Affiliate marketing is a great way to make money online. But when you’re new to the concept, the terms used can be quite confusing. Below is a glossary of the most commonly used affiliate marketing terms:
Affiliate: Person or entity that earns a commission for sales, clicks, or leads referred to a merchant.
Affiliate Agreement: The agreement between the merchant and affiliate that governs and defines terms of the relationship.
Affiliate Link: Code used to alert the merchant that the affiliate should be credited for the sale or visit to their site.
Auto-Approve: All affiliates are automatically approved for the affiliate program.
Commission: The rate or percentage earned per sale, click, or lead by the affiliate.
Conversion Rate: This refers to the ratio of clicks that result in a sale or lead. In other words, the number of clicks required to earn a commission.
Manual Approval: Affiliate approval process is handled manually – affiliates usually have to meet certain criteria set by the merchant.
Merchant: Person, business, or entity that sells services or goods. The merchant sets up affiliate programs and pays commissions to affiliates.
Pay-Per-Click: Affiliates receive a low commission for clicks, or visits, to a merchant’s website. Although the commissions are usually very low, the conversion rate for this type of program is usually very high.
Pay-Per-Lead: Commissions are paid when the affiliate generates a lead for the merchant. In most cases, the commissions are mid-range and the conversion rates are in the mid to higher range.
Pay-Per-Sale: In this type of affiliate program, the affiliate only receives a commission when a sale is made. Commissions are usually high, but the conversion rate can be low.
Residual Earnings: This is a profitable arrangement that allows affiliates to receive commissions for the first sale and for all sales over the lifetime of the customers.
ROI: This is the acronym for Return on Investment. It refers to the profits realized from time, money, and effort spent on advertising and marketing campaigns.
Super Affiliates: This describes the top affiliates in any given program. They generate enormous profits for the merchant, and therefore, these affiliates are sought out by merchants.
Two-Tier Affiliate Program: This affiliate marketing format is designed to allow affiliates to sign up affiliates below them. The first affiliate earns a set commission, and so does the second-tier affiliate. This type of program is sometimes referred to as ‘multi-level marketing’ or MLM.
This list of terms is certainly not all-inclusive. It merely covers the most basic terms used in affiliate marketing. Please feel free to suggest other terms that should be added to this list for those new to affiliate marketing.
Debbie Allen is a professional writer, blogger, and online marketer who covers a wide range of topics, including everything from home décor and gardening issues to things like Billfloat and affiliate marketing.
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