Imagine if you were paid for word of mouth
marketing, earning a commission every time you recommend a product to a friend.
Affiliate marketing is just that. By
placing advertisements on your websites for ‘affiliate’ companies, you earn a
commission fee when a visitor to your site clicks on the ad and/or makes a
purchase.
Aside from earning you a little extra cash,
having additional links to relevant sites in the form of clickable ads
increases the value of your site. Small businesses could approach each other
and place advertising links, agreeing on rates, terms and conditions of
commissions. This is a great way to support other small businesses, and by
having affiliate links to your site hosted by others you can effortlessly drive
traffic to your site.
Also helping your search engine ranking by
providing you with more relevant links, affiliate marketing helps to promote
your site and business in more ways than one.
Different Methods of Affiliate Marketing
Affiliate marketing as a term refers to the
concept of advertising affiliated companies through your own product, and there
are several ways of earning income through affiliate marketing. The option that
is right for you will depend on the needs of your business.
Cost Per Sale
Cost per sale (CPS) is by far the most
popular method of affiliate marketing, with 80% of affiliates employing this
form of payment. With CPS, if you were hosting an affiliate’s advertisement you
would be paid when the person who clicked on the ad from your site actually
bought something. If they clicked on the ad and just browsed the site without
converting to a sale, you wouldn’t be compensated. Rates for commission of CPS
generally go up to about 15% of the sale generated.
Amazon.com has been running its affiliate
program Associates since 1996 and is one of the most popular CPS schemes.
Participation is free, payments are made monthly and you can choose what books,
media or products you want advertised on your website. If you run a website
that promotes your life coaching services and hosts your self-improvement blog,
you could have books and audio programs about motivation advertised from
Amazon.
If you’re the advertiser, cost per sale is
the most secure form of affiliate marketing for the advertiser as you only have
to fork out cash once an actual sale is made.
Cost Per Action
Nineteen percent of affiliate marketers use
Cost Per Action. With this method, the advertiser pays the host for every
action resulting from the click including a purchase, filling in a form, or
subscribing to an email newsletter. eBay employs the CPA method in an affiliate
program called AdContext.
Cost Per Click
The most lucrative for the host and also
the rarest form of affiliate marketing, cost per click rewards the host website
for every click regardless of whether a sale is made. This method is not
recommended for advertisers as you will have to pay hosts even when you have
not earned income from the click.
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