The Model Of Affiliate Marketing
Affiliate marketing is one of the most effective methods to promote various types of business, products or services. Additionally, it has proved a good source of passive income for individuals looking to make money online. This form of marketing requires minimum effort both on the part of the merchant and the marketer. A detailed description of the structure of an affiliate business model will help you better understand how this online money making system works. So, read on.
Breakup of an Affiliate Business Model.
As the name implies, the business model comprises two parties. The first party is the merchant or the advertiser. The merchant is a company looking to advertise a product or service at a reasonable cost. The second party is the affiliate or marketer. The marketer endorses a product or service on behalf of the merchant. For this, he has to subscribe to the merchant company's affiliate program following which he is provided an identity number. The identity number is included in the unique URL. Merchants employ several website owners to promote their products and services. The identity number helps them identify the site from which sales have been directed.
There is no limitation on the type of product that can be promoted and sold in this type of business model. Most often it includes the sale of digital products. However, many companies also sell tangible goods such as books, clothes and home utility items.
Commissions are a major aspect of affiliate revenue. It does not involve a flat rate. The merchant company agrees to pay the marketer a certain percentage as commission if a website visitor performs any of the actions laid out in the affiliate program. This includes if a visitor clicks on an ad, visits the company website, fills out a survey or makes a purchase via banner ads placed on the affiliate site.
An affiliate can choose from a variety of compensation plans. The four primary affiliate revenue schemes are:
1. Pay-per-click (PPC): In this advertising model, the company pays the marketer every time a website visitor clicks on an advertisement.
2. Pay-per-sale (PPS): Pay-per-sale is a compensation scheme wherein a marketer is credited for every sale made via his site. It is the most popular of all.
3. Pay-per-impression (PPI): In this compensation scheme, affiliate revenue is paid if a visitor visits the company website.
4. Pay-per-lead (PPL): The company pays the marketer the agreed sum only if the customer registers at the merchant site.
It's a win-win situation.
In the affiliate model of business, the merchant and the marketer benefit from each other's actions. The revenue is shared between the two parties. The merchant profits because a marketer brings in more sales for the merchant company. It helps a business expand its customer base and also generates new leads. It proves reasonable in the long run as the merchant pays affiliate revenue only if a visitor has clicked on a link, visited the website or completed a survey.
A marketer benefits because he earns a commission for promoting another's product. He does not have to create a special product to sell. He only needs to have a website featuring affiliate links and banners. This small investment sets up a long-term source of income. Thus, it's a win-win situation for both.
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