Important terms in Affiliate Marketing

Important Terms & Definitions In Affiliate Marketing

Before you get started with affiliate marketing, you need to know some important terms and their definitions.

Affiliate marketing is about three very important relationships. These three relationships are involved in any form of affiliate marketing.

These are:

1. Merchant
2. Affiliate
3. Customer

1. Merchant

The merchant is also known as the advertiser, product creator or seller. It is the merchant who sells the product.

In some affiliate programs, the merchant is directly involved but in most cases, they are not.

2. Affiliate

This is you. The person promoting the product is called the affiliate.

Whether you are promoting a product on your blog, through your email newsletter or by running ads, you are the affiliate who helps the merchant get his product sold to customers.

3. Customer

The customer is the party who buys the product. Without customers, no sales are generated and hence you don’t get any commissions.

Finding ideal customers is very important as an affiliate because it will help you generate sales for your merchant’s product.

Here are some more important affiliate marketing terms you should know:

1. Affiliate Manager

An affiliate manager is a person who manages the affiliate program for the merchant. They help affiliates increase their sales by ensuring that they use the best methods for the merchant’s product promotion.

2. Affiliate Link

An affiliate link is a link you use to promote merchant’s product. This link is unique for each affiliate and helps the merchant and affiliate program track the sales generated from each affiliate.

3. Affiliate Network

An affiliate network acts as a bridge between merchants and affiliates. Affiliate networks help the affiliate and the merchant by providing proper link tracking system, generating sales reports and also helping affiliates find the best merchants.

4. Cloaking

Cloaking means hiding the tracking code of an affiliate link.

5. Commission

The money merchants pay to the affiliate for generating a sale. The commissions are predefined.

6. CPA

CPA or Cost Per Action refers to the money paid to an affiliate for generating the desired outcome. This action could be signing up to a mailing list or buying a product.

7. CPC

CPC stands for Cost Per Click and it refers to the money paid to generate a click by a user on your website or link.

8. CPM

Cost Per Mille (Thousand) refers to the amount of money spent on advertising per 1000 impressions.

9. Impression

Impression means how many times your ad was shown on a page.

10. Landing Page

The page used to promote a product to generate sales or leads is called a landing page.

11. PPL

PPL stands for pay per lead and stands for the amount of commission per lead generated.

12. PPC

PPC or Pay Per Click stands for the amount of money paid to an affiliate by the merchant whenever a click on the affiliate link is generated.

13. ROI

ROI (Return On Investment) is a percentage or a ratio that is used to analyze the affiliate marketing efforts.

The formula for calculating ROI is:

ROI = (Gross profit – Investment) / Investment * 100

14. SEO

SEO refers to Search Engine Optimization. It is a practice of optimizing a website or a web page to get it rank higher on the search engines for the desired keywords or topics.

15. Split Testing

Split testing is also referred as A/B testing. It is the practice of testing two different variations of a web page, sales copy or advertisement to see which one performs better for your affiliate marketing goals.

16. Vertical

Vertical is also known as a niche is a specific topic.