COMMISSION CATEGORIES
Pay Per Sale
The most common form of affiliate marketing incentive is called Pay Per Sale
(PPS).
When the visitor clicks your link and makes a purchase from the advertisers
website, you are paid a percentage of the sale. This form is very popular with
the large Internet retailers.
Advantage
You will make the most money from this type of affiliate marketing program on
items that are considered "high ticket" items, i.e., sophisticated
software like Adobe (Macromedia) Dreamweaver that retails for $899, a 10%
commission of this sale is $89, a 25% commission of this sale is $224.75.
You can see how important it is to pay attention to the amount of the
percentage. If they are only offering a 2% commission on this same $899 item you
will only earn $17.98.
Risk
You need to be aware that if the purchase is returned to the company for any
reason, you will lose your commission as well.
Pay Per Lead
Information is the oil that makes the Internet run, and this is why the Pay
Per Lead (PPL) type affiliate marketing programs is extremely popular. In this
type of program, you are paid for every inquiry for information about the
advertisers’ product or service that meets a certain criteria, i.e., the
visitor is in a particular age group or income bracket.
Industries that cater to the basic human needs such as financing, housing and
health tend to offer the most generous pay per lead programs.
Advantage
Because no purchase is involved, the chances are higher that the visitor will
be "converted" from being a website visitor to a prospective customer
when they complete the action of entering their contact information on the lead
form.
Risk
Commissions are not as generous as pay per sale affiliate programs.
Pay Per Action
In this type of affiliate marketing program, the advertiser pays you when
your referred visitor decides to download a trial version of their software or
report.
Similar to pay per lead programs, the visitor has not made a purchase; they
have simply agreed to take a closer look at what the advertiser has to offer.
As you would imagine, companies that offer electronic goods and services,
such as publishers, computer and software companies dominate this particular
market. In many cases, campaigns for pay per action are used in combination with
pay per sale.
Advantage
The "try-before-you-buy" option encourages visitors to download the
product with the understanding that it is for a specific period of time.
Risk
If the performance of the product or service fails to impress the visitor,
they will simply cancel the program rather than purchase it.
Pay Per Click
The first and most famous of all affiliate marketing programs is called Pay
Per Click. Thousands of merchants lost money when this affiliate marketing
program technology became the target of malicious hackers. The sophisticated
software programs that they developed to circumvent the tracking methods caused
this form of affiliate marketing to become unpopular.
However, the pay per click model is enjoying a rebound in use. It has been
adopted by contextual ("text") advertising companies, who are using
encrypted reporting and tracking features behind this technology to prevent
fraud.
Advantage
The easiest affiliate marketing programs to promote, with a growing number of
contextual ad providers to choose from.
Risk
Many of these contextual ad providers’ referral links use a large amount of
website page space. Commissions can be very small i.e., $.005 per click or have
extremely high payout levels, i.e. commissions only paid after 1,000 clicks.
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