Affiliate marketing started back in the early 90's when companies and website owners realized the potential of making money on the growing Internet. Their plans were realized and today many are enjoying large revenues from web shops and ad sites on the Internet by using affiliate marketing. Dont you know how affiliate marketing works? Keep calm – here is a short explanation.
Affiliate marketing is a performance based form of digital marketing where an advertiser rewards publishers for sending visitors and customers to their website. To keep track of everything both the advertiser and the publisher need to be registered with an affiliate network such as Double.net.
Publishers are companies and individuals who use the Internet to promote companies and products. This can be done through several different types of channels such as websites, blogs, social media, e-mail, price comparison sites and search engines. A publisher can register and use several different types of channels on their account at Double.net.
For their work, publishers are paid a commission by the advertiser. There are four types of commission models. Which model is offered depends on the action that the advertiser is willing to pay for. The four commission models at Double.net are; CPM (per ad display), CPC (per click), CPL (per lead) and CPS (per sale). CPS can be a fixed amount or a percentage of the order value in the web shop.
Cost/Earnings Per Click
In order to compare commission models and work out how much a publisher is earning per click (regardless of the commission model) you can calculate EPC (Earnings Per Click). If an advertiser for example offers €10 commission per sale and requires an average of 50 clicks to generate a sale the EPC is €0,2 (10/50). This means that the commission will be the same as if the advertiser offers €2 per click.
In practice, affiliate marketing works in the following way. The publisher places ads on their website or channel by pasting the ad code in HTML format. This code can be retrieved at Double.net and each specific ad has a unique code. When the consumer clicks on the ad a cookie is saved to their computer. The cookie keeps track of which channel the visitor arrived from. If the advertiser pays per click, no further action is necessary to receive commission. If the advertiser however pays commission per sale a purchase has to be made. A tracking code on the web shops confirmation page tracks the purchase. In many cases the tracking code also keeps track of the order value. This allows Double.net to keep track of which publisher has the right to the commission and the amount of commission to be paid.
The great advantage of affiliate marketing is that the advertiser can spread their message on websites with the right target audience. The cost is proportional to how the Internet advertising actually performs and furthermore, one can work with thousands of websites without having to spend time on administration. The method is a perfect complement to search engine advertising (SEO and SEM) where ads and organic results are always displayed among the competitors. With affiliate marketing ads often appear alone in their industry on sites where the target audience hang out. This way you can reach even those who buy spontaneously. Affiliate marketing is also measurable so creating a campaign budget is a very simple task.