Types of Affiliate Programs
While there are no real industry-wide standards for categorizing affiliate marketing sites, the following is a basic list of the types of sites that are used by affiliate marketers:
Click-per-action networks are affiliates dieyacht that expose their advertisers to their own network of affiliates (also known as top-tier affiliates)
Search affiliates that use pay-per-click search engines to promote advertiser offers
Co-registration affiliates that include offers from other companies during the registration process for their own website
Blogs and RSS feeds
Email list affiliates
Comparison shopping and directory sites
Loyalty sites that provide some kind of reward system for purchases
Coupon and rebate sites
Content, niche and product review sites
Getting Paid: How compensation works
You are paid by your customers, your affiliates are paid by you, but how? There are a number of different compensation schemes and either you or your affiliate will have a preference for one or another. In some cases the issue is negotiable, in others it is not. The various compensation schemes are:
Revenue sharing, also called “cost-per-sale” (CPS) is the compensation method of choice today, accounting for 80% of all affiliate programs today.
Cost-per-action (CPA) is the second most prevalent scheme in use today, accounting for another 19% of affiliate programs.
Other methods such as cost-per-click (CPC), where the advertiser pays for each click, and cost-per-mille (CPM), where the advertiser pays for every 1000 ad views, come in at 1% of affiliate programs. The use of these methods declined over the years for a variety of reasons that included the necessity to pay even though the ad failed to produce sales and, in the case of cost-per-click, fraud. These methods are, however, still used extensively in display advertisement and paid search programs.
CPS and CPA schemes have higher expectations before a commission check is issued to the affiliate. In fact, as the names imply, the customer has to buy something. Only then will the affiliate receive payment. In this arrangement the advertiser and the affiliate share the risk of the venture. It is from this model that affiliate marketing gets its other name, “performance marketing.” To make it under these rules, the affiliate must send only the best leads since it is only after a sale is made that the advertiser will reward the affiliate.
While the vast majority of affiliate programs are simple, one-tier affairs, it can go beyond that. Such programs fall under the heading of multi-tier marketing: An advertiser makes an agreement with an affiliate. This is the “top-tier” affiliate. That affiliate then attracts other affiliates and the deal moves down to them. Our top-tier affiliate is paid at the agreed upon rate and gets a commission on everything that the “second-tier” affiliates bring in. Any referral program that develops beyond these initial two levels is considered a multilevel marketing or network marketing scheme. Given the terrible reputation these businesses have, it is wise to simply avoid them completely.
It is not difficult to find affiliates. In fact, almost any website could be recruited as an affiliate. Bear in mind that high traffic websites will likely prefer CPM or CPC deals because these have a lower risk than CPA or revenue sharing. Some places to look while recruiting include:
Affiliate networks that already have a number of advertisers. These networks normally have a large number of potential affiliates for your company.
Sites that are relevant for the same audience that the advertiser is trying to reach. As long as the potential affiliate’s site is not in direct competition with the advertiser, it can work.
Vendors or existing customers could be recruited as long as doing so doesn’t pose any legal or regulatory issues.
Affiliate program directories
Pros and Cons
The cost-per-sale model makes affiliate advertising very popular since you only pay for results. The biggest con regarding this method of marketing is history itself. Spam, adware, spamdexing, trademark bidding, pay-per-click fraud and a number of other issues have given this kind of marketing a bad name over the years. These troubles, however, are becoming less and less prevalent due to advances in technology and better methodologies for dealing with them. This, coupled with the way one only needs to pay for results, leaves affiliate marketing as a strong way to reach the audience you are looking for.