The Basics of Affiliate Marketing and Revenue Sharing
The concept of Affiliate Marketing refers to an incentive system, wherein online merchants are enabled to generate profits and grow their business. Basically, people who subscribe as an “affiliate” earn money through revenue shares, sales commission, or a fixed rate. These earnings are dependent on the limitations that the merchant has set-up.
The most popular profit scheme for affiliates are Cost-Per-Action (CPA) and Cost-Per-Sale (CPS). Affiliates earns money through his/her referrals to the merchant. The referral is only profitable only the customer buys or subscribes to the merchant’s website.
To make things clear, I’ll be giving a concrete example. You are the merchant I subscribed to and I am the affiliate marketer. I will adopt different marketing strategies to promote your products and services. One popular example would be blogging about your products. I’ll be posting a link or an ad to direct my readers to your site where they can avail of your services. If my reader who was directed to your site, through the link I posted, bought an item, then I earn something.
Another scheme works on a Cost-Per-Click basis (CPC). In this system, the affiliate earns every time the ad he/she promotes gets clicked. This is also true if the visitor is redirected to the merchant’s site when he/she clicked an add on the affiliate’s website or blog. Similar to this scheme is the Cost-Per-Mil (CPM) method. This would be the easiest way to reel in profits as the affiliate simply has to display an ad of the merchant to get paid. These two schemes only account for 1% of affiliate marketing, because they are very vulnerable for fraud. A lot of people take advantage of these methods which makes it very risky on the side of the merchants. Unlike with the two methods I have mentioned earlier, CPA/CPS, which are very safe for both merchant and affiliate.
Affiliate marketing owes its roots to the revenue sharing idea that has been around long before the internet. However, affiliate marketing itself was birthed in late 1994, when companies like CDNOW and Amazon.com saw this low-cost opportunity to grow their online business. The success of those companies proves in many ways the success of the affiliate marketing system.
Some confuse Google’s Adsense as Affiliate Marketing. These two schemes are very different. Google’s system makes use of contextual advertising which is not utilized with affiliate marketing.
Discover more free marketing tactics that will make you the Ultimate Marketing Affiliate at CopyNProfit. Nate Volk’s site features Fast Video Reviews about different affiliate marketing products. You may find it at FastVideoReviews.com
