If affiliate marketing sounds like something you’d like to get involved in, you’ll want to brush up on the most commonly-used terms associated with this multi-million-dollar industry.
Here are some of the terms you should know:
An arrangement in which the advertiser pays a commission to an affiliate for each sale captured via their website or advertising link.
The commission model is based on actions performed by users, usually involving lead generation, subscription to a service, a direct one-time purchase, or other actions.
The advertiser will utilize performance-tracking software to track the users’ actions and the affiliates who have assisted in that process.
Many service providers run their own affiliate program, which means they buy traffic for themselves to increase their own profit.
An Affiliate Manager is any person who communicates with the affiliates. They often create offers and take care of maximizing performance of the affiliate program.
This is a person or organization that owns a business and offers services or products to customers.
Advertisers are willing to pay affiliates for each new lead or customer they bring. This helps them promote their brand and acquire new customers.
An affiliate network acts as an intermediary between affiliates and advertisers. Affiliate networks allow affiliates to easily find and participate in affiliate programs suitable for their inventory.
Advertisers who offer affiliate programs work with affiliate networks to reach larger audiences (i.e. all affiliates participating in the network).
In affiliate marketing, you are competing against other affiliates, who quite often, may be advertising to the same group of customers.
This is where the power of bonus offers comes into play.
Affiliates will often offer bonuses to persuade a customer to purchase through their link rather than someone else’s. Typically, the bonus adds additional value to the product that is being promoted. In other words, it is relevant, in the same niche/topic, and serves as an auxiliary component.
The greater the perceived value, the easier it will be to convince people to purchase through your affiliate link. Therefore, it’s very important to learn how to create high-quality bonuses that stand out and capture the attention of your target audience.
Building your bonus offer doesn’t have to be a difficult process, but does require some knowledge of design and/or content creation.
One way around this is to use a program like Commission Gorilla, which simplifies the entire process of creating affiliate bonus pages. They’ve essentially done the heavy-lifting for you.
In affiliate marketing, cookies are used to identify a visitor who has clicked on an affiliate link. It’s simply a form of tracking.
Cookies are usually assigned for a specific period of time. If the visitor returns within that timeframe, the affiliate marketer will be paid for the sale, whether or not the visitor uses the affiliate link to complete the purchase.
Your Click-Through Rate (CTR) is the percentage of website clicks for the number of advertising impressions displayed to visitors or bought from other networks.
CPA, CPS, CPL & CPC
Cost Per Action, or CPA, is the cost of an action carried out by a visitor. An action is almost always a form of conversion (see below).
A visitor either purchases the product or shows an interest in it. This is also referred to as Cost Per Sale (CPS) or Cost Per Lead (CPL), respectively.
Cost Per Click (CPC) is a payment model for online advertisements. Each time the ad is clicked, an amount will be paid to the advertiser.
Cost Per Action (CPA) is a payment plan where advertisers pay their affiliates for conversions only. If a sale is not made, the affiliate is not paid.
Campaign or Offer
This is the promotion of a product or service. Offers are created by affiliate managers or product owners, and usually contain all relevant information about the payout model, commission offer, and best marketing practices.
An Offer URL is the final URL where the visitor will land after clicking the promotion link or banner. This is your landing page where they will find your offer or campaign.
This is usually a target action of the end user, defined by the advertiser. It can be a subscription to a service, lead generation, sale of a product, or installation of a mobile application.
Conversion is the final goal of advertising and is the event the affiliates will be paid for. In other words, the consumer has now been converted into a paying customer.
The Conversion Rate is the percentage of website clicks that converted (turned, changed) into a lead or a sale.
For example, if one in every hundred visitors to your site makes a purchase, then your conversion rate would be 0.1%.
This is a file containing lists of all the products an advertiser sells, including prices, images of products, descriptions, and affiliate links for the products.
This is a notice on an affiliate’s website or blog, notifying visitors that the affiliate is being compensated or paid for sales, recommendations, endorsements, and advertisements of a product and/or service on their website or landing page.
This is an important part of your marketing campaign because it’s required to comply with FTC laws. You should place this statement towards the top of your landing pages before you mention the affiliate offer.
This is a unique URL to which an affiliate sends an audience for a particular offer. It can also be called a click tracking link or affiliate link.
This is the principle of notifying affiliates in real-time for every conversion. When a new conversion (or sale) is received, affiliate software automatically sends a conversion notification to tracking systems at the affiliate site or other third-party systems.
For example, if an affiliate program or network works with another affiliate network, each valid post-back can be forwarded to that affiliate network.
This is simply an advertisement (ad), or, in a broader sense, any form of content that helps sell the product, including graphics and banners.
There are many types of creatives used by affiliate marketers. Choosing the right type depends on the advertising channel, target audience, and advertising message.
When it comes to using banner-type creatives, they are typically large enough to be easily noticed without disrupting the user’s experience.
Interactive banners are, as the name suggests, dynamic and highly interactive. They usually offer more than one interaction, trying to get users to engage. This type of ad can contain an interactive element (a video or game) plus a call to action (a contact form, for example) all within the same banner.
An Ad Tag or Ad Snippet is an HTML element used to display ads by dynamically fetching them from an ad server.
Referral Bonus Program
This is a special type of payout awarded to affiliates who brought new affiliates into the affiliate program.
For each referred affiliate, they can receive a fixed-price sign-up commission and a percentage of their total earnings in a given period.
This is a tracking method in which information is stored on the user’s computer. A cookie is saved in the user’s browser when they click on the ad, and then linked back to the affiliate that brought in that user.
After the user completes an action on a page, the tracking program records a conversion for the proper affiliate using a piece of tracking code called tracking pixel.
The pixel is also called an impression pixel or iframe pixel, depending on which of these two methods are used.
This refers to the number of times an ad is shown on a page.
This is a website or webpage to which affiliates refer traffic.
For example, when a user clicks on an ad or banner, they are redirected to a webpage that gives them more information about the product advertised on that banner, usually with purchase options.
The main purpose of a landing page is for the user to complete an action. It can be a purchase, service sign-up, download, or any other action that has a positive value for the advertiser.
Your landing page should reflect your online personality and use your charisma to encourage users to take action and gain you those commissions.
You can also use a bonus page as your destination URL when promoting offers.
This type of marketing is focused on a specific group of consumers.
Niche marketing targets a far smaller group than general ads do. For example, if you are promoting yoga products, your niche is yoga while your main industry might be health and fitness.
A well-defined niche allows marketers to create more personal ads that will yield better results.
Search Engine Optimization (SEO)
This is the process of getting a better ranking on search engine results pages. The purpose is to achieve higher visibility and attract more traffic (more visits or clicks) to a website, which in turn results in more sales or leads.
This is a contact with the potential to become a customer. A lead, in other words, is a person who shows interest in the product or service you are promoting, which makes them more likely to become a customer instead of a browser.
This is also known as a prospect.
Keep in mind that the definition of a lead may vary depending on the organization using the term.
For some companies, a lead is a contact already determined to be a prospective customer, whereas other companies consider any sales contact to be a lead. Your goal is to convert the maximum number of leads into actual customers.
EPC (Earnings Per Click)
This refers to the amount of commission an affiliate earns fro every person that clicks on their advertisement and purchases from the merchant’s website.
This refers to an instance where you are running two or more versions of a webpage or creative at the same time in order to identify the most effective campaign.
This is a unique identifier given by the affiliate program or merchant that you are promoting. It tracks your sales, clicks and often, overall traffic.
This is the technology that prevents online ads from displaying on a website.
Ad blocking is on the rise, so the International Advertising Bureau (IAB) has launched its L.E.A.N. program to make ads better, and therefore, to encourage users to give up their ad blocking.
The latest research shows that over 15% of online consumers are using ad blockers nowadays, so something needs to be done to restore the balance in the marketplace.
The problem is that unscrupulous advertisers have started showing heavier, more distracting ads that impose on the customer instead of enticing their interest. IAB has owned up to this mistake. They realized that the most important thing to do now is to improve the experience of internet users so that ad blockers are no longer needed.
Encrypted: To advertise on secure websites, advertisers need to create secure, SSL-compliant creatives for display and video ads. SSL is a protocol for establishing a secure connection between two parties on the internet.
The goal is to make sure that communications are encrypted (or encoded) so that unauthorized users cannot understand them.
Return on Investment (ROI):
This is the amount derived by subtracting your net revenue from the total amount of your costs. The result shows you the profitability of your campaign.
A high ROI means the gains compare favorably to the cost, so you’re making good profits.
There are two main benefits to using the ROI calculation: it’s easy to calculate, and it’s almost universally understood.
This means that the affiliate program will reward commissions to the affiliate who was the first to refer the customer who made the purchase within the cookie duration timeframe.
Affiliate programs that reward commissions based on last click attribute the sale to the affiliate who was the last to refer the customer who purchased the product or service.
And finally, here is a list of a few common affiliate marketing abbreviations:
• AOV: Average Order Value
• B2B: Business to Business.
• B2C: Business to Consumer
• EPC: Earnings per Click
• SEM: Search Engine Marketing
• SERP: Search Engine Results Page
Affiliate marketing is one of the few opportunities available today that provide you with the opportunity to make money instantly, without hefty start-up costs, experience or skill.
In fact, you could very well see results from a single affiliate campaign within just a few short hours from now, even if you’ve never set one up before!
The next step is to create an action plan and build your bonus pages so that you can stand out in the marketplace and maximize conversion rates.
It truly is an exciting and incredibly profitable market to be a part of.
In fact, an affiliate can earn anywhere from $10,000 a year to six-figures and beyond when they focus on building a targeted list and then creating emails that motivate their audiences.