Basic Models of Affiliate Marketing

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Since the first day the Internet invaded our everyday life, it has been a quickly-adopted technology. It is now widely used not only in offices or big companies, but everyone can use it for all sorts of purposes including business.

People have found many ways to advertise goods and services through the Internet, launch marketing campaign, build business relationship with others, and basically       make money online without leaving the comfort of home.

Some have even figured out effective method to earn steady passive income from an online venture that does not require routine day-to-day work.

One of the most popular methods to make money online from home is affiliate marketing. This online venture has been around for a while, but its is getting more popular for a number of good reasons.

Some models of affiliate marketing do not even required you to own and store merchandises. As long as you lead and refer people to the products sold by the affiliates companies through your websites, you get commissions. It gains popularity also because people are getting more aware of its benefits, and how it can be realistically done from home.

Affiliate marketing is a broad term which can be divided into four major categories as follows.

1. PPC ( Pay Per Click )

The most popular type of affiliate marketing is PPC, partly it is the easiest way for the internet marketers to earn money. In this model, affiliates work together with online merchant. Affiliates create a website with which they can refer visitors to purchase products from the actual online stores that sell the products or services.

Affiliates can use text links or banner ads, which when clicked, redirect visitors to the merchants’ stores. The best thing is that affiliates earn money anytime visitors click the links, whether or not the visitors eventually purchase anything.

The amount of money earned per click is quite small, but countless clicks everyday sum up to a considerable income.

2. PPP ( Pay Per Performance )

For merchants, PPP is the preferable affiliation, with online marketers. It works similar to that of PPC, but affiliates only get commissions anytime their referrals into action, meaning the referrals actually buy something from the merchants’ store.

It is an efficient affiliation for merchants because the commission only goes for real referrals. The commissions can be from 15% to 20% of the actual product sales, which is quite a lot for certain products.

On the other hand, it creates competition among affiliate marketers are able to earn good amount of passive income with this method. It may take weeks or even months to fully understand how the systems work, unless affiliates get good support from experienced mentors. Pay per performance  can be further classified into two more specific types including;

  • Pay Per Sale ( PPS ): based on pay per performance method, but the commission that merchants pay to marketers can be a percentage of sale price or fixed fee. Regardless of the basis used for commission, the amount is higher than that of PPC.
  • Pay Per Lead ( PPL ): it is a slight variation of PPS. Affiliates also need to make efficient referrals, but the referrals may not have to purchase something  from the merchants. PPL is often used by survey-based  companies ( such as insurance or finance ). Affiliate get fixed commission anytime their referrals fill application forms or anything similar.

Apart from those basic models, affiliate marketing can be divided into 3 more classification based on the depth of affiliated networks including single-tier, two-tier, or multi-tier. Single-tier includes PPC and PPL, while other tier-based affiliate marketing models are more complex, but they can be more lucrative for the marketers.

There is also residual income affiliation, but it requires long-term relationship with referrals.

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3. Two-tier and Multi-tier Affiliate Marketing  

 In single-tier affiliate marketing get commission anytime their referrals purchase products from merchants’ stores or simply direct traffic to merchants’ website depending on affiliation model. Affiliates only get paid when their own websites or blogs generate the referrals.

Affiliates do not get commissions even when a returning referral buys again form the merchants, unless the purchase is generated from affiliates’ website again.

Single-tier model treat every purchase as different customer, and affiliates’ are not involved in long-term relationships between merchants and buyers.

Two-tier and multi-tier models are more lucrative because affiliates can create their own marketing network. In this model, an affiliate is allowed to recommend people to build the same online venture. For example, PPC and PPP affiliate have a network of other marketers for the same merchants.

The other marketers are considered second-tier. Every sale or traffic in the merchants’ stores grants commission for PPC and PPL affiliates, even when the traffic or sale is actually generated from the second-tier marketers. Multiple-tiers work in the same way, but its consists of larger network.

4. Residual Income Affiliation

In this model, merchants take the affiliation more seriously and potentially grant more commission. Instead of giving commission for every single traffic or sale, the merchants are willing to pay every returning customer who buys more products.

Commission is given whether the second sale or traffic is generated by the affiliate again or comes directly without  going through the affiliate. Similar to other affiliate marketing models, commission can be fixed fee or based on percentage.

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Conclusion

All models of affiliate marketing have great potential to be good sources of passive income for everyone. In general, affiliates only need to create a website and fill it with informative contents about the goods and services merchants offer.

Contents can be either persuasive, review-based, testimonials, or even multimedia files including images and videos.

However, effective affiliates marketers have to understand many factors that affect online marketing strategy including but not limited to Search Engine Optimization (SOE ) and website design.

 

‘ The Only Way To Do Great Work, Is To Love What You Do.’

Steve Job.

 

 

 

 

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