Affiliate Programs

Affiliate programs are utilized by many companies looking for a cost effective way to generate sales on the Internet. It is a direct response marketing method in which an affiliate is compensated for helping a company generate new business online. Depending on a company’s goals, the affiliate may be paid for every new person that they send to the company (i.e. the lead), but it is more common for the affiliate to be paid for every actual sale that they generate. In the case of a sale, the affiliate is usually compensated with either a commission percentage, or with a predetermined flat rate (Pay Per Sale (PPS)). In the case of a lead, the affiliate typically receives a predetermined flat rate (Pay Per Lead (PPL)).

Percentage vs. Flat Rate Affiliate Programs

There are pros and cons associated with the two primary forms of compensation that an affiliate can receive for generating a sale for an advertiser online. Many affiliates prefer the PPS option because it means that they will always know how much money they’ll make for every sale that they help to generate. Other affiliates would rather receive a percentage of the sale because they could conceivably make more money depending on how many sales they generate and more importantly, the value of each sale.

It is best to illustrate the difference by way of an example. Let’s say that an advertiser sells a variety of products online that range in cost from $50 to $125. The company launches an affiliate program offering either $25 per sale, or 25% of each sale. If an affiliate chooses to receive a flat rate payment and generates a $75 sale, they would make $25. But if they choose to receive a percentage and generate the same $75 sale, they would earn $18.75 ($75 x 25%), meaning the PPS option was the most profitable. However, if an affiliate generates a $125 sale, the percentage option would be the most profitable, earning the affiliate $31.25 instead of the $25 flat rate.

Some advertisers only offer a commission structure without the PPS option, and vice versa. IncentaClick specializes in PPS affiliate marketing, and primarily caters to affiliates that are interested in earning a predetermined flat rate for every lead or sale that they generate for an advertiser.

Tiered Structures in Affiliate Programs

Many advertisers utilize a tiered payment structure with their affiliate programs in order to motivate affiliates to generate a high level of sales. Tiered structures can come in a variety of forms, including:

• Average Sale Tier: The higher the average sale generated by an affiliate, the greater percentage or PPS they receive.
• Sale Volume Tier: Regardless of the average sale value, the affiliate will receive a greater percentage or PPS for reaching a certain volume level, i.e. 25 sales, 50 sales, etc.
• Referral Tier: If Affiliate A is able to get Affiliate B to sign up for an advertiser’s affiliate program, Affiliate A would receive compensation for every sale or lead generated by Affiliate B in addition to the money Affiliate A earns for generating their own sales or leads.

The concept behind affiliate marketing programs continues to increase in popularity as more and more advertisers turn to this model as a way to generate sales online while minimizing (if not eliminating) their online marketing expenses.

For more information on the benefits of affiliate programs, or if you have any questions or concerns that you would like addressed, you are welcome to contact the IncentaClick sales department.