Affiliate Marketing Pt 3. Different Types of Affiliate Marketing

Affiliate marketing programs have become very popular today and there are many different types of programmes out there, this gives you, the affiliate a great deal of choice in direction. Why are they now so popular? You will find that there are a number of reasons. The most probable reason, however, is possibly the fact that the benefits of affiliate marketing have become much clearer to many people who are looking at ways of earning money online.

In today’s economy, both merchants and affiliates have found that affiliate marketing can be very beneficial for both of them. For the merchant, affiliate marketing offers them the chance to advertise their products at a much lower cost. On the other hand, for the affiliate, marketing the products of merchants has become an easy way of earning profits online by doing what they like most, and that is being creative while working from home.

Over the past few years, the popularity of affiliate marketing has taken on a life of its own, and also, people’s outlook about it has changed a great deal. Affiliate marketing is no longer considered as an alternative method for a merchant to advertise his or her products, or as a source of additional income for the affiliates. Merchants and affiliates alike now consider affiliate marketing as a main source of profit and revenue.

The question which should now be on your mind is, what type of affiliate marketing is going to work best for me? Are all affiliate marketing programs the same? Are the benefits the same? Or are there affiliate marketing programs that work better than the others?

There are a number of different types and or classes of affiliate marketing for you to consider, and the number really depends on how we classify them. The most basic affiliate marketing programs, however, fall under two categories: these are, pay-per-click (PPC), and pay-per-performance (PPP).

Pay Per Click (PPC)

PPC is probably the most popular type of affiliate marketing for those affiliates who have small websites, and is most likely the easiest way for them to earn money. With this affiliate marketing type, the merchant will pay the affiliate whenever a visitor is referred to his site, and then clicks on any of the merchants links, banners or text ads. The affiliate then gets paid a certain amount, whether the visitor he referred makes a purchase or not from the merchant’s site. However, typical fees for PPC affiliate programs are quite small, these usually wont exceed a dollar for every click. So with this method you really do require a great deal of targeted traffic.

Pay Per Performance (PPP)

PPP affiliate marketing has to be one of the most popular merchant programmes and is also the most lucrative type for the affiliates. With this type of affiliate program, the merchant will only pay the affiliate when his referral translates into an action, that is, whenever the visitor he has referred actually makes a purchase from the merchant’s site or when that visitor becomes a lead. This equates to a great saving for the merchant. This type therefore, becomes the most lucrative type for the dedicated and hard working affiliate, commissions in PPP affiliate marketing usually come in at around 15% to 20% of the actual product sales.

Pay-per-performance affiliate marketing can also be classified into two other popular types: pay-per-sales (PPS) and pay-per-lead (PPL).

Pay Per Sale (PPS)

With the pay-per-sale type of affiliate marketing, the merchant will pay the affiliate a small fee whenever the visitor he or she has referred to the merchant’s site makes a purchase from the site. Affiliates are very often paid on a commission basis, however some merchants opt for paying a fixed fee. No matter what type of fee is paid, it is usually always higher than the fee paid to affiliates using a pay-per-click affiliate program.

Pay Per Lead (PPL)

The pay-per-lead type of affiliate marketing is just a variation of the PPS type, this type is often used by insurance and finance companies and companies who rely on leads for their company to grow. Using this type of affiliate marketing, the affiliate will get paid whenever the visitor he or she referred to the merchant’s site completes an application form or a similar form related to the business of the company. The payment structure for this type of affiliate marketing is based on a fixed rate which is approximate to that of the fixed fee in the PPS type.

Apart from these specific types of affiliate marketing, there are still many other affiliate marketing types in existence. If the classification is based on the depth of the affiliate network, we can classify it as single-tier, two-tier, and multi-tier affiliate marketing. There is also another type of affiliate marketing which pays the affiliate each time the customer he has referred makes a purchase from the merchant’s site.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on different levels or tiers in an affiliate network by which payments are made. In a single-tier affiliate marketing program, the affiliates are only paid based on the direct sales or traffic he or she has referred to the merchant. All the affiliate marketing types I have previously mentioned (i.e. PPS, PPL, and PPC) fall under the single-tier classification.

In two-tier affiliate marketing programs, the affiliate is not only paid for the direct traffic or sales that he or she has referred to the merchant’s site, but also on all traffic and or sales referred by the other affiliates who joined the affiliate program through his or her recommendation. Multi-tier affiliate marketing works the same way, although the affiliate gets additional commission for a wider number of affiliates in different tiers in the affiliate network.

Residual Income Affiliate Marketing

With residual income affiliate marketing, the affiliate will get paid, not only once for every customer he or she has referred to the merchant’s site. The affiliate will also be paid whenever the customer he or she has referred returns to the site and purchase another product. Payment for this type of affiliate marketing is based on either sales percentage commission or fixed fee basis.

The different affiliate marketing types will really work differently for merchants and affiliates alike, and each of them will usually have their own list of benefits. Which type of affiliate marketing is going to work best for you? I really cant answer that for you. It is for you to choose which type of affiliate marketing program will suit your needs and characteristics best.

In part 4 of this series of articles I will discuss the 5 most important things you need to be a success in affiliate marketing.