What is Affiliate Marketing? – Affiliate Marketing Business Compensation Methods

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Meaning

The ritual of rewarding the efforts of marketing affiliates that bring customers or visitors to the company is commonly termed as, Affiliate-marketing. The popular examples are websites where visitors are pleased with cash/gifts to complete an offer, and for referring others to the same site. The players of the industry are retailers, publishers, and customers, and the network-intermediary between publishers/affiliate and retailer affiliate programs.

Complex modern market demands another level of players that consist of super affiliates, affiliate management group, and third-party sellers. There is a considerable overlap of internet-marketing and affiliate marketing because of the use of regular methods like e-mail marketing, search engine optimization, search engine marketing, and display-advertising. Publishing reviews of service/product is conventional method. Affiliate marketing is another type of online marketing.

Past Developments

The development of affiliate marketing has been quick since its beginning. E-commerce has made a place in the general business idea from its earlier role as a marketing-tool and in numerous cases transformed itself into a bigger business when compared to others. Retail industries, betting, and adult segments are the most dynamic contemporary sectors for affiliate marketing. Cell-phone, travel, and finance industries are most likely to see a robust growth.

Next to these come the entertainment industry, especially games, and, then industries that are connected with internet, like broadband, have a good scope. Affiliate solution providers can expect an increase in interest business to business advertisers and marketers to use affiliate marketing as an element of their synthesis.

Concepts like Interactive online communities and blogging standing on Web2.0 have positively changed the face of affiliate marketing. Novel media techniques have brought the merchants and affiliates close to each other more than ever.

Methods of Compensation

Above 75 percent of affiliate plans follow cost per sale (CPS) or sharing of revenues as a method of compensation and around 20 percent use cost per action (CPA) and the remaining fraction either use cost per mile (CPM) or cost per click (CPC). These are the methods that have dominated the practice of compensation. In developed markets, around 1 percent of conventional programs use cost per click and cost per mile.

When a publisher makes the advertisement present on a website to display it to the visitors for payment, then we call it cost per mile. And, when a visitor hits the advertiser’s website link the cost per mile turns into a pay per click method of compensation and generates more revenue. Cost per day is popular in China. The other name of affiliate marketing is “performance marketing” because of its concern with the compensation of sales employees. Generally, they are paid commissions and sometimes incentives to achieve the targets set by the company.

 

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