All you have to do is to provide banner ads, small graphic or text links from your site to the vendor. Once you refer your visitors to their site from your homepage, their system will recognises you. They will give you credits for any sales you refer. It is easy to earn cash if you already have a site with huge traffic and if the product is attractive to your visitors. If you have a new, low-traffic site, you have a lot of work ahead of you.

Marketing and Advertising People have a great habit of creating confusing terms that we all have to try and understand. If you are going to become involved with Affiliate Programs you need to understand what these different terms mean. The following terms are not only used with affiliate programs but used on the web generally in the area of advertising, but the chances are you will come across quite a few of them!

Here is a 'brief' summary of what the different terms mean:

Click Through
This is the simple process of someone clicking on a link or a banner advertisement or search box or similar from your site to the merchants site.

Click Through Rate (CTR)
This is the percentage from all your online visitors that 'click-through' to one of your advertised merchants. This only measures the number of people who 'physically' click on your ad - not the people who may see the ad and then visit the site later. It is a measure of 'immediate response' to an advertisement, link, banner, search box etc. Because click-through-rates are tied to the pay-per-click model, CTR is becoming a less attractive measure of performance, where the conversion rate is now seen by many merchants as the best measure of performance.

Conversion Rate
The percentage of visitors that you send to your merchants site who take the desired action. This could be as simple as subscribing to a newsletter or ezine, buying a product, downloading some software. This is a very important measurement for affiliates and something you should really focus on! By examining your conversion rate and measuring that against the number of click-throughs' that you can gauge the effectiveness of not only your advertising/promotion efforts but also that of the merchant!

Cost Per Click (CPC) and Pay Per Click (PPC)
Both these terms are used interchangeably. In simple 'affiliate terms', when someone clicks on one of your merchants or advertisers links (whether it be text or graphic) you will receive a commission. To help you understand the different concepts a little easier the following equation may help:

If you were to offer advertising on your site that was based on the number of 'impressions' not clicks and you were selling your impressions for $10.00 CPM (cost-per-thousand- impressions) and you achieved a click-through rate (CTR) of 5% then ....

1000 impressions x 5% CTR = 50 click-throughs
$10.00 CPM / 50 click-throughs = 20c per click

Cost Per Thousand Impression (CPM)
Refers to advertising bought on the basis of impressions. This is totally different to any of the other 'performance based' programs - that is where the person has to click-through and make a purchase or perform some additional action.

The total price paid in a CPM deal is calculated by multiplying the CPM rate by the number of CPM units. An example would be two million impressions at $10.00 CPM equals a total price of $20,000.00.

The amount paid per impression is calculated by dividing the CPM by 1000 eg. $10.00 CPM equals 1c per impression.

Because impressions can be an imprecise measurement - if you plan to advertise of someone else's site It is strongly recommend to try to negotiate a CPA (cost-per-action) model.

Cost Per Action (CPA) - Pay Per Action (PPA)
This advertising model is based solely on qualifying actions that your referred customer must do at the merchants site. This is the overall trend now in affiliate programs - just referring people to merchants sites (in the PPC model) is normally not enough!

Your referral must perform some specific action for you to earn a commission - it may be just signup for a newsletter or download some software or buy a product!

Pay Per Lead (PPL)
To earn commissions in any pay-per-lead (PPL) program your referred customer must perform an action at your merchants site. This may be as simple as supplying the merchant with a contact name or phone number - so the merchant can follow that person up. Generally speaking, pay-per-lead program involve referrals where the customer does not have 'pay any money' to perform the action at the merchants site.
Depending upon the type of lead - there is a risk to the merchant/advertiser as fraudulent leads can be generated - that may not always be easy to spot!

Pay Per Sale (PPS)
The easiest of all terms to understand! For affiliates to earn commission your referred customer must make a purchase at the merchants site. Your commission is usually expressed as a flat rate eg. $10.00 for every sale generated or as a % rate - eg. 5% of the sale.

Be mindful of different terms that may be used. Some commissions may involve the 'gross' price, the 'net price' and can have things such as freight, packaging etc deducted from your overall commission.

An example is where a merchant offers a product that retails for $20.00. He charges $5.00 freight and offers you a commission of 10% on 'net' sales of this product. In this case you would earn 5% of $15.00 - or - $20.00 - $5.00 freight - net sale = $15.00 - commission = 10% of $15.00 = $1.50 commission -- get the idea!

This is the 'ideal' model for merchants because it is not open to fraudulent activity. It is also the most challenging for the affiliate - because he/she must obtain a sale to earn a commission!

If you are new to affiliate marketing you may not have heard about affiliate networks. So just to clarify, affiliate networks are companies that offer merchants a turnkey solution for recruitement, selection and payment of affiliates. In exchange for a set up fee, the merchants can start recruiting affiliates among the publishers that have joined a network. So basically an affiliate network is intented to be used by merchants but also by affiliates.

Next to that the single most important reason for small websites to be using affiliate networks is the fact that commissions of the different merchants in the network are put together in one pay check. Suppose you have earned 10$ with merchant A and 20$ with merchant B. Normally you'd be getting 2 pay checks, one of 20$ & one of 10$. Right? Wrong... If the particular merchants would have a treshold of 25$ before paying then you would have to wait until you reach that treshold which, especially for smaller sites can be a problem. Now, with affiliate networks you'd get only one check where both commissions would in only one check. So you'd receive a check of 30$. There's no limit in the amount of merchants you are joining so a lot of small commissions can still be interesting.

Another quite attractive feature of affiliate networks is their broad range of reporting possibilities: more experienced affiliates will tell you that checking results and modifying techniques to increase your conversion rate are key issues if you want to become a succesful affiliate. While stand-alone affiliates have only limited reporting tools, you'll find things as $ per year or CTR-rates on specific ads to be quite handy in order to set forward a balanced affiliate strategy. It allows you to see what works, and what not.

You can find some of the best Affiliate Networks in our directory:
http://www.affiliatesdir.com/AFFILIATE-NETWORKS

or just search our site.

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