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November 29, 2007

Common Affiliate and Advertising marketing Models

Invented by cdnow.com at the end of 1994 and pioneered by Amazon.com in 1996, "affiliate programs" - also known as "associate programs" or "partner programs" - are a simple way to generate revenue. Publisher or online merchants ads a piece of code in their site where the advertiser displays their ads. Advertisers gain whenever visitors clicks their ads or whenever ads are displayed for the users . There are mainly four kinds of affiliate models . CPM ( cost per Impressions) CPC ( Cost per click ) CPL ( Cost per lead ) CPA and Cost per Action

Cost per Mile ( CPM ):This is the amount the advertiser/Merchant pays to the affiliate when their ads are displayed for every 1000 Impressions ( An "impression" is NOT a click; it is a page view or display of the ad. The ad can be a text ad, a banner image or rich media.In short it is the amount paid to affiliate for showing or displaying the banners every 1000 times ) The drawback of such a advertising or affiliate model is that is hardly provides any genuine sales lead or inquiry to the merchant or advertiser .What is does is that it shows the banner to every user irrespective of their interest or inclination to see the banners.


Cost per Click ( CPC ) : In this model the merchant or the advertiser pays only when the ad is clicked by a user . In This model the merchant is hardly concerned about how many times the ad is displayed .The affiliate earns only when the ad is clicked . The drawback of the model is " the amount of click fraud that it generated". Random clicking of ads by either competitor or someone else can lead to misleading interpretation of results and can cost the advertiser or the merchant huge amounts of money when the actual clicks do not lead to desired results.

The PPC model was kept alive by the PPC search engine Goto.com, which became Overture.com and is now owned by Yahoo! and renamed from "Yahoo! Sponsored Search" to "Yahoo! Search Marketing."

Google launched its PPC service AdWords in 2000. Ask Jeeves, now simply Ask.com, followed with its PPC service in 2005 called Ask Sponsored Listings, and MSN.com followed in 2006 with AdCenter. Other PPC services are Miva/findwhat.com, ah-ha (now Enhance Interactive) and 7Search.com


Cost per Lead(CPL ) /Pay per Lead /Cost per Action (CPA): Considered by many as one of the most relevant online advertising models.,Pay per lead is the payment that is received by the affiliate or the publishers only when users click on the ads and takes an action that results in a specific lead.. like filling up the form , submitting personal details , giving a email id or a phone numbers so that the merchants or the advertiser can contact them later.

Due to the typically high flat commission amount, CPA is very attractive for PPC affiliates who do not have a permanent website or an established user base. Some affiliates have only a single landing page optimized for specific PPC campaigns with specific offers from individual Advertisers. These affiliates are, in effect, doing what an in-house search engine marketing team would do for the Advertiser, that is generate leads for the Merchant.The CPA model is very popular with online services like credit card providers, insurance services, DVD and video game rental services and loans and mortgages.


Pay per Sale /Cost per Sale : In This model the merchants pays the affiliate only when the ad results in an actual sale . The advertisers can not concerned about clicks,no of impressions or leads, They are only interested to pay only when the ad leads to a a sale .The Advertiser pays the affiliate a percentage (%) of the order amount (sale) that occurred when the affiliate referred a customer (usually via a link) to the Advertiser's site.This model is used by most online retailers today.

One of the things you should remember while running this kind of an affiliate model is that you should only pay to affiliates for every new customer they refer to you.


Affiliate Networks:Operating an affiliate program to drive traffic to your website has never been easier. Most sites utilize third party services (so-called affiliate networks). Those services provide the infrastructure for you, the merchant, to track all traffic and referrals to your website.

Networks also work as a recruiting platform to find websites willing to promote your products or services. The integration of their services usually takes just a few days or sometimes just a few hours.Some affiliate networks also help you to keep overhead low (such as dispensing payment to affiliates).

Networks usually charge a fee of 20%-30% of the commission you pay to affiliates. For example, if an affiliate refers a customer who makes a $100 purchase and you pay the affiliate a commission of 10% (or $10), then you would pay an additional fee to the network: 20%-30% of the $10 commission, or $2-$3 to the network. Therefore, your total cost for the referral is $12 - $13.

You might want to have more control over your affiliate program and avoid the network fees by running the program in-house.Numerous affiliate tracking solution providers have already developed the technology and software to manage affiliate programs. The technology is typically easy to plug into your existing merchant site. Be careful, though, with too-small or too-new solution and software providers.

In-House Affiliate Program Solution Providers and Software (alphabetically)


AffiliateClicks.com by Kowabunga Technologies is a do-it-yourself affiliate tracking and management solution for advertisers who prefer to run and manage their affiliate program independent and in-house.
Affiliate Runner - Specializing in private affiliate program management solutions. Affiliate Runner offers a 15 days free trial to test their product without risks and obligations.
Affiliate Shop is a self-managed affiliate program solution by Pendulab Pte Ltd. Bonus: Your products will be listed for free at the AffiliateShop MarketPlace shopping portal
Affiliate Software Platform - In-House/white-label affiliate program solution by Ecom Access (who also owns the affiliate network ShareResults).
AffiliateTracking.com - The affiliate tracking network. You can try it for free, before you buy it.
AffiliateTraction by NetTraction
AssocTrac in-house affiliate program software by Internet Marketing Center, Inc
DirectTrack by Direct Response Technologies. Their CPA network DirectLeads uses DirectTrack among a large number of other independent CPA networks.
FusionQuest.com - Affiliate program management solution featuring UltraLinks™ (clean links with no redirection and no query string) for improved SEO
iDevAffiliate - affiliate tracking software
Interneka Affiliate Software - Start your own affiliate program for as low as $149.00!
Leadhound Network - affiliate program software. Their affiliate network "Leadhound.com" uses the solution
LinkTrust.com - Ad Network/Lead Management Solution by Burstabit Media, Inc. LinkTrust also powers Burstabit Media's own network called LinkMo.com.
MarketersChoice.com from 1ShoppingCart.com
MyAffiliateProgram (MyAP) by Kowabunga Technologies. MyAP packages: Feather Weight, MYAP Lite, MYAP Pro, Enterprise Package. Get a Free eBook with your sign-up! Details: Pricing / Tour / Special Offers
OSIAffiliate - Hosted affiliate program management solution which supports the management of multiple affiliate programs from one account.
Post Affiliate Pro is a low cost (< $100) affiliate program management platform based on PHP that was created by QualityUnit.com who also developed other in-house solutions such as membership management and customer support management software.