If you own a webpage and find yourself needing a little bit more cash to make ends meet, you’ve probably heard the term affiliate program, but you might not understand the definition of affiliate programs or how you might go about choosing one. If so, this article is for you. We briefly define affiliate marketing and the different types of affiliate marketing, then go on to give you some tips to choose the affiliate program that is right for you, with the aim of giving you a solid definition of affiliate programs that you can use for your business in the future.
It’s a lot of ground to cover, so let’s just jump right into it.
What is an affiliate program?
First off, let’s look at the most basic definition of affiliate programs. An affiliate program is some kind of automated marketing program that allows you, the webmaster, to place an advertiser’s banner ad on your website. In effect, it allows you to ‘affiliate’ with an advertiser, hence the name. Webmasters who participate in affiliate programs will receive a commission when a customer clicks on the affiliate link if, depending on the type of affiliate program, they also perform the desired action. This way, the advertiser gets more revenue as people who visit your website click on their links, and you also receive a portion of the revenue gained as commission.
The three types of affiliate programs
There are three different types of affiliate programs, and while working on our definition of affiliate programs, it’s important to consider each one. The first and most basic type of affiliate program is a pay-per-click (PPC) program, where you, the webmaster, receive an agreed upon rate for each click made on the advertiser’s banner, whether or not a sale is made. On a single website (not a search engine) the price for each click is fixed and agreed upon in advance. These sort of programs usually have a higher conversion rate (the percentage of visitors who click on the ad and make the desired action), but conversely, pay less for each click than other forms of affiliate marketing.
The second type of affiliate program is a pay-per-sale program, where the advertiser pays the affiliate only when a visitor clicks on the link and makes a purchase, in a manner that is agreed upon in the affiliate agreement. This tends to net the affiliate a much higher commission than a pay-per-click program, but since it relies on the people clicking on the link and making a sale, it tends to have a much lower conversion rate (Really, how many times have you clicked on an ad online and then bought whatever product they were selling?)
To round out our definition of affiliate programs is the third type of program, the pay-per-lead program. This is somewhat like the middle ground between pay-per-click and pay-per-sale programs, where the link takes the visitor to a page where they are asked to perform an action, such as complete a survey or sign up for a newsletter or download a file or software. The affiliate is paid a commission each time a visitor completes the required action, which could be as simple as filling out a survey depending on the program’s terms. Because it doesn’t necessarily require a purchase, pay-per-lead programs can have a higher conversion rate than pay-per-sale programs, but not as high as pay-per-click programs.
How to choose an affiliate program
So now that you have a definition of affiliate programs under your belt, how do you go about choosing one? Like with all things, go over the terms carefully. Look at the commission rate to make sure it’s right for you (some websites recommend not participating in any affiliate program with a commission of less than 60% for electronic goods, less than $1 for surveys or clicks, or less than $40 for physical goods). Now look at who the competitors of the advertiser you’re affiliating with are.
Remember that your success in this venture is directly tied to their success, so you actually have to care about the product that you’re promoting on your website. And while it may seem tempting to affiliate with multiple advertisers selling multiple products, it’s probably best to keep your advertising focused and stick with a few products instead of many. This makes you more likely to actually earn commissions for the products you are selling, and also makes your website look a lot less cluttered than some of the sites out there.
Affiliate programs may help you make a little extra money to keep your business running, and should be something to consider if you’re working on running a website, but need to be something you go into with both eyes open. This article gave you a definition of affiliate programs, but should definitely not be the last place that you look. Do your homework, search around, and find the affiliate program that works for you.