Affiliate Marketing has increasingly become an integrated and large part of a company’s marketing plans – most notably for companies that wish to use the internet to gain revenue or sell products. For this reason, e-commerce owes much of its rise to the idea of affiliated marketing, which includes websites such as CDNOW (BuyWeb) or Amazon.com.
The idea of affiliated marketing is profoundly simple yet incredibly effective. Basically, a webmaster will display a merchant’s adverts on a site, and be paid for those websites in one of three ways. Either, he will be paid per click (known as Cost-per-click, CPC for short) which means that every time the advert is clicked, the affiliate is paid. This is not the favored form of affiliate marketing due to many fraud click sites, the rise of adware, and other fraudulent schemes.
Another method of payment is Cost-per-Action (CPA) which is when the affiliate receives income based on either a sale, registration, or the ‘action’ of the person who has clicked the advert from the affiliate’s site.
The last form – and most favored form – is the Cost-per-sale method (CPS) which is based solely upon sales or purchases generated on the merchant’s site, that have come through the affiliated site. CPA and CPS are very similar in this respect, and represent a form of revenue sharing or commission plan.
Affiliate marketing has many benefits for both the affiliate and the merchant, one being that there are no real risks at all for both parties – and both parties find it very beneficial. Merchants enjoy affiliate marketing, and it has become a favored form of advertising for e-commerce business.