The benefits of affiliate marketing are more pronounced today than before. This is one of the main reasons for the immense popularity of affiliate marketing programs among thousands of internet marketers.
The latest web technology has enabled affiliate marketers to get their statistics and income figures when they make an affiliate sale. It is now possible to use companies like PayPal for payment and receipt processing. This has highly curtailed when an affiliate marketer needs to wait for his payments to be collected from the merchants.
Both the affiliates and the merchants have now realized that affiliate marketing is effective for both of them. The merchants perceive affiliate marketing as an opportunity to advertise their products at a much lesser cost. On the other hand, the affiliates see affiliate marketing as an uncomplicated way of earning profits online by doing something they like most, which is web publishing.
Just as affiliate marketing’s popularity has gone into overdrive, similarly, people’s outlook has changed for the better about affiliate marketing. Affiliate marketing is no longer considered a secondary marketing method by the merchants or an additional income source by an affiliate marketer. For merchants and affiliates alike, affiliate marketing is now considered a main source of profits and revenues.
We now need to analyze what type of affiliate marketing will work best for any person? Are there any differences in affiliate marketing programs? Are the paybacks from these programs the same? Which are those affiliate marketing programs that work better than the others?
There are actually varieties of affiliate marketing, and the types will depend on how you will classify them. The primary classification of affiliate marketing programs falls under two categories: pay-per-click (PPC) and pay-per-performance (PPP).
1. Pay Per Click (PPC) — PPC is the most popular type of affiliate marketing for affiliates with small websites and probably the easiest way for them to earn money. In this affiliate marketing type, the merchant pays his affiliate whenever a visitor is referred to his site, that is whenever someone clicks through the merchant’s banner or text ads. The affiliate gets paid a certain amount even if the visitor he referred does not purchase anything from the merchant’s site. However, typical fees for PPC affiliate programs are small, usually not exceeding a dollar for every click.
2. Pay Per Performance (PPP) — PPP affiliate marketing is well-liked among merchants and is also the most rewarding type for the affiliates. In this type of affiliate program, the merchant pays the affiliate only when his referral converts into an action — that is whenever the visitor he has referred actually buys something from the merchant’s site or when the visitor becomes a lead. This means that the merchant saves a lot on his own direct marketing efforts. On the other hand, this type of affiliate marketing becomes financially most rewarding for the dedicated affiliate. Commissions in PPP affiliate marketing usually come in 15% to 20% of the actual product sales. In e-products or e-goods, the affiliate commission can go as high as 70–75% of the sale price.
Pay-per-performance affiliate marketing can further be classified into two types: pay-per-sales (PPS) and pay-per-lead (PPL). Both these are highly popular.
a) Pay Per Sale (PPS). In a pay-per-sale type of affiliate marketing, the merchants pay the affiliate a certain fee whenever the visitor he has referred to the merchant’s site actually buys something from the merchant’s site. Affiliates are often paid on a commission basis, although other merchants would opt to pay a fixed fee. No matter the fee’s basis, it is generally higher than the fee paid to affiliates in a pay-per-click affiliate program.
b) Pay Per Lead (PPL) — The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant’s site fills up an application form or any similar form related to its business. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate the PPS type’s fixed fee. Generally, the sales conversion rate is the highest in PPL because the visitor is not required to purchase anything but only complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, etc.
Aside from these three specific types of affiliate marketing, a lot of other affiliate marketing types exist. If the classification is based on the affiliate network’s depth, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing. Another type of affiliate marketing pays the affiliate each time the customer he has referred purchases something from the merchant’s site.
Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing
These affiliate marketing types are based on the different levels or tiers in the affiliate network by which payments are made.
A) Single Tier — In a single-tier affiliate marketing program, the affiliates are only paid based on the direct sales or traffic he has referred to the merchant. All the previously mentioned affiliate marketing types (i.e., PPS, PPL, and PPC) fall under the single-tier classification.
B) Two Tier — In two-tier affiliate marketing programs, the affiliates are paid for the direct traffic or sales that he brings to the merchant’s site and on every traffic or sales referred by other affiliates who joined as sub-affiliate of the above affiliate marketer.
C) Multi-Tier — Multi-tier affiliate marketing works the same way, although the affiliate gets additional commission for more levels of affiliates in different tiers in the affiliate network.
D) Residual Income Affiliate Marketing — In this type, apart from the affiliate getting paid for every customer he has referred to the merchant’s site, the affiliate is also paid whenever the customer he has referred goes back to the merchant’s site and purchases another product. Commission for such type of affiliate marketing is based on either sales or based on fixed fees.
Every affiliate marketer finds that these different affiliate marketing methods work differently for each of them. For instance, multi-tier affiliate marketing, also called Multi-Level Marketing (MLM), is a complicated type of internet marketing, and it does not work for everyone. As a matter of fact, many legitimate marketers consider MLM as illegal or something undesirable.
An affiliate marketer has to try out different methods and decide which will work best for them. He/she should then concentrate on those affiliate marketing methods suitable for his/her internet marketing style.
Contact GrowSmart for all your Digital Marketing needs.