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Affiliate Network – Various Compensation Plans

By Brian Lett

The internet has come a long way since its early days. This has lead to more individuals turning to the internet to generate additional revenue streams. Many of these new internet marketers have discovered that an affiliate network is the place for an individual with no products or services of their own to sell. Basically, an affiliate network is an online venue who brings advertisers into contact with internet marketers, also known as affiliates, to market their products in exchange for a commission. Such an exchange is common what is referred to as affiliate marketing.

Affiliate marketing presents a win-win situation for both advertisers and affiliates. In the case of the affiliate, they do not have the headache of trying to develop a new product or service which is marketable to a particular niche. In the case of the advertiser, they do not have to search for their next buyer. Furthermore, affiliates are only paid once they perform a particular action. The affiliate network comes in and accepts payments from buyers, tracks who is owed what for each sale, and makes sure that payments are made in a timely fashion. One thing that you should be aware of, is that there are different compensation structures when is comes to affiliate programs. The structure will dictate how you as an affiliate will be paid.

Hereafter, we will discuss four of the most widely utilized compensation methods of affiliate marketing:

1. Cost Per Sale or CPS: This is an agreement by which an affiliate drives traffic to a unique link which is provided to them by the advertiser or affiliate network. Essentially, when a customer purchase on item from an affiliate’s unique link, the affiliate earns a percentage of the commission of the sale. The term “Cost Per Sale” refers to what it cost the advertiser for each sale which is made by an affiliate. Therefore, if an affiliate were to sell an item which generated $50 per sale, and their agreed upon commission was $30 per sale, the “Cost Per Sale” would be $30.

2. Cost Per Action or CPA: Cost Per Action is a little bit more flexible in that the actual “action” which is compensated is determined by the advertiser. Essentially, all three of the other forms of affiliate compensation can fit within this definition. For example, if the “action” to be completed is a sale, then this would fit the definition of “Cost Per Sale”. Thus, CPA gives the advertiser and affiliate the flexibility to determine and agree upon what constitutes an action.

3. Cost Per Mille or CPM: This is actually used quite frequently by affiliate networks. Basically, for every 1000 visitors sent to an advertiser’s website by an affiliate, the affiliate is compensated in a predetermined amount. Many larger advertisers utilize this method.

4. Pay Per Click or PPC: Usually when you hear of PPC, someone is referring to the programs offered by the search engines. However, did you know that there are also PPC programs offered by an affiliate network? How it works is that an affiliate network will host websites and blogs which belong to a myriad of niche markets. The advertiser then posts their ads on websites and blogs which fit their niche market, and pay a fee each time a visitor clicks on their link.

There you have it. The four most common affiliate network structures. Nonetheless, I must inform you that while affiliate programs can be very lucrative, you have to approach them in the right manner. Do not simply throw traffic at your unique link and hope for sales. The truth is that very few buyers make a sale on their first contact with your website. Thus, it is important to provide your visitors with an incentive to provide you with their email address, and build your customer list. Thereafter, you can market to your growing customer list for years to come.

Before joining an Affiliate Network, you should determine the compensation structure. The reality is that a number of Affiliate Programs better lend themselves to a particular structure. This article covered the main four. Do not forget to check us out at SOSComplete.com

categories: affiliate network,affiliate programs,make money online,online,business,work,business,money,cash,jobs,careers,finance,e-commerce,entrepreneurs

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Article Citation
MLA Style Citation:
Lett, Brian "Affiliate Network – Various Compensation Plans." Affiliate Network – Various Compensation Plans. 3 Jul. 2010. uberarticles.com. 3 Feb 2016 <http://uberarticles.com/business/affiliate-network-four-main-structures/>.

APA Style Citation:
Lett, B (2010, July 3). Affiliate Network – Various Compensation Plans. Retrieved February 3, 2016, from http://uberarticles.com/business/affiliate-network-four-main-structures/

Chicago Style Citation:
Lett, Brian "Affiliate Network – Various Compensation Plans" uberarticles.com. http://uberarticles.com/business/affiliate-network-four-main-structures/


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