If the classification is based on the online money earning types of the affiliate network, the most basic affiliate marketing programs, however, falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).
1. PPC - Pay Per Click is a highly promoted and used affiliate marketing method by affiliates with no websites or small websites. This is also the easiest way for them to start making money. Under this method of affiliate marketing, the affiliate is paid a commission by the merchant when a visitor visits the merchant’s site through the affiliate’s reference, that is, whenever a visitor clicks and goes to the merchant’s site through the banner or text ads that the affiliate has put up. Pay Per Click method is basically used to capitalize on the traffic that arrives at the affiliate’s site and the affiliate facilitates the flow of these traffic from the affiliate’s site to the merchant’s site and the affiliate gets paid for this effort. The merchant’s product or services need not be purchased by the visitor, who is referred by the affiliate, for him to earn his compensation from the merchant. However, compensation for each click under PPC affiliate programs are quite small, usually in the range of 10 cents to 1 dollar.
2. PPP - Pay Per Performance affiliate marketing is the darling among merchants and is also the most sought after type by the affiliates. Under this type of affiliate program, the affiliate is paid a commission only when his referral performs an action - that is the visitor that he has referred should actually purchase a product or service from the merchant’s site or when the visitor is converted to a lead for the merchant. For the merchant, this translates into a lot of cost and resource savings in terms of his own direct marketing efforts. Also, this type of affiliate marketing is highly lucrative and most rewarding for the dedicated affiliate, since commissions in PPP affiliate marketing usually is in the range of 15% to 20% of the actual product sales. And, in the case of e-products or e-goods, the merchant may offer a commission as high as 70 - 75% of the sale price to the affiliates.
A further classification of Pay-per-performance affiliate marketing can be done into two types: pay-per-sales (PPS) and pay-per-lead (PPL). Both these are very popular:
a) Pay Per Sale (PPS) - In a pay-per-sale type of affiliate marketing, the affiliates get commission from the merchants whenever the affiliate is successful in converting the visitor into a purchaser from the merchant’s site. Affiliates are generally paid on percentage basis, although some merchants may opt to pay a fixed fee. But, whichever method is adopted, percentage or fixed, it is generally much higher than the fee paid to affiliates in a pay-per-click marketing methods.
b) Pay Per Lead (PPL) - The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant’s site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type. Generally, the sales conversion rate is the highest in the case of PPL, because, the visitor is not required to purchase anything but only complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, etc.
Every affiliate marketer has to try out various methods and decide which works best for him. He should then concentrate on those affiliate marketing methods which is suitable for his style of online business building.
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