Affiliate Marketing normally consists of three central players: the advertiser, the affiliate, and of course, the customer. The affiliate drives traffic to advertiser, by encouraging the potential customers to click on the links. So if you are an affiliate you’re basically sending people to a website. If they then buy or sign up for something you get commission for directing them there and for many website owners, its an easy way to earn extra money without actually having to “do” anything. Pretty much like being a salesman, without actually promoting or selling the product. The affiliate can just relax knowing that they are making a profit.

Affiliate marketing is also beneficial to the advertiser, commonly known as the merchant. By placing affiliate marketing advertising on various websites, he has free advertising. Therefore the merchant’s products get a lot more exposure, merely by placing an ad for their product on the affiliate’s website. The more affiliates the merchant is registered with, the more promotion the product gets!

There are different programs for the affiliate to earn commission: either pay-per-sale or pay-per-lead. Pay-per-sale means that the customer has to pay for the product you have linked to before you are rewarded, whereas pay-per-lead pays works on the premise that the customer is interested enough to purchase the product just from the link. Commission varies between the types of program but no matter what you will earn from them, the amount will clearly vary depending on how much effort is put in. After registering with the appropriate program, a link is then placed from your site ready for someone to click.

One of the most crucial points to consider first and foremost is the target audience. The website needs to be built around the audience to stimulate traffic and success in the products being promoted. For instance, if the website is of a particular theme then it would be beneficial to select the appropriate affiliating marketing to coincide with this. It’s no good having traffic if the products aren’t good enough to promote in the first place! For example, if your website relates to a clothing, links to books or home improvements might look out of place. Likewise, too many affiliate advertisements on the website will only drive people away.  It helps to build trust to keep people visiting your site, writing a product review may determine the likelihood of the whether the customer is interested or not.

In conclusion, affiliate marketing is a great way to reap benefits from a website. The affiliate relies on quality products to therefore make money out of a sale and the merchant has the incentive of free advertising and so is mutually beneficial to both parties.

Some helpful resources to get you started:

A forum offering helpful hints on affiliate marketing: http://www.affiliates4u.com

An affiliate network for publishers with access to lots of merchants across many of the big networks all under one simple account: http://www.profitbite.com

Some of the larger affiliate networks that will help you promote your product with affiliate marketing: http://www.affiliatewindow.com, http://www.cj.com/, http://www.buy.at/, http://www.tradedoubler.com, http://www.linkshare.com, http://www.webgains.com, http://www.paidonresults.com, http://www.dgm-uk.com

• Affiliate – An affiliate (in the context of affiliate marketing) is a website which refers visitors to one or more e-commerce sites via affiliated links with the intent of earning commission on any sales generated subsequently.
• Affiliated Link – A link to a merchant site which is tagged with a code to enable tracking of the purchasing habits of the users clicking on it.
• Click – The action of a site visitor using a link on an affiliate’s website.
• Commission – A share of the revenue generated by a merchant when a sale is made to a customer referred by an affiliate.
• Cookie – A small file placed in the browser of a visitor to help identify whether or not they make a purchase after clicking a link from a publisher website. Some cookies last for up to 30 days, meaning a commission will be paid if the visitor makes a purchase within 30 days of first clicking the link.
• CPA – Cost Per Acquisition. This is a measurement is used in online advertising to gauge how much a merchant pays for each lead/sale generated by an affiliate partner.
• CPM – Cost Per Mille. This is a metric used in online advertising and refers to the cost per 1,000 impressions.
• CTR – Click Through Rate. This is the ratio of clicks to impressions, usually expressed as a percentage. A CTR of 5% means that an advert displayed 100 times has generated 5 clicks.
• EPC – Earnings Per Cent. This is the earnings per hundred clicks and provides a measure of the relative worth of clicks in terms of the commission generated. It is calculated by taking the number of commissions earned and dividing it by the total number of clicks. The result is then multiplied by 100.
• Impression – The showing/display of an advert to a web visitor.
• Lead – A lead is a visitor who indicates interest in a merchant site as the result of marketing activity by an affiliate. A visitor is usually converted into a lead through the action of signing up for a newsletter, registering with a site or downloading a file in exchange for providing contact information.
• Link Popularity – This is a measure of the popularity of a site based on the number of other websites which link to it. In affiliate marketing it is used to measure the power of an affiliate.
• Merchant – This is the brand/business engaged in an affiliate programme and paying commissions to sites which generate sales or leads on their behalf.
• Network – Networks provide a bridge between merchants and publishers. Merchants sign up for accounts with networks to connect with publishers in order to generate sales/leads, whilst publishers register with networks in order to access the affiliate marketing campaigns of merchants and earn money.
• Network Override – This a charge to merchants added by networks on top of commission payments and may be up to an additional 30%.
• Pay-per-lead – This is a means of commission payment whereby a flat fee is paid by merchants for each qualified lead generated.
• Pay-for-performance – This is an arrangement whereby a publisher is paid a commission for generating leads for online merchants.
• Pay-per-sale – This is a means of commission payment whereby a flat fee is paid by merchants for each sale generated.
• Publisher – A website owner/manager. Publishers are responsible for creating adverts and links on their websites which visitors click through to merchant websites via. Publishers are paid commissions by merchants for generating leads/sales/revenue.
• Reversal – Also known as a “charge back”, this is when a merchant withdraws the commission due on a sale/lead due to it not clearing for payment. Typically, this might be due to the sale being generated through fraudulent activity or because of a charge back from the card issuer after the sale has completed.
• Tiered Programme – Some merchants offer tiered schemes whereby publishers are given performance incentives for selling above a particular target level.

The terms above cover the most commonly used terms, but if there’s a term you’re not sure of the meaning of, why not add it to the comments section of this article!