Types Of Affiliate Marketing

The popularity of affiliate marketing is very well realised now than earlier. This is prominent among the reasons for the high visibility of affiliate marketing programs among the ever growing number of affiliate marketers on a daily basis.

Due to latest web technology, the affiliate marketers are able to get their statistics and income figures the moment they make an affiliate sale. It is also possible now to use services like PayPal for payment and receipt processing. This has greatly reduced the time that an affiliate marketer has to wait for his payments to be realized from the merchants.

Now a days, both the affiliates and the merchants can evidently see that affiliate marketing works for both of them. The merchant views affiliate marketing as an opportunity to promote their products at a lesser cost. On the other hand, the affiliates see affiliate marketing as a trouble free way of earning profits online by doing something which they like most, and that is by publishing websites.

Just as the reputation of affiliate marketing has gone up, similarly the attitude of people has enhanced with respect to affiliate marketing. Affiliate marketing is no more regarded as a inferior method of marketing by the merchants, or as an secondary source of income by an affiliate marketer. Both merchants and affiliates regard affiliate marketing as 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 are going to 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 no websites or one page websites, and probably the easiest way for them to start making money. In this type of affiliate marketing, the merchant pays his affiliate whenever a visitor visits the merchant's site through the affiliate's reference, that is whenever someone clicks through the merchant's banner or text ads that the affiliate has put up. PPC is basically used to just divert the traffic from the affiliate's site to the merchant's site and the affiliate gets paid for this effort. The visitor he referred need not purchase anything from the merchant's site. However, typical fees for PPC affiliate programs are very 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, for commissions in PPP affiliate marketing usually comes in the range of 15% to 20% of the actual product sales. And, in the case of 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 be further classified into two popular types: pay-per-sales (PPS) and pay-per-lead (PPL).

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 commission basis, although other merchants would opt to pay a fixed fee. But no matter what the basis of the fee is, 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 somewhat different from Pay Per Sale type and is generally used by companies like finance, banking, insurance, or credit card who rely on leads for their company to grow. Under this type of affiliate marketing, the merchant pays the affiliate whenever the visitor he referred to the merchant's site fills up an application form or any similar form related to the business of the company or the visitor subscribes to their list. Compensation for this type of affiliate program is based on a fixed fee. The ad impression to conversion ratio is the highest in the case of Pay Per Lead type, because, the visitor is only required to complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, filling a survery, etc. The visitor feels more secure when he is not asked to enter his credit card details or open his wallet.

Apart from these three types of affiliate marketing, several other types of affiliate marketing exist. If the classification is based on the depth of the affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing. There is another type of affiliate marketing that pays the affiliate every time the customer he has referred purchases an item from the merchant's site.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing 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 not only paid for the direct traffic or sales that he refers to the merchant's site, but also on every traffic or sales referred by other affiliates who joined the affiliate program through his recommendation.

C) Multi Tier - Multi-tier affiliate marketing works the same way, although the affiliate gets additional commission for more number of levels of affiliates in different tiers in the affiliate network.

D) Residual Income Affiliate Marketing - In this type, the affiliate gets paid for every customer he has referred to the merchant's site. Additionally, 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 percentage of sales or based on fixed fee.

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 highly difficult 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 which is undesirable.

Every affiliate marketer has to try out various methods and decide which works best for him. He should then concentrate on those affiliate marketing methods which is suitable for his style of online business building.

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Act Now To Succeed. Read Rajagopalan's article, Benefiting From Two Tier Affiliate Programs to gain knowledge. Visit Top 100 Affiliate Marketing Programs.

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