Affiliate Marketing in layman's terms
Affiliate marketing is, what we call, performance-based marketing. Whereby, the online retailer will only ever pay a small affiliate commission when an order has been placed by an affiliate referred customer (CPA). The financial risk is almost eliminated for the online retailer and substantially reduces the financial risk that comes with other traditional Ad spends like tenancy.
There are four core players in the industry, the affiliate, the online retailer, the affiliate network and in most cases, the affiliate manager.
Affiliates own marketing initiatives can sometimes overlap with other traditional marketing methods Those methods include organic search, paid search (PPC – Pay Per Click, example google sponsored listings), e-mail marketing, social and mobile advertising, couponing and more.
Affiliate Marketing is the fastest way and most cost-effective way to get your products in front of more targeted consumers, it’s like having a virtual sales force driving new customers and sales and the beauty is online retailers only ever pay on results.
Terminology
Affiliate – Also known as a publisher. An individual or company that does not sell directly to consumers.
Affiliate Networks – Third party companies that provide affiliate tracking software and some have their own aggregated database of affiliates. They provide a suit of analytics, pays affiliate commissions, provides tool to enable advertisers/merchants to communicate with their affiliates and to provide banners and text links as well as supply affiliate with promotional information.
Affiliate Manager – Like a large orchestra an affiliate program requires a conductor, the affiliate manager, to ensure all the instruments are playing in unison. Affiliates managers are usually highly skilled and it’s the one industry whereby longevity within the sector is advantageous when it comes to brand protection.
Affiliate Network Override – This is a cost, usually a very small percentage of the total amount of the affiliate commission or Sales amounts that the merchant’s affiliates have referred. Example if an affiliate generates $10k in commission some networks may charge 20% of the affiliate commission or 2% of gross sales.
Affiliate Software – Software that, at a minimum, provides tracking and reporting of commission-triggering actions (sales, registrations, or clicks) from affiliate links.
AOV – Average Order (basket) Value, example if a merchants product cost $30.00 then average order basket value would equal $30.00
Banner – Graphic advertisement.
Brand Bidding – PPC (see PPC) affiliates using the Merchants name as a key word
Commission – monetary reward given to an affiliate for referring a visitor based on visitor action, per sale, per lead, per impression, per click.
Conversions – From an affiliate’s perspective, how many referred visitors (clicks) sent will convert into a sale or lead. From a merchant’s perspective how, many visitors will it take to convert into a sale or lead.
Cookie – Information stored on a user’s computer by a Web site so preferences are remembered on future requests.
Cost Per Click – Each referred visitor equals 1 click, this click has a cost attached to it, uncommon in affiliate marketing.
CPM – Cost Per Mille. “mille” the word is seldom used; this is actually cost per 1000 impressions. An impression is every time a referred visitor looks at a banner ad, this is called an impression. Cost per 1000 impressions is usually sold in bundles and is seldom used in affiliate marketing.
CPA – Cost Per Acquisition, most used in affiliate marketing, this is the merchants cost to acquire a new customer.
CSV.File – A product feed is a CSV file containing the merchant’s entire product range.
Dynamic Linking – Usually a piece of java script that affiliates can place on their website and whereby the merchant has control over what is displayed on the affiliate’s website but is less common.
EPC – Earnings per click, this is a metric that affiliates can see before they join an affiliate program so they can make an informed decision about partnering with the merchant, its an indicator about the merchant’s conversions and potential earnings.
Hybrid – Combination of revenue share + A CPC, CPM, or CPA
Linking – Term used for the link from the affiliate’s website to the merchant’s website or vice-versa
Links – Can mean the above or as reference to buttons, banners, text links, product feeds or any graphical content that affiliates can use to display on their website, will have affiliate tracking behind them.
Merchant – Also Known as The advertiser, who sells directly to the consumer can be B2C or B2B
Mobile Marketing – cell phone text ads.
PPC – Pay per click, example Google ad words, some affiliates are experts in paid search.
Publisher – Same as affiliate
Product Feed – Also known as a data feed. CSV or XML file containing merchant’s entire product range, see also CSV file
Return days – The number of days an affiliate can earn commission on a conversion (sale or lead) by a referred visitor. Also known as cookies.
Social Media Affiliate – Influencer who primarily works on a revenue share.
Super Affiliate Or Premium Partners – An affiliate capable of generating a significant percentage of an affiliate program’s activity. Fact, 30% of affiliates may generate 70% of the sales.
Text-Link – Text with a hyperlink behind it example: Agency 310 has one of the original pioneers of affiliate marketing working for them click here to find out who it is.
ROAS – Return on ad spend, this is the cost to an advertiser based on performance of his/her campaign
Thinking about setting up an affiliate program?
Contact us, it costs nothing to get you some good advice and further information and in most cases, we can even do a projection/forecast.
Already have an affiliate program? We would be delighted to do an affiliate program audit to see if your program needs optimizing, find your programs strengths and weaknesses.
Do you have concerns about your affiliate managers performance? We would be delighted to give you a holistic overview of your affiliate program, call it a Agency 310 Health Check.
