Affiliate Marketing Terminologies
There are many terminologies we come across while understanding Affiliate Marketing. It is necessary to understand those terminologies. Here we are discussing on Affiliate marketing terminologies. Below are few terminologies that should be familiar with while working on Affiliate Marketing.
Advertiser/Merchant – The advertiser is the company that produces the products or the services that you are going to promote. The advertiser is also called as the Merchant.
Affiliate – The affiliate is the person who promotes advertiser’s services and products and will receive commission on sales of the product. For example if Suresh is a blog owner and he promotes Amazon books, then Suresh is the affiliate, book is the product, Amazon is the advertiser.
Affiliate Agreement – This is the agreement that is made between the affiliate and the advertiser when they enter into an affiliate relationship. It contains details of rules, roles, legalities and responsibilities for the relationship.
Affiliate Link – An affiliate link is the link which is provided by advertiser (or affiliate network) to the affiliate. This link has a unique tracking code specifically for the affiliate so that the merchant can keep track of the sales that the affiliate is generating. If you are the affiliate then advertiser will provide you a unique link. By using this unique code advertiser will track visitors who purchased products in their sites through affiliate site.
Affiliate Manager – Affiliate manager is the person who manages affiliate program for the advertiser. He recruits affiliates and ensures that their promotional methods are above board and increase affiliate sales. The affiliate manager is also the connection between the affiliate and the advertiser.
Affiliate Network – The Affiliate network is a third party, manages the affiliate program for the advertiser. Networks provide technology for tracking the efforts of the affiliates. They also ensure that there is proper tracking of the sales, prompt payment of commission to affiliates. It also help the merchant to meet potential affiliates for promotion their services and products. Amazon Affiliate Program is one of the example of an affiliate network.
Affiliate Tracking – As we mentioned above “affiliate link”, there is a unique code that is provided to the affiliate. This code helps in tracking the traffic that has been sent to the advertiser. An example of affiliate tracking is – advertiser.com/?ID=AFFILIATEUNIQUEID.
Banner Ad – A banner ad is a graphical advertisement that the affiliate puts on his website for the advertiser’s promotion.
Click Through – When visitor clicks on affiliate link ,he has been redirected to advertiser’s site then click through occurs.
Click Through Rate – It is also known as CTR, this is a metric that compares number of times the affiliate link has been clicked to the number of times it has been viewed. The result is displayed in the form of percentage. For example, if the banner ad on your website has been viewed 100 times and has been clicked once, then you will divide 1 by 100 and multiply it again by 100. This will give you a result of 1%.
Commission – Commission is the money that the advertiser pays to the affiliate. Money that advertiser has to pay to affiliate is predefined in affiliate agreement.
Conversion – When a visitor visits the website takes action, such as buying a service or product, signs up for email or fills up a form, then he is converted. The conversion of potential customer to a buyer complete.
Conversion Rate – It is number of times the affiliate link has generated conversion to the number of times the affiliate link has been viewed and displayed as percentage is conversion rate. The method of calculation of conversion rate is same as CTR.
Cookies – When an individual visits affiliate website a text file has been sent from the website to the web browser of the visitor. This is used for assigning an ID to the visitor who has clicked on the affiliate link to reach the advertiser’s website for a specific period. If the visitor returns to the website within the specified period, then the affiliate gets credited with a sale. Example, Suresh visits your website and clicks the affiliate link. Cookie is dropped to his web browser. He returns to the advertiser’s website again before the cookie expires. This ensures that you receive credit and commission for the sale.
CPC – CPC is cost per click. This is the money that is paid for generating a click by a visitor on an affiliate link. For example, you have spent Rs.200/- on an advertisement. The advertisement gets 100 clicks. Therefore, your CPC is Rs.0.50. The calculation formula is number of clicks generated divided by the cost of the advertisement.
Disclosure – A disclosure is a page that the affiliate has on his website to make visitors aware of the compensation that you are paid for recommending products or services that you are endorsing for purchase. This is mandatory for affiliate marketing.
Email Link – This is an email advertisement sending affiliate link sent to users so that they can utilize it in their email marketing.
Earnings Per Click (EPC) – Earnings that affiliate gets on every click of affiliate link. EPC or the earnings per click is calculated by dividing the total amount received from the affiliate link by the total number of clicks.
Independent Affiliate Program – This term refers to advertisers who run independent affiliate programs and do not depend on affiliate networks.
Niche – Niche is nothing but topic.If you have a website for dogs, then your niche is dogs.
Pay Per Lead – Also known as PPL, this is the process of paying a commission to the affiliate on generation of a lead. It can be in the form of a quote requested by a visitor, filling up of a form or anything. These are the things the advertiser has identified as a lead in the agreement.
Pay Per Click – PPC, as this is known is a program in which the advertiser pays a commission to the affiliate when a visitors clicks on the affiliate link that leads to the merchant’s site. The commission is paid whether the lead results in a sale or not.
Pay Per Sale – This is an affiliate program where the affiliate is paid on the basis of the total number of sales made when visitors click on the affiliate link. For example, Suresh visits your website and clicks on the affiliate link that takes him to the advertiser’s link. He makes a purchase from the advertiser. A sale has been made. This results in a commission for you.
Recurring Commissions – The affiliate is paid a commission of the initial signature of a visitor. He continues to receive commissions as long as the visitor is using the service and paying for it. Therefore, if you refer a visitor Suresh to a website and he signs up for the services and pays for them, you are paid a commission. If Suresh continues to buy the services, then the commission you get is Recurring Commission.
Residual Earnings or Lifetime Commissions – Many affiliates are receiving lifetime commissions when they sign up for such programs. In this type of program, the affiliate is credited with lifetime sales when they refer any new visitor to the merchant’s website. The initial referral has been made by the affiliate and he continues to get the commissions.
These are Affiliate Marketing Terminologies which are commonly used while working on affiliate marketing.