Home » SEM » Affiliate Marketing » The various compensation models...

Affiliate marketing sites use various different compensation models. Most common among them are pay-per-impression (PPI), cost-per-thousand (CPM), pay-per-click (PPC), pay-per-lead (PPL), cost-per-action/acquisition (CPA), pay-per-sale (PPS) and pay-per-phone call (PPP).

In PPI, the publisher gets money from the advertiser or the merchant as per the number of page views and displays (i.e. impressions) of the ad on the affiliate site. CPM is similar to the PPI model as in CPM the affiliate site gets some amount of money for every 1000 impressions of the ad (impressions have been discussed in detail in a separate article). In this model, the merchant often assumes the risk of low-quality traffic generated by the affiliate.

In PPC model, the merchant pays to the affiliate every time a visitor clicks on the ad. The affiliate site may be displaying the ad all time but they will be paid only when the ad is clicked by a visitor. PPC is sometimes seen as the middle ground between PPI and CPA.

PPL and CPA are both very similar. The advertiser pays the publisher a certain amount of money for every visitor that was referred by the affiliate site to the merchant’s site and who performed a desired action like filling out a form, creating an account or signing up for a newsletter.

In PPS, the merchant pays the publisher a percentage of the sale that was generated through affiliate site. This is a type of revenue sharing model. This model is the most common compensation model used by online retailers. But it is often seen as the most favorable to merchants and least favorable to affiliates. For merchants, PPS has some unique advantages compared to PPC and PPL. With PPS, there is less concern about whether conversions are legitimate and whether traffic is incentivised or of low quality.

PPP is a new compensation model. Here, the advertiser pays the affiliate a commission for phone calls received from potential buyers or customers in response to the ad on the affiliate site. It is then the job of the advertiser to convert the phone call into a sale.

Whatever compensation model you opt for, you should have a proper software to track the number of clicks, visits and sales otherwise you will be a loser in your affiliate business.

del.icio.us Digg Furl Reddit Ask BlinkList blogmarks Google RawSugar Rojo Shadows Simpy Socializer Spurl StumbleUpon Technorati Yahoo!