Affiliate marketing

Affiliate marketing

The Internet affiliate marketing is an online shopping technique to distribute products and/or services on affiliate websites.

Membership is a partnership between a publisher site and a commercial site trying to increase online sales or pick up a number of more important quotations. The commercial site, called “advertiser”, offers an affiliate program to site wishing to sell its traffic, named “affiliated”. This affiliate program describes how the affiliate will be paid by promoting the advertisers products or services. Modes of payment for an affiliate program can be varied; they may include some or all of the following:

  • CPC (Cost per Click or pay per click): example, a click on a banner or a text link
  • CPA (Cost Per Action or earnings per action): example, a commission on a purchase
  • CPL (Cost Per Lead or earnings per lead) such as a credit application, a subscription to a newsletter …

If the technique of affiliation allows a multitude of websites to relay on targeted offers, it is also the source of great shops.

Commissions paid by advertisers to webmasters vary: PPC (a few cents per click), sales commissions (fixed or variable) or lead. Hybrid models (PPC and sales commissions or fee) exist and are intended to motivate affiliates. A capping can be done to minimize click fraud and enhance the performance of the affiliate program: X clicks for a sale. On the other hand, the most important members (top affiliate) can obtain specific compensation packages.

In practice advertisers make available for webmasters advertising or visual products catalogs in various formats (XML, txt, csv) or communicate how to rewrite their URL to include the “tag” of the webmaster and redirect the user to the product page, on condition that they integrate them on their site. The affiliator must also conduct its program to make it attractive: the challenges reward top affiliates and temporary increases in commission are frequently used.

Webmasters regularly receive their commissions on the basis of statements of merchants or platforms results. However, the transformation ratios of visitors into buyers rarely more than 1% on average. Still, the affiliation is an effective tool for marketing performance and allows the affiliator get increased visibility by limiting costs.

There is still very little hard data on the market for affiliation in Europe. Union of internet boards regularly publishes figures for advertising spend on the Internet: the first half of 2010, membership represented 8% of advertising spending on the Internet, making affiliate advertising the fourth  investment on Internet.

Translated from Wikipedia

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