Posted on December 6th, 2007
Affiliate Marketing programs are very popular in nowadays. Why ? Because a lot of people can see clearly the benefits of being an affiliate more than before. Very low cost to start a business and no hassle at all. In just minutes, you can start your own business.
Today, both the merchants and the affiliates can see clearly that affiliate marketing can work for both of them. The merchant sees affiliate marketing today as the chance to advertise their products at a lower cost. The affiliates, on the other hand, sees affiliate marketing as an easy way of earning profits online by doing what they like most, and that is by creating websites.
So the question now is what type of affiliate marketing will work best for you? Are all affiliate marketing programs the same? Are the benefits the same? Or are there affiliate marketing programs that work better than the others?
There are various types of affiliate programs. Hundreds of affiliate programs have been developed to accommodate the different business models that have formed on the Internet over time. Below is a list of the basic types of affiliate programs and how they are intended to be used. Realize that just because it works well for one website doesn’t mean it will work for another.
The most basic affiliate marketing programs, however, falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).
• Pay Per Click (PPC)
PPC is the most popular type of affiliate marketing for affiliates with small websites, and probably the easiest way for them to earn money. In this affiliate marketing type, the merchant pays his affiliate whenever a visitor is referred to his site, that is whenever someone clicks through the merchant’s banner or text ads. The affiliate gets paid a certain amount even if the visitor he referred does not purchase anything from the merchant’s site. However, typical fees for PPC affiliate programs are small, usually not exceeding a dollar for every click. Example of PPC programs are Google Adsense and AdBrite.
• Pay Per Performance (PPP)
PPP affiliate marketing is the most popular among merchant and is also the most lucrative type for the affiliates. In this type of affiliate program, the merchant only pays the affiliate whenever his referral translates into an action-that is whenever the visitor he has referred actually buys something from the merchant’s site or when the visitor becomes a lead. This means a lot of savings for the merchant. On the other hand, it becomes the most lucrative type for the dedicated affiliate, for commissions in PPP affiliate marketing usually comes in the range of 15% to 20% of the actual product sales.
Pay-per-performance affiliate marketing can be further classified into two popular types: pay-per-sales (PPS) and pay-per-lead (PPL).
In a pay-per-sale type of affiliate marketing, the merchants pay the affiliate a certain fee whenever the visitor he has referred to the merchant’s site actually buys something from the merchant’s site. Affiliates are often paid on commission basis, although other merchants would opt to pay a fixed fee. But no matter what the basis of the fee is, it is generally higher than the fee paid to affiliates in a pay-per-click affiliate program. For instance, if you sell a $75 product, you can either get paid a certain percentage (like 30%) of the sale or a flat rate (like $25). There is no second level to earn additional income. Obviously the focus here is just selling the product.
The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant’s site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type.
As an example, I know a company that was paying $1 for every registration they received for their sweepstakes. All you, as the affiliate, would need to do is place it on your website. For every visitor that filled out the registration for the sweepstakes, you would get one dollar. Again, for best results, this program works great on high traffic sites or to large email lists.
• Multilevel Marketing (MLM)
You’re likely already familiar with this form of affiliate program. Many folks argue that MLM is not an affiliate program. Certainly the similarities are there and truly, most affiliate programs concepts spawned from the MLM. The concept is the same as other programs, accept the focus is generally different.
In a nut shell, MLM is multi-tiered, meaning three or more tiers or levels. Generally the focus for MLM is building the down line and “selling” the opportunity. The product or service of the MLM is more of a means to allow the opportunity to exist rather than it’s main focus. Therefore you have more loyalty from the affiliates to just work with the one program and to work with their down line.
• Two Tier
Two-tier programs have two levels of pay out. Similar to the above MLM example except there is only two levels (you and any sub affiliates you sign up). It’s not really called a down line, because with only one level, the matrix goes wide.
Also, generally the focus is no longer on the down line or opportunity, but more on the sale of the product. For instance, let’s say that Lisa signs up for the program who’s product is cheese cakes. Lisa is considered the first level (or first tier). Any sales that she makes, she earns a set commission of say 30%.
Mike comes along and decides he’d like the opportunity to earn money selling cheese cakes, so he signs up under Lisa. He is considered Lisa’s sub affiliate (or second tier). If HE makes any sales, Lisa would earn 15% of his sales.
So now, she not only can earn 30% from her own efforts, but also 15% of someone else’s. It’s very similar to the MLM concept, the main difference is often the focus isn’t the opportunity in the program itself, but more about selling the product.
• Residual Income Affiliate Marketing
In residual income affiliate marketing, the affiliate gets paid not only once for every customer he has referred to the merchant’s site. Rather, the affiliate is also paid whenever the customer he has referred returns to the site and purchase another product. Compensation for such type of affiliate marketing is based on either sales percentage commission or fixed fee basis.
The different affiliate marketing types would virtually work differently for merchants and affiliates alike, and each would generally have their own list of benefits. Which type of affiliate marketing will work best for you? It is not really for me to tell. Rather, it is for you to choose which type of affiliate marketing program will suit your needs and characteristics best.
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