Affiliate Marketing!

Welcome!
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Recently, I have developed an interest in Network Marketing and started to learn about it. To develop a better understanding of the subject, I thought of bringing into writing everthing that I have learnt and to share it with people across.

It is an open blog and I would apppreciate your comments on it. 
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Before I go on to define: What is an Affiliate Marketing? We must first get ourselves familiar with the Terms ?Affiliate? and ?Marketing?.

So, let?s first start with the terms:

Affiliate

An Affiliate, with reference to Affiliate Marketing, is a corporation or an individual that is linked or related to another company by undertaking the task of promoting or selling its products or services through ones own website or other electronic marketing medium.

Marketing

American Marketing Association (AMA) has defined the marketing as: ?the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.?

Affiliate Marketing

Keeping in view the above two terms, we can say that ?Affiliate Marketing? is an activity or set of processes undertaken by an affiliate to promote or sell the products/services, which have value to customers, of its principal in return for some reward.

To make it more simple and elaborating to show how it works:

• An Affiliate Marketing is a revenue sharing venture between a website owner and an online merchant. The website owner will place advertisements on his website to either help sell the merchant?s products or to send potential customers to the merchant?s website, all in exchange for a share of the profits.

                                                                     (Source: wisegeek.com)

• Affiliate marketing is hosting links, banners, and product information on a website or blog and then getting paid a flat fee or percentage of a sale whenever visitors click through on these links and make a purchase. In essence, affiliate marketing is selling products or services offered by others and then getting paid for each sale.

                                                                           (Source: About.com)

Affiliate Marketing / Internet Advertising Pricing Models:

There are three different methods being used to reward an Affiliate Marketers:

1) Cost per Click (CPC): It is a pricing model whereby the merchant pays its host every time a potential customer clicks its ?ad? through the host website. This reward could be fixed per click or based on a bid.

2) Cost per Sale (CPS): It is a pricing model whereby the merchant pays its host every time a customer performs a specified action (a purchase, a form submission, and so on) through an ad placed on affiliate website.

3) Cost per Lead (CPL): It is sometimes referred to as Pay per Lead. Under this method an Affiliate is paid every time a potential customer registers himself with the merchant through the ad placed on an affiliate website.

Advantages of Affiliate Marketing

As you can see from the affiliate pricing models, these methods are advantageous to both website owners and the merchant. Let us see how it is beneficial to both of them:

• Benefits to Merchants

1. Saves a huge cost of advertising as these ads are placed on affiliates? websites at no cost or at very nominal cost.
2. Through Affiliate Marketing?the merchants have the advantage of getting its products/services exposed throughout the world by getting itself connected with more websites. All he has to do is to allow ads of its products/services to be appeared on someone else website.

• Benefits to Affiliates

It helps an Affiliate to earn some extra income without having to do anything. All it involves is placing an ad on the affiliate?s website. There?s no selling or promotion of any kind. All he has to do is to provide a link on his website to the merchant?s website and thus he can just sit back and wait for the profits to roll in.

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