What is Affiliate Marketing?

First thing first, what is affiliate marketing? It is a kind of referral program where a person will receive commission when he or she refers visitors to the merchant’s site who then made a purchase from the merchant. Besides being known as a referral program, affiliate marketing is also known by many other names, for example Associate Programs, Revenue Sharing Programs, Bounty Programs and Partner Programs but affiliate marketing is still the most accepted and widely used name today..

Who are involved in Affiliate Marketing
There are basically four parties involved in affiliate marketing and they are the publisher, merchant, affiliate network and customers. Most terms are self explanatory except the term affiliate network and publisher. Affiliate network acts like a middleman between publishers and the merchants’ affiliate programs. It provides a platform where merchants can list down their affiliate programs in which publishers could find and sign up easily. The merchants will then be charged a fee for using the affiliate network platform but publishers are free to join.

Publisher is the one who sign up merchant’s affiliate program and help to promote merchant’s product and/or services to earn commission, he/she is also known as affiliate marketers or affiliates. Publishers will only be rewarded when there is a successful transaction occurs at merchant’s site. The transaction can be as following:

  • Sales occur at merchant’s site.
    Publishers will then be paid by pay per sale or cost per sale (CPS) from merchant’s perspective.
  • Leads generated at merchant’s site which is known as pay per lead or cost per lead (CPL) from merchant’s perspective.
  • Clicks on merchant’s text link or banner which is known as pay per click (PPC) or cost per click (CPC) from merchant’s perspective.
  • Desired actions done at merchant’s site for example, filling up a form, download a document or sign up opt-in list. When this occurs, publishers will be paid by pay per action (PPA) or cost per action (CPA) from merchant’s perspective.

The different pricing models mentioned above can be summed up and called pay by performance from the merchant’s perspective.

What’s so good about Affiliate Marketing?
Affiliate marketing is favored by merchants because they can leverage on publishers’ marketing skills to drive high quality and targeted customers to their websites. Unlike traditional type of advertising, merchants only need to pay when a transaction occurs so it helps to eliminate ineffective advertising and save on funds. In addition, merchants are able to track their affiliate marketing performance online which gives them better control and management.

Affiliate marketing is also favored by publishers or affiliate marketers because it offers great potential for passive income. There is no physical inventory to purchase, no billing, no logistics and no customer service to deal with. What one needs to do is to be creative in its marketing and encourages more sales to be made at the merchants’ sites. The rest of the works will be done by the merchants. Does it sounds too good to be true? But that’s the beauty of affiliate marketing.

What Affiliate Marketing is not …
Contrary to most people believe, affiliate marketing is not a fast track to wealth. It is not a get-rich-quick program and even though you might have heard rag-to-riches stories involved in affiliate marketing but you might not aware these people had put in tremendous amount of hard work, time and patience to achieve it.

Affiliate marketing is not rocket science either; anybody who is interested to go into affiliate marketing can start with some training and coaching. So if you are interested to find how affiliate marketing can work for you, stay around and learn more.

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