Affiliate_MarketingRecently, several people have asked about the various types of affiliate marketing programs that are available and what the differences are. I thought it would be a good idea to post an article about it and explain what the different programs are.

Today, more than ever, affiliate marketing is gaining in popularity. There are many reasons for this but the most likely reason is the very small or no risk that’s involved. There are also a great deal of benefits for both the affiliate marketer as well as the merchants.

In today’s marketplace both the affiliate and the merchant realize that affiliate marketing can be beneficial to both. The affiliate (especially newbies) looks at an opportunity to earn money without a product, website or subscriber list and the merchant sees it as an opportunity to market their product or service to a much broader market at a lower cost.

Based on the rapid growth affiliate marketing is experiencing, people now look at it in a different way. In the past, affiliate marketing was primarily considered as an alternative method for the merchants to promote their products and for the affiliate, an additional source of income. Nowadays, affiliate marketing is considered as a main source of income for both the merchant and the affiliate.

That leads to the following questions: Are all affiliate programs the same? What type of affiliate marketing program will work best for you? Are some affiliate programs better than others? What are the benefits of the various programs?

Actually, there are several types of affiliate programs and it depends on how people classify them. Basically, most affiliate programs fall under these two categories: PPP (Pay-Per-Performance) and PPC (Pay-Per-Click)

Pay-Per-Performance (PPP)
The most popular and most lucrative affiliate marketing program for both the affiliate and the merchant is PPP. With this type of program the merchant only needs to pay the affiliate when their referral translates into an action. In this case, when the referral makes a purchase or becomes a lead. With this type of program, merchants realize a great savings. It is also the most lucrative for the affiliate because commissions in PPP generally range anywhere from 15% to 75%. The commission rates vary depending on the types of products or services being offered.

Also note that Pay-Per-Performance affiliate marketing can be further classified into these two popular programs: PPS (Pay-Per-Sale) and PPL (Pay-Per-Lead).

Pay-Per-Click (PPC)
One of the easiest and perhaps the most popular ways to make money is with PPC. This is also very appealing to those with smaller web sites. With this method of marketing, a merchant pays the affiliate marketer for referring potential customers to their site. In other words, when someone clicks through to a merchant’s site via a text ad or banner, the affiliate gets paid. Even if the visitor does not make a purchase, the affiliate will still earn a commission. In most cases the commission rates are generally small and likely to be less than a dollar per click.

Pay Per Sale (PPS)
With a PPS type program, the affiliate marketer gets paid by the merchant for referring a visitor to the merchant’s web site and having that person make a purchase. This type of program generally pays the affiliate on an agreed upon commission. In most cases, the commission paid to the affiliate will be significantly higher than that of a pay-per-click program.

Pay Per Lead (PPL)
This is a variation of the PPS type program and is generally used by financial institutions and insurance companies. In order for those companies to experience growth, they rely heavily on leads. With this type of marketing, the affiliate gets paid for sending a visitor to the merchant’s site and having them complete an application or some other type of form. The affiliate is compensated by a fixed rate which is generally higher than that of the PPC program.

In addition to the programs mentioned above, there are several other programs available. If you go in depth with some affiliate networks, you’ll find they may have single-tier, two-tier and multi-tier programs.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing
With these types of programs, the affiliate is paid differently depending on the level of tiers offered by the affiliate network. All of the previously mentioned programs (PPC, PPL, and PPS) are single-tier. The affiliate only gets paid for the direct sale or traffic they referred to the merchant.

With the two-tier programs, not only is the affiliate paid for the sale or traffic they refer to a merchant’s site but they also get paid from having other affiliates who joined the program through the affiliate’s recommendation. While the multi-tier program works in the same way as a two-tier program, the affiliate gets paid additional commission from a larger number of affiliates based on the different tiers in the network. For more information on tier marketing and why I recommend it, check out this article: Promoting Two-Tier Affiliate Programs

Residual Income Affiliate Marketing
With a residual affiliate program, the affiliate will get compensated for the initial purchase plus a commission each time the customer makes another purchase. This works well with membership sites or web hosting accounts where the customer makes a monthly payment. The affiliate will get a percentage of each monthly payment as long as the customer continues the service.

Each of these affiliate programs have benefits and each work differently for affiliates and merchants. Which type of affiliate program do you think would work best for you? It’s not up to me to make that decision. It’s all up to you based on which program fits your needs.

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