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Affiliate Marketing is a type of internet marketing that allows websites to share traffic and revenue using banner and text advertisements.

Merchants who sell goods and services online pay commissions to website owners (affiliates) for referring sales or leads to their site. Contrary to "pure" advertising, with affiliate marketing merchants only pay for results (leads or sales). On this site I review both advertising and affiliate networks.

Affiliates placing links to promote merchant's products or services can earn money in different ways. There are several affiliate marketing models:

CPA or Pay-Per-Lead / Sale - affiliate program where an affiliate receives a commission for each lead (eg. e-mail lead, download, newsletter subscriber) or sale of a product that they refer to a merchant's web site. Strictly, only this model is to be considered affiliate marketing.

CPC or Pay-Per-Click - merchants will pay affiliates based on the number of clicks a specific ad banner gets.

CPM or Pay-Per-Impression - program where affiliates get paid for merchants' ad appearances on affiliate's site.

Pop-Up Programs - affiliates get paid for merchants' ads that display in a self-generating new browser window.

Search Engine Affiliate Programs - usually affiliates get paid each time visitors to their site perform a search.

Affiliate marketing is very useful and cost effective solution for almost any online merchant. It not only increases your sales potential, but also gives you risk-free advertising.

Compared to traditional CPM models (banner or e-zine advertising), affiliate marketing offers the option to make money without first spending money. Merchants do not pay for advertising with their affiliates until a sale occurs.

You can setup your affiliate program by signing up for Affiliate Network or by purchasing your own Affiliate Tracking Software. There are pros and cons for each method.

Affiliate Networks track affiliates, handle sending out the checks to affiliates, provide other necessary support both to affiliates and merchants. Additionally, you will have access to a base of potential affiliates that often have more confidence in third party monitoring.

Affiliate network downsides: setup fees and transaction fees based on the merchant's payout rate for affiliates. All these fees substantially hover depending on affiliate network.

Affiliate Tracking Software (in-house affiliate program) gives you more control over your program, plus there are no commissions paid to a third party.

Affiliate tracking software downsides: requires skills and time for affiliate program management and marketing.

You have two choices to choose from in regards of a Merchant Account. You can get your own, or you can use a third party's merchant account. Which method is better depends on your business.

For Merchant Account Providers you must pay for processing software, transaction fees, monthly statement fees, etc.

Third Party Credit Card Processors take only a percentage of your products cost (usually 3% to 15%), however this percentage is about four times the amount it would be if you had your own merchant account.

If you just starting your online business and don't have the money to purchase a merchant account, use the third party credit card processors until your mothly sales reach at least several thousands.

Regarding affiliate marketing, many of third party credit card processing companies provide your own online business with a built-in affiliate program.

 
 

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