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This is how affiliate marketing works: online marketing basics

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The basic principle of affiliate marketing
Payment models
Affiliate Marketing for Businesses - A Risk-Free Decision
Affiliate Marketing for Publishers: Lack of Security in Planning
Pay per sale
Pay per click
Pay per click out
Pay per lead
Registration fee
Install payment
Pay per link
Lifetime remuneration
Remuneration for the duration of the communication

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This is how affiliate marketing works: online marketing basics

Affiliate marketing, also known as affiliate marketing, is one of the classic disciplines of online marketing. Amazon, the popular international trading platform, has laid the foundation for a marketing model that is used globally. The initial idea was to market their own products on web pages with the appropriate theme and pay a small commission to the operator each time they hire a client. This simple model has resulted, almost 20 years later, in a powerful marketing tool that should be an essential component of any online marketing mix..

Index
  1. The basic principle of affiliate marketing
  2. Payment models
    1. Pay per sale
    2. Pay per click
    3. Pay per click out
    4. Pay per lead
    5. Registration fee
    6. Install payment
    7. Pay per link
    8. Lifetime remuneration
    9. Remuneration for the duration of the communication
  3. Affiliate Marketing for Businesses - A Risk-Free Decision
  4. Affiliate Marketing for Publishers: Lack of Security in Planning

The basic principle of affiliate marketing

Affiliate marketing is, by definition, a marketing model based on sales and billing follows the principle of commission by mediation, in which 2 components come into play, the merchant and the affiliate.

  • The merchant or merchant (advertiser) aims to market its products or services on external web pages, for which it uses advertising media such as banners and offers a commission depending on the payment model (see below).
  • The affiliate (support or administrator of a website), makes available to the merchant his free advertising space and, therefore, the scope of his website. The affiliate acts as an interface between the merchant and potential customers by including advertising in the form of banners or so-called affiliate links in the posts.

The affiliate networks or service providers to affiliates (ASP) act as conciliators organs between affiliates and merchants. Affiliate programs (software) make technical execution and follow-up possible, thanks to which commission billing is carried out. Through affiliate links or banners the advertiser can know when a customer reaches the affiliate partner's page. If you work according to the cost model, that is, if the purchase of a product in the online store is carried out, the merchant pays the affiliate the agreed commission..

The classic form of affiliate marketing mediation is carried out through the affiliate website, but affiliate programs can also be integrated into Email Marketing campaigns (newsletters, emails) or activated on social networks.

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This is how affiliate marketing works (source: sugarrae.com)

Payment models

As mentioned above, there are a number of ways to get paid in terms of membership. Here is a list of the most common remuneration models in affiliate marketing:

Pay per sale

The pay per sale or pay per order model (payment per sale, cost per sale) is the best known in affiliate marketing. Payments take place if a customer is found . In this case, the commission is paid when a user clicks on the affiliate link or on the banner on the merchant's website, buys a product or places an order. A fixed amount or a certain amount may be paid depending on the product, although a combination of both options can also occur. As a general rule, in the case of customers who do not buy immediately, the affiliate also receives a commission. In this sense, cookies help to test the validity of the product link (30-60 days)..

Pay per click

In the pay-per-click model (pay per click), as its name suggests, the payment of remuneration is made based on the number of clicks achieved. This is a model that is being used less and less, despite the diffusion it enjoyed in the early period of affiliate marketing, mainly because of its simple technical implementation. Over time, it has shown that the return on investment (ROI) is relatively low for the merchant, as well as the prices that have to be paid for each click.

Pay per click out

In the case of the payment method per click out (pay per click out), the visitor must make at least one second click on the merchant's website. In this way, the disadvantages of the pay-per-click model decrease. A second action by the prospect will result in the commission being paid.

Pay per lead

In the pay-per-lead model, the remuneration is paid every time a customer makes contact with the advertiser , eg. For example, when filling in a contact form or requesting information material. Pay-per-lead is often used for products that require intensive advice, such as insurance or cars. Since, in general, customers do not usually sign contracts of this type immediately, another payment model would not make much sense for these products that require thought. The merchant pays the commission to the affiliate for the established contact or lead.

Registration fee

The pay per sign up or registration payment is one of the types of payment per lead (pay per lead) in which case the affiliate receives a commission when the user registers on the merchant's website.  

Install payment

Pay per install is a form of the pay per sale model. The user will pay a commission the first time a software is installed , which is often established in the toolbars of the browsers or in the free trial versions.  

Pay per link

Pay per link is often used in advertorials and sponsored posts . For example, a blogger will receive a commission when they link a merchant's product in one of their posts.

Lifetime remuneration

In the case of lifetime remuneration, the affiliate receives remuneration even after the first action of the customer. The concept of? Lifetime? refers to the period of time in which the new customer remains loyal to a company . Merchants often use this type of compensation when offering subscriptions (for example, in the case of contact portals). The affiliate is paid at the end of the subscription and each time the current contract is extended.

Remuneration for the duration of the communication

The principle of remuneration for the duration of the communication occurs in the telecommunications sector and is used, for example, by mobile telephone operators. In this regard, the affiliate receives a commission (for a specified duration) for each minute that the customer pays for each operation.

Affiliate Marketing for Businesses - A Risk-Free Decision

Affiliate marketing offers a clear advantage for merchants, and that is that it does not lead to advertising costs . In this commission model based on the successful sale, the affiliate is paid only in case they get clicks, leads or sales. In short, depending on the cost model, these are a very profitable way to attract customers and help brands become better known. Through appropriate research and accurate analysis, affiliate partners or affiliate networks that best suit individual needs can be found and losses in diffusion can also be countered through optimal targeting (for example, to through a beauty blog). Tracking each of the links allows you to measure success, which will lead to good chances for optimization.

However, when an affiliate network is not available , this non-existent infrastructure becomes a disadvantage. It is in these cases that companies must invest large amounts of money and spend time developing them, which increases marketing spending.

Affiliate Marketing for Publishers: Lack of Security in Planning

Affiliate links and banners are an additional source of income for affiliates. Thanks to merchants' advertising media, this type of marketing is relatively straightforward. To put it into practice, there is a wide range of programs with which publishers, regardless of whether they manage small websites or large discount portals, can enter the field of affiliate marketing. Affiliate links do not earn you a steady income , making them difficult to achieve financial predictability.

The affiliates always depend on the merchants. The quality of the offers that are linked plays a very important role, for example, in contracts determined by the pay per sale model. If the reader is disappointed with the content of the links or with the advertising that is done through the banners, the responsibility falls on the blogger. Another disadvantage is the lack of transparency in the calculation of commissions, since it is practically impossible for the advertiser to control the affiliate's website.


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