AFF – Affiliate Network – A Look Under the Hood

I am sitting here thinking back to the early days of the internet, and in particular, online marketing. Do you remember when you first learned of what an affiliate network was, and what it was for? Me neither. However, what I now know, is that an affiliate network is a website which acts as a facilitator for advertisers who have products or services which need to be marketed, and internet marketers known as “affiliates”, who are eager to market the products and services of others in exchange for a commission. The set up is what is referred to as affiliate marketing.

Affiliate marketing presents the individual entrepreneur who owns no product or service of their own, with the capacity to generate a profit from the sale of hundreds, if not thousands of offers from advertisers (ie. merchants) in need of promotion. The vast majority of these advertisers take advantage of a third party affiliate network to process payments, and track compensation which is due to affiliates. However, how the affiliate is compensated depends upon the method of affiliate marketing which is being offered by the advertiser and the affiliate network.

The following cover the four most common compensation methods which are utilized by affiliate marketing:

1. Cost Per Sale or CPS: This is the most cut and dry form of affiliate marketing in which the affiliate is given a unique tracking link. If the affiliate program comes from an affiliate network, then the affiliate network will provide the tracking link. Otherwise, it will be provided by the actual owner of the product or service. Nevertheless, whenever a sale is made via the affiliate’s link, the affiliate receives credit for the sale, and they earn a commission. So when we say, “Cost Per Sale”, we are referring to how much it costs the advertiser for every sale which is made. Thus, if an affiliate sells a product which sells for $75, for which the affiliate is compensated $45 for each sale, the cost per sale is $45.

2. Cost Per Action or CPA: This is just how it sounds. A predetermined action is specified for which the affiliate is compensated. I really view this one as all encompassing, as the other three main compensation methods are based upon an action. Nonetheless, whatever the agreed upon action is, the affiliate earn compensation once it takes place. This if the action constitutes bringing customers to sign up for a free trial which the advertiser is promoting, the affiliate will be compensated for each new subscriber.

3. Cost Per Mille or CPM: This form of compensation is actually quite popular. However, I do not like it, at least from the standpoint of the affiliate network, because there is no really good way to measure the quality of the traffic. Essentially, how it works, is that for every thousand visitors which are sent to the advertiser by an affiliate, the affiliate is compensated in a predetermined amount.

4. Pay Per Click or PPC: Usually when you hear of PPC, someone is referring to the programs offered by the search engines. However, did you know that there are also PPC programs offered by an affiliate network? How it works is that an affiliate network will host websites and blogs which belong to a myriad of niche markets. The advertiser then posts their ads on websites and blogs which fit their niche market, and pay a fee each time a visitor clicks on their link.

One thing that I must tell you about becoming a member of an affiliate network, and engaging in affiliate marketing is that you need to treat this as a business, not a hobby. Your business is that of a marketing firm, and advertisers are willing to pay you as much as you are willing to earn. Focus on building a customer base by using opt-in email methods. This will present you with the capacity to market to the same customers again and again.