Affiliate Marketing is a broad form of performance-based advertising in which a firm rewards one or more agents for each visitor or client brought about by the affiliate's marketing efforts. An affiliate marketer uses one or more web pages to carry out advertising, and in return, the agent receives a commission for his or her work. In order to become an affiliate, one must register with an affiliate service provider, as well as the relevant company. The content and design of the web pages must be compatible with the specific services offered by the affiliate.
Some common characteristics of affiliate marketing include the use of links that lead from the merchant's website to the affiliates' web pages; frequent referral of prospects; and the promotion of products and services by both parties. Because affiliates are often referred to as "unqualified traffic" or "spiders", their marketing efforts may often times be misinterpreted by members of the general public who do not understand the subtleties of Internet marketing. For this reason, it is important that any affiliate marketing citation needed to accurately represent the nature of the relationship that exists between the affiliate and the company being promoted.
Generally, a typical affiliate marketing program offers pay per click advertising, cost per sale advertising, or pay per lead advertising. Pay per click advertising is the most common form of affiliate marketing program used today, as it allows advertisers to directly present their products and services to the general public for a predetermined fee. For example, if a user searches for "dog collars", an advertiser can insert his or her ads into the search results, targeting only those searchers who are interested in dog collars.
The second form of affiliate marketing program commonly found online is cost per action or cost per lead, where advertisers only pay their affiliates when a visitor clicks on one of their ads. For example, if a searcher types in "how to cure stammering". He or she will be directed to an affiliate network site that offers information about stammering. If the searcher decides to follow the link, he or she will be redirected to one of the many stammering remedies available. Affiliates make money by earning a commission from sales made this way, rather than paying a fixed amount per lead or sale.
Cost per action or cost per lead is a newer form of affiliate marketing program. Unlike the traditional affiliate networks, cost per action websites are designed to track the progress of the affiliates themselves. It is calculated by how many visitors are led to a particular website, rather than by how much advertising was performed. Thus, a more relevant advertisement is placed in front of a less likely target market. By tracking visitors to a particular website, advertisers can determine which content and which advertisements result in more click-through revenue.
In order to set up and use a cost per action affiliate marketing program, the creation of a website, including web page content and an affiliate management system must be established. Once the affiliate management system is in place, all advertisers must establish their own websites and include a hyperlink to the affiliate manager's website. The hyperlink directs the browser of the user to the affiliate manager's site. In order for the affiliate program to work, there must be at least one website and a link between them. Thus, the hyperlink in the affiliate marketing advertisement must lead to a website.
After the affiliate marketing program has been set up, the advertiser's website is created. A hyperlink is added to the website that directs the user to the affiliate manager's site. The hyperlink is encoded with the website's unique URL. The URL is then included in the advertisement, so that when a user clicks on the advertisement, it will take the user to the specific website that was created by the advertiser. A description of the website is also usually included in the HTML coding of the advertisement.
Affiliate programs offer many different ways to earn commissions. There are also different types of commissions available depending upon the nature of the products and services sold by the affiliates. Some affiliate marketing programs offer a fixed commission on sales, while others offer a variable commission rate on sales. The most common type of commission offered by most programs is a percentage based on the cost of each sale.
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