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Affiliate Glossary
Affiliate
Person or organization which earns money from their website by placing
advertising (text, banners, pop-ups etc.) on it that generate actions that
have been defined as commissionable by merchants (payment per click, per
lead or per sale).
Autoresponder
An autoresponder is a piece of software that automatically replies to an
email message by sending a pre-composed reply that can be structured to
include images, text, PDF files etc. Many autoresponders can be set up to
send multiple follow-up messages at pre-defined intervals, or in response
to certain actions such as a recipient clicking on a link within a prior
message. The more sophisticated autoresponders are also able to respond to
triggers (such as keywords) within the initial email, and to select from
the most appropriate reply. Autoresponders can be used for tasks as simple
as sending a confirmation email when someone signs up for a newsletter or
sends feedback via a form, or as complex as sending a series of targeted
email marketing messages at pre-determined intervals. The most advanced
autoresponders incorporate additional functionality such as the ability to
track responses (clicks on links within the message being sent, email
responses to the automated mailing etc.)
Banner
(ad)
A banner or banner ad is a graphical advertisement, typically 468 pixels
wide by 60 pixels tall (although many other standard and less standard
banner sizes exist.) Banner ads used to be virtually synonymous with Web
advertising, and indeed they remain the single most popular form of
advertising carried by websites. This despite the fact that the response
rate for banner advertisements has dropped precipitously from the lofty
highs of double-digit percentage clickthroughs in the "early days" of Web
advertising to fractions of a percent today. While most websites still
make use of banner ad inventory, many other types of advertising such as
text ads and ads embedded within the content of a page show much better
clickthrough rates. Banner ads should therefore be considered just one
small part of an affiliate program's total arsenal of marketing resources
(i.e beware of programs that offer only to let you "put up a banner on
your site" without offering alternative types of advertising creative to
work with.)
CPC
CPC stands for
cost per click (through)
and refers to the cost incurred in getting one person to click on an
advertisement (banner, text or other form of advertising) and going to the
site referenced by the link. The term CPC arises in a number of contexts
in both web advertising and affiliate circles. An affiliate program that
pays on a CPC basis will pay a small amount for each clickthrough
(essentially, each visitor) delivered to the target site via an affiliate
link. Some search engines offer advertising paid for on a per-click basis
- these are called Pay Per Click search engines.
CPM
CPM stands for
cost per thousand
(think of the Roman numeral "M", which means "thousand") and is usually
used as a measure of the cost of displaying 1,000 advertisements of any
kind (banners, text ads or any other form of ad that can be tracked). For
example, a CPM rate of $10 for banner ads means that it will cost $10 to
purchase 1,000 banner ad impressions. CPM is also a useful metric to use
when normalizing the revenue potential of two affiliate programs with
completely different commissions and conversion rates; by calculating the
value of each affiliate program on a notional CPM basis (in this specific
case, income per 1,000 ad impressions) it is possible to quantify which of
two affiliate programs is the more profitable for a given site or page.
Affiliate programs themselves rarely pay a straight CPM amount (except in
the case of extremely low-paying "filler" campaigns where the affiliate
network is seeking to purchase large amounts of ad inventory in bulk.)
CTR
CTR stands for
click-through ratio
or
click-through rate,
and refers to the number of ad impressions required to generate a
click-through (i.e. to "persuade" a visitor to click on the link
referenced by the ad), expressed as a percentage. In other words, if it
takes 20 ad impressions to generate one click-through, this represents a
CTR of 5%.
EPC
EPC stands for
[average] earnings per (100) clicks.
EPC metrics have been touted by many affiliate networks as a method of
gauging the relative performance of different affiliate programs and of
different ad creatives within each affiliate program. Beware: Some
affiliate networks, such as Commission Junction, define EPC as "average
earnings per HUNDRED clicks" whereas other affiliate networks, such as
FineClicks, define EPC as "average earning per ONE click." It is therefore
essential to be sure which definition of EPC is being used in any
particular situation, since one EPC measurement scale is 100x the other
EPC measurement scale - even though they're both confusingly referred to
as "EPC"! EPC can be calculated by dividing the commission earned by the
number of clicks required to generate that commission (and then
multiplying by 100 if the larger EPC factor is desired). While EPCs can
occasionally be a useful measure of a program's likely performance, you
still need to
do the math’s each
time.
FAQ
FAQ stands for
frequently asked questions.
A FAQ is usually used by a website to pre-empt the most likely questions
that site visitors may have by listing up common questions and answers.
FAQs
can informally be divided into two groups: the "informative FAQ", which
focuses on problem-solving and providing information (e.g. "How can I
configure my affiliate links to track visitors from multiple websites?"),
and the "marketing-speak FAQ", which focuses on the questions the company
wishes
people would ask (e.g. "How will your product save me both time and
money?") but which are of no practical use, and serve only to frustrate
the reader. When setting up your own site's FAQ, don't give in to the
siren-call of the marketing-speak FAQ!
Hit
The "hit" is perhaps the most abused term in web traffic measurement. A
"hit" is recorded every time a web browser makes a request for a single
item of information, such as the HTML code underlying a web page, or the
graphics on that page. A hit is recorded for every such element on a page,
so for instance 31 hits will be generated by loading a page with 30
graphics on it ONCE (HTML + 30 graphical elements = 31 hits) Hits are a
useless measure for anything beyond making the traffic to a website "sound
impressive" (e.g. "Our new site got a million hits last month!" - what's
not stated is that each page might have 100 graphics on it, meaning that
only 10,000 pages were actually served.)
Merchant
Company or organization on the pay-side of an affiliate relationship.
While merchants are typically e-commerce sites, which compensate
affiliates for bringing in customers, other types of sites can also be
thought of as "merchants" from an affiliate program viewpoint. For
instance, a company that pays a bounty for each new subscriber to its free
newsletter is an "affiliate merchant", even though they're not (directly)
selling a product.
Opt-in
Opt-in is a consent-based method of subscribing people to a newsletter or
mailing list. In other words, people must actively "choose" to join the
mailing list by for instance inputting their email address into a signup
form. Double opt-in is a stronger form of opt-in, whereby a confirmation
action is required to activate a subscription, typically by means of an
activation link embedded in a welcome message sent to the subscriber's
email address. Many mailing list hosting companies and affiliate merchants
require that the mailing lists they work with be double opt-in to avoid
any possible Spam issues. The action of building an opt-in mailing list is
commonly referred to as
permission marketing.
See also:
Opt-out.
Opt-out
The flipside to opt-in, opt-out is a non-consensual method of subscribing
people to a mailing list. The fundamental difference between an opt-in and
an opt-out mailing list is that a person has to say "I'd like to JOIN this
list" to get on an opt-in mailing list, but they are included on an
opt-out mailing list without their consent, and have to say "I'd like to
LEAVE this list" in order to get taken off it. The dividing line between
opt-out and outright Spam is a flexible one, and the two are
interchangeable in many peoples' minds. Opt-out relationships can range
from the benign but misguided ("These people have bought our product, so
therefore they want to get our newsletter...") to the underhand ("This
user checked off an interest in "Entertainment" when they signed up for
our newsletter, so that gives us full permission to sell their email
address a hundred times to a hundred different people building
entertainment-related email lists.) Commercially, you're always going to
be better off in the medium-to-long term establishing permission-based
(i.e. opt-in) relationships.
Pyramid
scheme
A scam (illegal in most countries) that takes multi-level-marketing to an
ignoble conclusion by relying on the "greater fool" principle. In a
pyramid scheme, the originators of the scheme rely on the income generated
by the recruiting of new members (the "greater fools") by existing members
to compensate the people higher up. Since these kinds of schemes are
always predicated on exponential growth, the supply of fools is quickly
used up and most people involved end up losing their shirts - often sooner
rather than later!
Pyramid schemes have never been an
accepted form of affiliate marketing,
and this entry is included here purely as a warning.
Second-page click
A method of tracking and rewarding actions taken in a CPC affiliate
program whereby a payment is only made for visitors that
arrive at a target site AND take
further action.
In other words, an affiliate program operating on a second-page click
basis would only pay a bounty for clicks made by visitors on the target
page i.e. the page hosted on the merchant site. Typically, the number of
second-page clicks can be from 10%-50% of the number of visitors sent to
the page on which the clicks are tracked, meaning that revenue
expectations should be adjusted accordingly.
Two-tier program
A two-tier affiliate program rewards affiliates on two levels, for two
different types of action. The first tier represents the "standard"
merchant-affiliate relationship, i.e. the affiliate is paid for generating
an action such as a lead or sale. The second tier provides for a way to
incentiize affiliates into bringing more affiliates on board. Typically,
this second tier reward takes the form of an ongoing percentage of the
earnings of affiliates that sign up "under" the original affiliate that
introduced them to the program. The preponderance of the commission in a
two-tier program is generally paid in the first tier (e.g. a 20%
commission rate, and a 5% commission on the earnings of recruited
affiliates.) Two-tier programs can sometimes be seen to walk a fine line
between a straight affiliate relationship (whereby affiliates get paid for
generating a sale or lead) and a multi-level-marketing relationship (where
affiliates can expect to derive the bulk of their income from the actions
of those under them, rather than from sales to end customers.)
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