Thursday, 21 June 2012

Affiliate Marketing Compensation Methods

Affiliate marketing is an area that not many people are familiar with. What it is, is a lucrative business that many individuals are taking on as a main source of income or as a side business. Finding the right product to promote is incredibly necessary for any kind of success as well as profits with
affiliate marketing ventures.

The payment methods in affiliate marketing is quite the attraction for many online entrepreneurs because the sum of the methods of payment used by various affiliates differ in compensation structure, payout thresholds, and commission percentages. Each method has its own distinct advantages and disadvantages and online marketers weigh each of them to find a suitable vendor affiliate with a payment method that they really like and feel confident about.

Over 80 percent of most all online affiliate programs use the cost per sale or the revenue share method as their compensation platform. This involves distributing the payout based on the profit made from each sale or a portion of the sale. The other 19 percent of affiliates use the cost per action method of which payouts are distributed based on the customer’s actions. The remaining 1 percent uses methods other than CSP or CPA to generate their payment structure. There are several successful payout methods that affiliate marketers use to manage their business.

Click Per Impression (CPM)

The CPM type of payout is probably the most popular of all in the affiliate marketing payment methods. All that is required for payout to the affiliate is that the publisher loads the advertising onto his website, allowing his visitors to view it in order to get paid. CPM is used as the primary method of compensation by Google for their products including Adsense and Adwords. Although this type of compensation is not as popular or as lucrative as it was due to fraudulent activity, it is still a system that a lot of advertisers use and still many bloggers prefer.

Pay-Per-Click (PPC or CPC)

CPC differs in CPM because in order for the affiliate to be compensate, the visitor must go one step more and actually click on the link and visit the advertiser’s website for the affiliate to be paid. In this type of program, the publisher is concerned about drawing traffic to the site and not whether or not the customer purchases. The affiliate has already made his commission once the customer clicks on the link.

Click Per Action (CPA)

The method of compensation via Click Per Action requires the customer to click on the link and make a purchase before the affiliate will be compensated. Since marketing the products and ensuring the sale of items leans heavily on the advertiser, this type of compensation method is not as common but is certainly more lucrative than the others because of the additional steps to customer conversion and the skills necessary to motivate customers and promote the site.

So once all these methods are broken down, it’s not so scary right? Whether you choose CPM, PPC/CPC or CPA, the number one thing to remember is that you have to pick an affiliate and product that is right for you. If you don’t have confidence or passion about what you’re marketing, you won’t succeed at all.


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