Today we simply answer the question what is affiliate marketing? I am not going to promote any specific product, network or vendor. Just answer the question about what it is and how it works. Affiliate marketing is simply promoting or selling a product for profit, it’s that simple. A vendor creates a product and pays someone to promote it for them. It is the same as hiring a sales force.
Affiliate Links
When signing up to be an affiliate with a vender, network or product there may be an approval process. Once approved the vendor will give you an affiliate link and or number. Affiliate links contain unique identifiers that let the vendor know which affiliate sent customers to that link. Most of the time that link goes to a sales or promotion page. Once a customer takes an action on that page you get paid. There are three main ways to get paid in affiliate marketing so let review those.
Ways to get paid with Affiliate Marketing
CPA – Commission Per Action – When you’re paid for someone (a customer or lead) to take such as filling in a form or making a phone call.
CPL – Commission Per Lead – When you are paid a set amount for each new lead/email sign up you generate. on your link.
CPS – Commission Per Sale – When you earn a commission for every sale you make. This is normally a percent and can be any range for 1%-99%.
Terms & Statistic
Affiliate marketing and online marketing have several terms and stats that you should get to know. I have listed one of them below.
EPC – Earnings Per Click – Calculated by taking the total earnings you have generated over a period, and then dividing that by the number of clicks you have generated for that same period.• Example – 100 Clicks sent / $200 earned = $2 per click
Conversion Rate – Calculated by dividing the number of qualified actions (Action/Sale/Lead) by the clicks on the affiliate link or target action.
Commission Rate – Percent you earn form each sale if you ten dollars on a hundred dollar sale that’s a 10% commission.
Grav or Pulse Score – Approximate indication of how many affiliates have successfully promoted a product and a sign of how well it converts. The higher the number that better however do your research it could be an undiscovered product or over 100
Initial $ Sale – Average dollar amount you would receive from each initial sale
Avg Re-bill Total – Average dollar amount you would receive in recurring payments after the initial sales.
Avg $ Sales –Average dollar amount you would receive form both the initial sale and the re-bill sales.
Avg % Sales – Initial percent commission for sales you earn form each sale
Avg % Re-bill – Re-bill percent commission for recurring payments. How much you receive each month as long as that customer remains a member and pays their subscription.
Visitor Value – Is the average return for sending a visitor to the sales page
Refund Rate – Percentage of customers that have requested a refund after purchase. (the lower the better)
Conclusion
When looking to become an affiliate with a specific product, network or service do your research and check out our Checklist on how to choose a network here.
