Affiliate Marketing – Easy Start
Affiliate Marketing over the Internet
The concept of Affiliate Marketing exists as much in the real world, as it does in the virtual. In the real world, it exists in the form of multi-level marketing – a marketing technique in which a business develops affiliates to sell its products and those affiliates make other affiliates, and so on. On the internet, affiliate marketing is slightly different from this concept but the premise remains the same: profit or revenue sharing.
Affiliate marketing over the internet started off in November 1994. The first website to launch an affiliate marketing program was CDNOW.com, an online retailer. The program was called BuyWeb. It was directed at sites related to music and required affiliates to put up album reviews or listings on their websites along with a link to CDNOW.com from where visitors could buy the albums. After CDNOW, Amazon’s affiliate program, launched in July 1996 was and still is one of the most popular on the internet.
How it works – Compensation Models
As mentioned before, affiliate marketing at its basic premise is a revenue sharing model and earns money for both – the affiliate master and the affiliates – based on the revenue generated. How this revenue is generated and how it is shared is what distinguishes one affiliate program from another. Various models of revenue sharing or compensation work under the affiliate marketing model itself.
1)Pay-per-sale/Cost-per-sale: The original ‘revenue sharing’ concept. The affiliate displays a link to the affiliate master’s website and refers visitors to that website. Such visitors are often called as ‘referrals.’ The affiliate master pays a certain pre-decided and arranged percentage of the revenue that was generated due to a purchase made by the referral to the affiliate who referred the visitors. 80% of affiliate programs work on this model.
2)Pay-per-lead/Cost-per-action: Also known as cost-per-acquisition, cost -per-action or cost-per-lead and their acronyms. The previous revenue sharing model worked for websites that were selling a product. However, there were many websites whose success depended on other factors such as number of members, number of subscriptions, number of sign-ups. Such websites required the ‘referrals’ to perform an action apart from purchase. Thus such a program paid the affiliate every time a referral from the affiliate performed the desired action (signing up, subscribing, etc.)
3)Special compensation models: These are designed to cater to very specific online businesses that offer visitors a niche service. Most of these are variations of the Cost-per-action model, in that they require their referrals to perform a certain action but the nature of the action required being very specific, a separate model is required:
a.Cost-per-call/Pay-per-call: This model is used by online businesses that offer their visitors the facility to talk to a customer service representative/executive at the click of a button. The affiliate here is an ad publisher who displays the affiliate master’s ad. Usually such affiliates are search engines. The affiliate master pays the affiliate each time a call is placed by a visitor who clicks on the publisher’s ad.
b.Cost-per-install/Pay-per-install: The affiliate gets paid every time a referral installs a software application from the affiliate master’s website. This software is usually free and bundled with adware applications. Although this model can be directly incorporated into the Cost-per-action model, it is distinguished due to its specific connection to distribution and installation of adware.
4)Lesser known revenue models: There are certain revenue models that were quite popular when affiliate marketing was in its nascent stages, but eventually were discarded for obvious reasons.
a.Cost-per-click/Pay-per-click: The affiliate earned a commission every time a visitor clicked on the affiliate master’s ad (banner, text, etc) displayed on the website.
b.Cost-per-mille: The affiliate gets paid for displaying the ad (which would usually be a banner) a certain number of times (usually 1000.) The number of displays was called ‘impressions’. Thus the affiliate would get paid ‘per 1000 impressions.’
It is obvious why website owners or affiliate masters would hesitate to use such models of revenue sharing. They require paying the affiliates for free.