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This is part three of the Affiliate marketing frequently used terms.
Hybrid Model: affiliate commission model that combines payment options (i.e. CPC & CPA).
In-house: alternative to using an affiliate solution provider; building affiliate program architecture within a company.
Lifetime Value of a Customer (LVC): the amount of sales in dollars that a customer in his lifetime will spend with a particular company.
Manual Approval: affiliate application approval process where all applicants are manually approved for an affiliate program.
Merchant: an online business that markets and sells goods or services. Merchants establish affiliate programs as a cost effective method to get consumers to purchase a product, register for a service, fill out a form, or visit a Web site.
Pay-Per-Sale: program where an affiliate receives a commission for each sale of a product or service that they refer to a merchant’s Web site. Pay-per-sale programs usually offer the highest commissions and the lowest conversion ratio.
Pay-Per-Lead: program where an affiliate receives a commission for each sales lead that they generate for a merchant Web site. Examples would include completed surveys, contest or sweepstakes entries, downloaded software demos, or free trials. Pay-per-lead generally offers midrange commissions and midrange to high conversion ratios.
Pay-Per-Click: program where an affiliate receives receive a commission for each click (visitor) they refer to a merchant’s Web site. Pay-per-click programs generally offer some of the lowest commissions (from $0.01 to $0.25 per click), and a very high conversion ratio since visitors need only click on a link to earn the affiliate a commission.
Predatory Advertising: method that creates or overlays links or banners on Web sites, spawns browser windows, or any method invented to overwrite or redirect affiliate links.
Residual Earnings: programs that pay affiliates not just for the first sale a shopper from their sites makes, but all additional sales made at the merchant’s site over the life of the customer.
ROAS: stands for ‘Return on Advertising Spending’. This is the amount of revenue generated for every dollar spent on advertising. For instance, a ROAS of $1 means you’re generating $1 in sales for every $1 in advertising spend, and a ROAS of $5 means you generate $5 in sales for every $1 in spending.
ROI: stands for ‘Return on Investment’. This is what all marketing managers want to see from the money they spend on their marketing and advertising campaigns. The higher the sales, the larger the number of shoppers and the greater the profit margin generated by sales – the better the ROI.
Super Affiliates: that small percentage of sites – the top 1% of affiliates, based on performance and earnings – that generate the lion’s share of the revenue for your program. They are born marketers and are very successful with the affiliate program they promote from their sites.
Two-tier: affiliate marketing model that allows affiliates to sign up additional affiliates below themselves, so that when the second tier affiliates earn a commission, the affiliate above them also receives a commission. Two-tier affiliate marketing is also known as MLM (Multilevel Marketing).
