Demystifying Affiliate Marketing: A Glossary of Essential Terms
Affiliate: This refers to an individual or a company that promotes products or services for a merchant. In return, they receive a commission based on sales or leads generated. For instance, a tech blogger might promote a specific laptop model; if someone buys the laptop through the blogger’s unique link, they earn a commission.
Affiliate Agreement: This is a formal contract between the merchant (the product owner) and the affiliate (the promoter). It sets out the rules of their partnership, such as commission rates, payment terms, and promotional guidelines.
Affiliate ID: Every affiliate gets a unique ID for tracking purposes. This helps in tracing which sales or leads originated from which affiliate. For instance, if your ID is “techguru123”, sales made through your promotions can be accurately credited to you.
Affiliate Link: This is a specialized URL containing the affiliate’s ID. If a tech reviewer shares an affiliate link for a camera and someone buys using that link, the sale gets tracked back to the tech reviewer.
Affiliate Manager/Program Manager: Think of this as the ‘control center’ for an affiliate program. They handle the recruitment of affiliates, set commission rates, and ensure timely payments. For instance, they might negotiate higher commissions for top-performing affiliates.
Affiliate Network: It’s like a middleman platform that connects affiliates and merchants. They take care of tracking, reporting, and payments. ShareASale, for example, hosts multiple merchants under one roof, offering a wide range of products for affiliates to promote.
Affiliate Program: This is a system where the merchant rewards affiliates for bringing in customers or visitors through the affiliate’s marketing channels.
Banner Ad: A visual advertisement displayed on websites. Imagine seeing a colorful rectangular ad promoting the latest smartphone on a tech blog; that’s a banner ad.
Chargeback: This happens when an affiliate’s commission gets reversed. Reasons could be customer returns, fraud, or canceled orders.
Click-through: This captures the moment a user clicks on an affiliate link, redirecting them to the merchant’s site.
Click-through Rate (CTR): It’s a performance metric. If your affiliate link was viewed 100 times and clicked 5 times, the CTR is 5%.
Commission: It’s the affiliate’s earnings. For instance, if someone buys a $100 product via your link and the commission rate is 10%, you’d earn $10.
Conversion Rate: This gauges how effective an affiliate link is. If 100 people clicked on your link and 10 made a purchase, your conversion rate is 10%.
Cookie: A tech tool that remembers users. In affiliate marketing, it helps track which affiliate sent a customer.
Cookie Duration/Life: It signifies how long a cookie lasts. If it’s 30 days, and a user makes a purchase within that time after clicking your link, you get credited.
Cost Per Action (CPA): Affiliates get paid when users take specific actions, like signing up for a newsletter.
Cost Per Click (CPC): Here, affiliates earn each time their link gets clicked, irrespective of sales.
Cost Per Mille (CPM): Affiliates are paid based on the number of times their ad gets a thousand views.
Datafeed: It’s a comprehensive file, often given by merchants, listing all product information for affiliates to leverage.
Deep Linking: Instead of linking to a general homepage, affiliates link directly to a specific product page, enhancing relevance.
Earnings Per Click (EPC): It shows how much an affiliate earns on average for every 100 clicks their link receives.
Landing Page: The specific webpage users land on post-clicking an affiliate link.
Lifetime Value (LTV): This metric predicts the total revenue a single customer will bring over their lifetime.
Merchant: The original seller or service provider who offers the affiliate program.
Multi-Tier Affiliate Marketing: A layered system where affiliates recruit sub-affiliates and get a slice of their earnings.
Override: Commissions earned from the activities of sub-affiliates.
Pay Per Lead (PPL) & Pay Per Sale (PPS): Affiliates earn for generating leads (like sign-ups) or direct sales, respectively.
Recurring Commission: Affiliates keep earning as long as their referred customer remains subscribed, typically seen in services like online courses.
Referral: The user who comes to a merchant’s site via an affiliate link.
Super Affiliate: A high-performing affiliate, generating a sizable portion of an affiliate program’s sales.
Tracking Method: The technological means through which referrals and sales are tracked.
Two-tier Affiliate Program: This lets affiliates earn not just from their activities but also from affiliates they’ve recruited. If John recruits Jane, and she makes a sale, both earn a commission.