Affiliate marketing is a unique form of online performance-based contracting, where a firm rewards one or more affiliates either for each visitor or client brought about by the affiliate's marketing efforts on their behalf. This is done through a point-and-click method. In affiliate marketing one agrees to promote and advertise the products and services of another company for a commission. The actual product or service being sold is referred to as the Target Market. The affiliates are rewarded for referring visitors, customers and clients to the companies.
Many small and medium businesses are now adopting affiliate marketing as a way to expand their business and increase revenues. For these businesses, revenue is not an immediate concern but rather an imagined future one. They calculate how many visitors they can realistically attract and then concentrate their time and resources in drawing them in. If they do not realize that eventually those visitors will turn into customers, there will be no money made. Thus, affiliate marketing is essentially a passive income generating system for these businesses.
But revenue sharing in affiliate marketing is the very heart and soul of this whole process. Let me explain. If you are an affiliate marketing network broker (which I highly recommend) you receive a commission every time one of your members' purchases a product through your website.
Now, there are two types of revenue sharing: Cost Per Action (CPA) and Cost Per Sale (CPS). With cost per action (CPA), the publisher pays you a commission when a visitor (a lead) performs some type of action, such as a purchase or inquiry. The advertiser only pays you if the visitor performs a specific action or is directed to their website. The benefits to this type of revenue arrangement are obvious. With a single CPA sale, the publisher has paid you, the affiliate, roughly $3.00, whereas with multiple CPA sales, the advertiser may pay you hundreds or thousands of dollars per sale.
With cost per sale revenue sharing, the affiliate does not receive any commission unless you sell a specific amount of product or service. The advertisers only pay the publisher if the visitor performs a specific action or is directed to their website. The benefits to this type of revenue sharing are obvious. With a single CPA sale, the publisher gets paid, while with multiple CPA sales, the advertiser may pay you hundreds or thousands of dollars per sale.
As you can see, affiliate marketing differs greatly from traditional network marketing and other similar revenue sharing arrangements. Traditional revenue sharing arrangements are based upon the advertiser paying you a lump sum amount for each sale you make, with the remaining money going to you as the affiliate. With affiliate programs, the advertiser and you both split the profits, with the advertiser paying you per sale and you are paying them per visitor. The advertiser only pays you if they get a lead or sale, while you are only paid if you provide value to the advertisers.
Affiliate programs are not limited to just advertising networks. They also come in the form of software that you install on your computer that allows you to collect data on visitors to your site. Through this data, affiliates are able to determine which advertisements will draw in customers, and which will not. By combining the data from affiliate marketing with the advertising networks, advertisers can come up with more effective advertisements to bring in more customers.
This type of advertising is often used by small businesses who are just starting out. Because the advertiser only pays you if you bring them a sale, there is no cost associated with hiring employees, paying for printing or paper ads, or developing a website and getting traffic. Affiliates do not have to worry about developing a product, collecting customers, or providing support for either the advertisers or merchants. Affiliate marketing brings entrepreneurs together who otherwise may never have gotten to know each other.
Learn how to create a six-figure per year income working from home in your spare time
DISCOVER: A Simple, Scalable, and Sustainable method for creating PASSIVE income online that HUNDREDS of people have followed to help them replace their 9 to 5 jobs and live a lifestyle of time money FREEDOM since 2017