Blog > Affiliate Marketing

What is Affiliate Marketing: A Detailed Guide of Affiliate Terminology

Thanks to the evolution of technology, the world is exposed to smart devices fueled by the internet and social media, which have changed the lives of millions since their inception.

Today, the internet does not only provide a source of information, entertainment, or communication but also give an unbiased platform to make money and build a thriving career by just sitting at home.

Ever since the internet showed the potential of making money online, the search term of how to make money online has grown exponentially.

If you told people a decade ago that they can make millions while sleeping and working from home, people would have laughed on you.

Thanks to affiliate marketing, social media marketing, search engine optimization, blogging, freelancing, etc. people can make five-figure incomes while working from the living room in their pajamas.

Out of all the options, affiliate marketing is one of the most profitable and stable income streams for anyone who aspires to grow a side business or full-time income stream.

What is Affiliate Marketing?

Affiliate marketing is an activity where you collaborate with the brand and refer their particular products and services to the audience.

For each successful purchase through your recommendation, you get a commission from that brand.

There is no limit about how much you can make through affiliate marketing because there is neither an income cap nor specific targets that you need to achieve to maintain affiliation with particular brands.

The more you sell, the more you earn.

In door-to-door sales, you go to people's place, knock on their door and advertise specific products; and based on the number of sales you make, the company will pay commission.

In the case of affiliate marketing, the situation is reversed.

People come to your website while looking for a particular type of products. They read your content, and if they find the product helpful, they can purchase through your affiliate link.

One of the most exciting things about affiliate marketing is you can sell any products belong to any niche. Yes, you can sell anything to anyone through affiliate marketing because all you need is an excellent website, relevant product, and appropriate content.

Before diving deep into affiliate marketing, you must also know specific terms and terminologies to understand the structure of affiliate marketing better.

Popular Affiliate Marketing Terms

Affiliate: The person who earns a commission after every successful purchase done from the person's recommendation

Merchant: Merchant is a brand or a business whose products an affiliate sells.

Affiliate terms: These are the list of the conditions that mutually agreed by the merchant and the affiliate.

Relationship between the merchant and the affiliate is built and maintained by these terms.

Affiliate link: This is the most crucial element that governs the whole process of affiliate marketing.

Affiliate links are the URLs that track the traffic and conversions coming from an affiliate website. The merchant or affiliate networks give these links to the publishers.

Affiliate manager: this is a person who oversees the affiliate marketing programs that are built and governed by the merchant.

Affiliate program: This represents the structure based on which the affiliate is given the commission for every successful conversion.

Affiliate software: It is a computer program cloud hosted or locally installed; and helps the affiliate to track, manage, analyze, and execute affiliate marketing campaigns.

Affiliate software will let you know how many clicks, impressions, conversions, traffic did your website got in due time.

Application form: Almost all the major affiliate marketing programs have application forms which the publishers have to you fill to become the affiliate. These applications are reviewed and approved by the merchants.

Affiliate network: Networks are an essential entity which works as a bridge between affiliate and merchant. These networks help affiliates to find profitable affiliate programs and products instantly.

Banner ads: Conversely to textual and link advertisement, this ad represents a billboard ad in the form of GIF, video, flash movie, etc.

Impressions: How many times did your advertisement been seen or appeared to visitors.

Click-through-rate (CTR): It is the percentage of the people who click the affiliate link compared to the number of people who viewed it.

Cost-per-click (CPC): It is a payment method that means you are being charged per single click.

Cost-per-action (CPA): We have to pay money when a particular action is performed.

Cost-per-million Impressions (CPM): The cost that advertisers have to bear to get a thousand impressions of their advertisements.

Cost-per-order (CPO): The amount that the affiliate had to spend per sale.

Cookies: Cookies are a form of a textual file that stores information about the visitor. It has data about interest, date, and time.

Cookie expiration: The expiration date of a cookie is already defined when the cookie is saved in the web browser. It is the period when the sales are counted.

This period also determines whether repeated sales are recorded.

Recurring commission: For some products, the buyer has to renew the license to keep using that particular product. So whenever merchants charge the renewal fee from the user, the affiliate is paid a recurring commission.

Residual income: it is a type of commission that merchant gives to the affiliate for all the purchases that are being made by the buyer coming from the affiliate's website.

For example, if you are selling drones and cameras from your website, the user goes to the merchant's website from your landing page and purchase camera accessories instead of a camera that you promoted.

Here, even though you promoted a different product, you will be given residual income since the user purchased something thanks to your recommendation.

ROAS: It stands for Return On Advertising Spending, which shows how much money did you make per dollar. For example, if the ROAS of your campaign is $100, that means you made $100 after spending $1.

Return-on-investment: Return on investment is also known as ROI, which is the most critical metrics for any marketer and business owner. 

Everyone aspires to generate maximum ROI from their Advertising and Marketing activities. It shows the profit that you made after spending a particular amount.

Type of affiliate marketing

Website

In most of the cases of affiliate marketing, a website is a mandatory tool to use for affiliate marketing campaigns.

People can utilize their website to advertise and promote specific services or products in the form of banner or text advertisements.

Blogging

An established blogger has a good readership and loyal audience who is continuously engaging with the content that the blogger publishes.

So, the bloggers can leverage their reputation by genuinely promoting relevant products based on the niche of their blogs and monetize their online reputation.

Paid advertising

Here, the affiliates have to invest in paid advertising options like social media, search engines, banner advertising, email marketing, etc.

Through this type of marketing, the affiliates do not need to have a website to promote products and services. You can also start promoting your products with the help of social media profiles or email addresses.

Vouchers

This is one of the most renowned ways of making money through affiliate marketing and make an insane amount of money every day.

Promoting and providing coupons, discount codes, and vouchers to help users get discounted price for their favorite products; and in return, earn commissions from the merchants whose coupons are redeemed by the users.

Every coupon websites, voucher, and discount codes providers usually monetize their websites with the help of affiliate marketing.

Publish reviews

Here, you can write a detailed review of a specific product on your website.

The review can be in any form like text, video, movie, animation, infographics, or live streaming. 

Either way, your objective is to provide genuine feedback which helps users on the web so that more people come to your website to read the review and eventually by the products which you are promoting.

These type of websites should have an excellent online reputation and user engagement to earn affiliate incomes.

Email marketing

Email marketing is one of the oldest forms of affiliate marketing, which has undergone many evolutions over the years.

In this type of affiliate marketing, you promote products or services through emails which are sent to recipients who would be potential buyers of the product.

For each successful purchase, you earn a commission. However, ensure that your emails do not appear as spam for fishy to users.

Sign-ups

In this type of affiliate marketing, affiliates focus on getting as many registrations.

With the help of different affiliate marketing ways discussed above, publishers try to get as many people to sign up for services or purchase the products.

Moreover, you can also bring more user sign-ups on an eCommerce store, subscribing to newsletters, turn-on posts notification for social media posts, book an appointment, or using a trial offer of a product.

Conclusion

Do let us know what do you think about affiliate marketing and its terms which are discussed in this article.

If you are already doing affiliate marketing and have a decent experience of the industry, share your feedback, and tell our readers more about your success and experiences.

Let's help each other grow a successful affiliate marketing business.