visitors
that 'click-through' to one of your advertised merchants.
This only measures the number of people who 'physically'
click on your ad - not the people who may see the ad
and then visit the site later. It is a measure of 'immediate
response' to an advertisement, link, banner, search
box etc. Because click-through-rates are tied to the
pay-per-click model, CTR is becoming a less attractive
measure of performance, where the conversion rate is
now seen by many merchants as the best measure of performance.
Co-Branding
Some programs allow you (as an affiliate) to include
your logo or navigation system on the page of an online
store or service that is offered by a merchant. Creating,
for example, a storefront that has the look and feel
of your site but is really maintained by your merchant
partner. The merchant partner handles all the sales,
returns, stock, invoicing and etc. You (as an affiliate)
collect a percentage of the money each time a purchase
is made through your site. The free email accounts we
offer you are an excellent example of co-branding.
Content
Your viewers need a reason to come to your site and
to keep coming back, something to look forward to. Content
is exactly that. What is content? News, weather, personals,
and even classifieds and auctions can be considered
content. Content is something that is interesting to
your viewers. If your site is full of pages, that once
you read them there is really no reason to read them
again, then you can see why no one will come back. You
may need content that is automatically updated daily.
This creates interest for your viewers and a reason
to come back to your site. There is a saying that you
see on the net: "Content is King" meaning,
content is what brings viewers and content is what keeps
them coming back. For example, if you sell cars there
is no reason for anyone to come to your site who is
not looking to buy a car. Unless you add some interesting
content. News about cars, classifieds so they can sell
their cars, driving games, travel by car guides would
then be considered content. The free email accounts
we offer you are an excellent example of content.
Conversion Rate:
The percentage of visitors that you send to your merchants
site who take the desired action. This could be as simple
as subscribing to a newsletter or ezine, buying a product,
downloading some software. This is a very important
measurement for affiliates and something you should
really focus on! By examining your conversion rate and
measuring that against the number of click-throughs'
that you can gauge the effectiveness of not only your
advertising/promotion efforts but also that of the merchant!
Cost Per Click (CPC) and Pay Per Click (PPC) :
Both these terms are used interchangeably. In simple
'affiliate terms', when someone clicks on one of your
merchants or advertisers links (whether it be text or
graphic) you will receive a commission. This can vary
from anywhere between 1c (or even less) up to (generally)
10c. To help you understand the different concepts a
little easier the following equation may help: -
If you were to offer advertising on your site that
was based on the number of 'impressions' not clicks
and you were selling your impressions for $10.00 CPM
(cost-per-thousand- impressions) and you achieved a
click-through rate (CTR) of 5% then ....
1000 impressions x 5% CTR = 50 click-throughs
$10.00 CPM / 50 click-throughs = 20c per click
Cost Per Thousand Impression (CPM) :
Refers to advertising bought on the basis of impressions.
This is totally different to any of the other 'performance
based' programs - that is where the person has to click-through
and make a purchase or perform some additional action.
The total price paid in a CPM deal is calculated by
multiplying the CPM rate by the number of CPM units.
An example would be two million impressions at $10.00
CPM equals a total price of $20,000.00.
The amount paid per impression is calculated by dividing
the CPM by 1000 e.g. $10.00 CPM equals 1c per impression.
Because impressions can be an imprecise measurement
- if you plan to advertise of someone else's site I
strongly recommend you try to negotiate a CPA (cost-per-action)
model.
Cost Per Action (CPA) - Pay Per Action (PPA) :
This advertising model is based solely on qualifying
actions that your referred customer must do at the merchants
site. This is the overall trend now in affiliate programs
- just referring people to merchants sites (in the PPC
model) is normally not enough!
Your referral must perform some specific action for
you to earn a commission - it may be just signup for
a newsletter or download some software or buy a product!
Merchants
A merchant is a company that has products, services
or technologies to sell. A merchant is a company that
you (as an affiliate) partner with in order to enable
your web sites capabilities to sell things online. Merchants
enable you to sell things online like: products, services
or technology. You (as an affiliate) place links (HTML)
on your site to promote the merchant's products or services.
In exchange, you receive a commission for all the valid
transactions that you have referred. This can take place
on a pay per click, pay per lead, pay per sale or other
basis.
Merchant Solutions for setting up an affiliates program
(Affiliate Network):
An affiliate network is a larger organisation that
is involved in two businesses. Recruiting merchants
and recruiting affiliates for those merchants. The merchants
need the affiliate networks because the networks have
forged ahead and created all the sophisticated technology
needed to track affiliates. They also have the people
power to offer support to both the merchants and the
affiliates when needed. They handle sending out the
checks to the affiliates. They can also provide much
needed assistance in helping the merchant to create
their web sites and offer a complete solution. They
will help you as a merchant get and affiliate program
launched and they help you as an affiliate find merchants
and all the in-betweens.
Merchant Solutions for setting up an affiliates program
(Software Based):
Affiliate tracking solutions enable you to track how
much your affiliates are selling, how much you owe them
and many other details that are needed in a complete
solution. But it is up to you to deal with your affiliates
needs and write out the checks, and try to promote your
affiliate program etc. In other words, you are buying
into a technology that is a solution to your technical
needs but not the people power you need to run a big
operation. As you would expect these solutions are cheaper
and are aimed at smaller operations or larger ones who
want to be be more involved in every aspect of the process.
If, however, that is more than you want to deal with,
then an affiliate network is the answer for you. In
order to make this happen, however, you have to fit
the Affiliate Networks basic requirements. Affiliate
tracking software is software you add to your server
(or your host adds it to their server) allowing the
"technology" (software) to go to work keeping
track of all the information that you need to run your
affiliate program.
Merchant Solutions for setting up an affiliates program
(Web Based):
Affiliate tracking solutions enable you to track how
much your affiliates are selling, how much you owe them
and many other details that are needed in a complete
solution. But it is up to you to deal with your affiliates
needs and write out the checks, and try to promote your
affiliate program etc. In other words, you are buying
into a technology that is a solution to your technical
needs but not the people power you need to run a big
operation. As you would expect these solutions are cheaper
and are aimed at smaller operations or larger ones who
want to be be more involved in every aspect of the process.
If, however, that is more than you want to deal with,
then an affiliate network is the answer for you. In
order to make this happen, however, you have to fit
the Affiliate Networks basic requirements. Web based
affiliate tracking is a solution where another web site
other than your own, takes care of everything allowing
you and your web site to do what it does best. Web based
tracking is allowing the "technology" (another
companies web site) to go to work keeping track of all
the information that you need to run your affiliate
program. Some even take care of all of your affiliates
needs including writing out checks and technical support.
Minimum:
Minimum means the minimum you need to make before the
merchant or affiliate program will send you a check.
If the minimum is $20.00 then each month (or quarter
with some programs) you make over $20.00, they will
send what every you made. If it is under $20.00, then
they hold it over another month (or quarter) until you
make up to or over $20.00. If you do make over the minimum
amount that is required then they send you what ever
you have made. If not then they hold it over again.
If you have low traffic on your site and the minimum
is $100 and you make a few dollars with each sale, you
may never reach that $100 minimum. You're better off
with a much lower minimum or something that pays higher
for each sale or lead.
Pay Per Click:
These programs all offer you (as an affiliate) the
opportunity to earn commissions without the visitors
you refer needing to make a purchase from the merchant
of any type. All they have to do is click on the link
on your page that takes them to the merchants site.
At that point they may (or may not) buy something or
signup for something. If you are the merchant then you
are paying your affiliate for the targeted traffic they
provide to your site.
Pay Per Impression:
These programs all offer you (as an affiliate) the
opportunity to earn commissions without the visitors
you refer needing to make a purchase from the merchant
of any type or even click on their banners. All they
have to do is see the banner on your page that takes
them to the merchants site. At that point they may (or
may not) click on it and then go on to buy something
or signup for something. If you are the merchant then
you are paying your affiliate for the targeted viewers
they provide. This is more like traditional advertising
where the viewer simply sees and ad on television of
hears it on the radio. NOTE: Same as Pay Per View.
Pay Per Lead:
These programs all offer you (as an affiliate) the
opportunity to earn commissions without the visitors
you refer always needing to make a purchase from the
merchant of any type. All they have to do is click on
the link on your page that takes them to the merchants
site and sign up for something. Most often for free
services, trials or coupons and things. If you are the
merchant then you are paying your affiliate for the
targeted leads (contact info) they provide you.
Pay Per Sale:
With these programs you (as an affiliate) earn commissions
when you refer the visitors at your site to buy your
merchant partners products or services. You usually
get a percentage of the sale or a fixed predetermined
amount for the referral. If you are the merchant, then
you are paying your affiliate a percentage (of the total
dollar amount before shipping and taxes) of what actually
sold from the targeted traffic they provided to you
site. Otherwise you pay a a fixed predetermined amount
for the referral.
Pay Per View:
These programs all offer you (as an affiliate) the
opportunity to earn commissions without the visitors
you refer needing to make a purchase from the merchant
of any type or even click on their banners. All they
have to do is see the banner on your page that takes
them to the merchants site. At that point they may (or
may not) click on it and then go on to buy something
or signup for something. If you are the merchant then
you are paying your affiliate for the targeted viewers
they provide. This is more like traditional advertising
where the viewer simply sees and ad on television of
hears it on the radio. NOTE: Same as Pay Per Impression.
Product Specific Links:
Links that take (a web sites) viewers to a specific
product or product page. Example: Being able to direct
ones viewers to a specific product like a Solar Shower
or an organic brush within a huge computer site.
Reseller:
Reseller program are different than affiliate programs
because you (a site owner) have to buy something and
then resell it. Thus you usually also have to deal with
invoicing, returns, technical support and the like.
Some reseller programs are really affiliate programs
but are called Reseller programs, so you have to read
the fine print...
Residual:
Residual income means that once you (as an affiliate)
have referred an initial sale (by someone clicking on
a link and then going on to buy something) you will
receive a commission. Plus, you will then receive additional
commissions (monthly, quarterly, yearly or etc.) as
long as the visitor you referred remains a customer
of the merchants service. If you are a merchant you
can offer this residual income to your affiliates to
ensure that they remain loyal and recommend you over
the other merchants vying for their loyalty.
NOTE: This is usually only happens in a service that
is supported through monthly fees or automatic subscription
renewals. Examples: Web site hosting, magazine subscriptions
and etc...
Search Box:
The search box that you see to the right is a special
way of linking. It is coded to access web addresses
built into a database. If you enter a category in to
the "select category area", for example, and
click Search, your browser will show the programs that
relate to that category. (Try it to see how it works.)
Storefronts:
Storefronts are prefabricated pages that display new
or specialised products in an appealing way. Some storefronts
are dynamically updated, so that you (as an affiliate)
don't have to change the code on your pages to make
sure that your viewers are linking to an up-to-date
merchandise. Other storefronts are created by you using
the merchants affiliate technology allowing you to hand
pick the products you want featured. If you are a merchant,
you want to enable your affiliates to have every option
available as far as them creating store fronts. Options
like being able to hand select specific products, CO-Branding,
easy storefront setup and the ability to target categories
of products or services if appropriate. Avoid making
your affiliates download (and then upload again to their
sites) the individual pictures (graphics) of your product
or services as this gets old really fast... Example:
Dell Computers and Accessories or Sport Bras
Text Links:
The link that you see between the two stars *100% Free
After Rebate * is a text link. It is coded to have an
address built into it. If you click it, your browser
will show the page that the address points to.
Two Tier:
Two Tier programs pay commissions at least two-levels
deep. This means that if you (as an affiliate) refer
new affiliates (to sell the merchants products or services),
then you receive a portion of the new affiliates sales.
This is in addition to whatever commissions are made
on the sales that are made by the viewers that come
to your site. In other words, a two tier program is
the merchants way of encouraging you to promote their
affiliate program to other webmasters. When you do you
get a commission (percentage) based on what they make.
If you are a merchant, then offering a two tier program
is one of the best ways to encourage your affiliates
to get other webmasters to start promoting your products
and services. This will cause your affiliate program
to expand and reach more and more webmasters, which
in turn makes you more money. Definitely do not over
look this feature...
What should I look for in an affiliate program?
Reliable, sophisticated tracking technology
The ability to control your brand as it is distributed
over potentially thousands of affiliate web sites
The ability to create and structure deals and compensation
in any way you want, and in as many different ways as
you need, to as many different types of affiliates as
you may have
The ability to run targeted, limited time, and/or product
specific promotions
A platform-neutral solution
An interoperable solution
A scalable solution
The ability to monitor, evaluate and optimize your program
Ease of use
A solution that is easy for affiliates to use too (because
happy affiliates are productive affiliates)
The ability to tailor your solution according to your
business goals and objectives
Access to active, committed affiliates
The ability to ramp up quickly
The ability to create private offers to provide incentives
for affiliates who perform well
The ability to segment your affiliate base into groups
you define, just as you segment your target audience
The ability to partner with other merchants
Affiliate customer service
Relationship Management Tools
Merchant Marketing Support.
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