What Is Affiliate Marketing? The Cash Machine Of The Online World?
The basic idea is that companies join forces in the struggle for customers, so enter into a partner program. This idea was not first born with the online world. The referral of customers in a complementary context of the service offering or their own customers – against a kind of commission – to recommend another provider as a tip is certainly as old as doing business itself.
With the technology of the Internet, the concrete possibilities of partnership support in the sales efforts have multiplied continuously. The characteristics of what is commonly described as affiliate marketing are correspondingly complex. If you want to realize what the benefits and advantages of Affiliate Marketing are, first of all the perspectives have to be specified: view of the merchant (also called provider or advertiser) or view of the affiliate also called partner or publisher (Evergreen Wealth Formula 2.0 review).
Affiliate Marketing – Definition
It is in affiliate marketing to a business partnership in which the affiliate – and publishers – a company, the Merchant, puts on his sites on the Internet communications space available. The publisher directs his contacts to the services of the provider and receives a provisioning for it. There are many variants of the affiliate system. These differ depending on
- Affiliate services, from easy linking to order acceptance.
- Used tools and technology, from a direct link to the dissemination of digital information.
- Own core services of the affiliate, from pure information to the marketing of own products.
- Reference for the design of the provisioning, from the mere visit of the site to sales.
This is how Affiliate Marketing works
At the core, the process of affiliate marketing is always the same. Based on the agreement between merchant and affiliate and using an affiliate system, the affiliate advertises products of another company. If a visitor to the Affiliate’s website becomes aware of the merchant’s performance and uses the affiliate system, eg by clicking on a corresponding link, he will be able to access the Merchant’s specific offer.
This information is tracked via the affiliate system (Evergreen Wealth Formula 2.0 review) and billed between the affiliate partners when the internet visitor has been purchased in accordance with the agreed regulation. Probably the most extensive affiliate program comes from Amazon. Here, affiliates receive differentiated commissions according to product category. For example, commissions amount to about 3% of computer sales or 5% of footwear sales. The earnings of the affiliate are not limited to the advertised product, but to the entire shopping cart of the customer forwarded by the affiliate. In addition, the mediation generated via the link acts in terms of time. It is enough if the customer places the purchased product in his shopping cart within 24 hours and actually orders it within 89 days.
Commission models in affiliate marketing
In Affiliate Marketing, different approaches to provisioning or condition models can be observed in practice. In essence, the question arises as to the distinction between the models as to the point at which contact is to be made by the customer. The most widely used models are pay-per-sale, pay-per-lead and lifetime compensation. In classic online banner or display advertising, individual clicks are often billed. The Pay-per-Click method, which is also widely used in display advertising, sets a fixed commission for each individual click. Similar to the pay-per-click-out, where explicitly the achievement of the linked side of the merchant is rewarded. For both models, it is not considered whether a user subsequently makes a purchase or not. Theoretically, costs are incurred for the merchant, without any turnover.
With the pay-per-view model, the mere insertion of an advertisement is billed. Compensation is usually based on the thousand-contact price. So a fixed amount is paid for every thousand impressions. In the case of pay-per-print-out, the printing, eg of a coupon, and similar to the pay-per-install, the installation of a software is rewarded. In the pay-per-sale approach, the affiliate receives a commission if the redirected user actually makes a purchase. The commission can be calculated on a per purchase absolute or relative basis of sales. The advantage from the point of view of the merchant is obviously that only then a commission is payable, even if sales are achieved. In the pay-per-lead process, the payment of the commission depends on the origin of the contact between the customer and the offering company. Compared to the pay-per-sale approach, the pay-per-lead method is particularly
suitable if an acquisition online is basically not possible, such as in consulting or agency business. Very similar is the pay-per-sign-up, in which the customer has made an explicit declaration on the merchant’s side for provisioning. With the Lifetime remuneration, the affiliate receives as long as a commission, how the mediated customer generates the merchant turnover. This is useful, for example, for rental solutions of software products for the customer. As long as the customer continues to lease or lease the service, the affiliate receives a pro rata commission. Very similar, although typically a special case of telecommunications, is the airtime compensation . Here, for example, the commission refers to each minute of customer call to be paid. In both variants, the merchant only pays, even if corresponding sales face, and for the affiliate, it is particularly attractive if the customer longer acquires the service.