Affiliate Business

Search Engine Optimization vs. Pay Per Click

2007-02-09T21:45:00.001-08:00

Search Engine Optimization vs. Pay Per Click

Back in 1997 when I started getting web sites to the top of the search engines it wasn't even

called "Search Engine Optimization". In fact, there wasn't a name for what I did much less a

multi-billion dollar industry. I realized back then that search engines were the only place to find

what you were looking for on the web. They were a phone book of sorts with about 4 billion

listings that you could sort through in less than 1 second with the push of a search button.

Now the search engine game is very different yet very much the same. You have the media

bombarding you about pay per click, sponsored listings, featured listings, ppc, cpa and don't

hear very much about natural search engine optimization anymore. You don't know if there

even is such a thing because most companies that perform search engine optimization of web

sites are small and can't compete with the large advertising budgets of the major search

engines like Google and Overture. But the deeper you dig the more you realize the algorithms

haven't changed that much and getting to the top can be made simple. This leads us to two

questions.

1. Does search engine optimization work anymore?
2. What kind of traffic can I expect to see from both methods?

We'll start with the first question.

Does search engine optimization work anymore?
The answer is a resounding, ABSOLUTELY! Natural search engine placement and optimization is

not dead at all. In fact, the industry is growing at a tremendous rate. The competitiveness over

arguably the most competitive word on Google "search engine optimization" has drastically

increased. As of the writing of this article there are over 1,620,000 results when you type in

search engine optimization compared to only 560,000 two months ago.

Okay you say, that makes sense but give me more proof.

GlobalPromoter.com does no advertising other than natural search engine optimization and

natural search engine placement in the major search engines. We spend $0 on pay per click

campaigns or any other method of advertising yet our traffic rivals that of our competitors and

we average an incredible amount of account signups on a daily basis. Our visitors / purchasers

ratio is in upwards of 4.5% which is incredible in any industry. Why do we have such a high

purchase/click ratio? Because people are looking for us, we're not looking for them. When a

user goes to Google and types in "search engine optimization tools" and finds us on the first

page, they know we know what we're doing and are compelled to click if only out of awe.

The secret of the search engines is the ability to be found not the other way around. That's why

the natural search engine listings in Google outperform the Adwords listings. Users know that

sites listed in the Sponsored matches section or on the right side of the results means a

business or individual is paying every time someone clicks on their site. That equates to

advertising which is no different than radio, television, newspaper or magazines. That's a

company "pushing" their product onto the consumer.

But, when a user finds a site in the web matches section, they have more confidence. This site

didn't pay to get there, they are there because Google or Yahoo or AOL's algorithm said their

site is the most appropriate for my search based on the entire site's content. This is "Pull"

demand. Meaning, the user is looking for us instead of us looking for them. If you can get on

the Pull side of advertising then you'll experience much higher purchase / click rates on every

visitor to your web site.

On to question 2.

What kind of traffic can I expect to see from both methods?
This question needs to be answered in two parts. First let's look at the ppc method.

PPC search engine listings will give you as much traffic as there is demand for a given keyword

or keyword phrase. Meaning, if there are 500,000 searches a month and your listing is

appealing you can expect to receive approximately 2 - 5% of those searches. Let's say you get

an incredibly high click thru rate of 5%. That means you have .05 * 500,000 = 25,000 visitors at

your disposal. But if a keyword has 500,000 searches in a month then that means it's fairly

competitive and it could easily be $1.00 to be in the top 3 positions for that keyword. So if you

are paying $1.00/visitor and you had 25,000 visitors, then you paid $25,000 for the traffic one

keyword would generate for your site.

I think you can see how risky and expensive ppc can be. Unless you know you can convert

visitors into sales and your profit margin on the items you're selling is incrdibly high, then

Caveat Emptor (buyer be ware).

On the flip side, when your site shows up in the natural rankings you don't pay a single cent for

any of the traffic it generates. This means you have more money for developing your site,

tweaking marketing tactics, making your product better, etc...

As far as the old argument that you won't get as much traffic from natural placements vs ppc

listings, that's a myth. Several of our customers receive over 50,000 visitors a month on average

from natural placements in the major search engines. In fact, when we optimize a client's web

site, one of their goals is to decreaes the amount of money they are currently spending on ppc

advertising. After the completion of the optimization plan 75% of our clients completely

abandon their ppc programs. This leads us to a general comparison of ppc vs. natural rankings.

Advantages of Search Engine Optimization
1. Up front fixed cost vs. fluctuating costs that can skyrocket with ppc advertising.
2. Long term listings and rankings with natural placement vs. Showing up only as long as your

bank account has money.
3. Natural rankings have higher click thru ratios than ppc listings because natural rankings are

pull demand vs. push demand.

In Conclusion
I'm going to close this article with an analogy. Most of you have been camping before and

remember at least one cold night when you couldn't get a fire started. So you went and got

some lighter fluid and squirted it on the dry oak or whatever wood you used. Then you threw a

match into the fire and began to warm up next to the fire.

The lighter fluid is akin to ppc advertising. When the lighter fluid is squirted on the fire the

flames shoot high and bright and then vanish. Just like ppc advertising it's short term because as

soon as the money is gone so is your exposure. Whereas natural rankings are like the solid oak

used in the fire. The oak will burn for hours and hours and keep you warm much longer than

just lighter fluid alone. Like the oak, natural search engine optimization campaigns last in

excess of 6 months in stead of one day. And if you learn the secrets to good web site

optimization you can stoke the fire and make it last even longer with no added cost. Of course it

takes a little longer to get the oak branches to light up but once you get them going they will

last for a long time.

Many people see the solution to their search engine marketing campaign in pay per clicks

because they're easily set up and effective almost immediately. However, those that understand

the principle of laying a solid foundation and building upon it can understand the long term

benefits of natural search engine placement. It may take longer to get the same results but it

will cost much less in the long run.

Best Regards,
Debraj Khanal
CEO Freedom Online Business P Ltd

How MSN Ranks

2007-02-09T21:17:00.000-08:00

SEO experts often forget that there are three major search engines. While there is no doubt that Google is the number one with the most searches and Yahoo! manages to get about a quarter of the market, MSN has not retired yet. It holds about 10-15 percent of the searches (according to some sources even less – about 5%) but it has a loyal audience that can't be reached through the other two major search engines, so if you plan a professional SEO campaign, you can't afford to skip MSN. In a sense getting high rankings in MSN is similar to getting high rankings for less popular keywords – because competition is not that tough you might be able to get enough visitors from MSN only in comparison to the case when you have optimized for a more popular search engine.

Although optimizing for MSN is different from optimizing for Google and Yahoo!, there are still common rules that will help you to rank high in any search engine. As a rule, if you rank well in Google, chances are that you will rank well in Yahoo! (if you are interested in the tips and tricks for optimizing for Yahoo!, you want to have a look at the Optimizing for Yahoo! Article) and MSN as well. The opposite is not true, however. If you rank well in MSN, there is no guarantee that you'll do the same in Google. So, when you optimize for MSN, keep an eye on your Google ranking as well. It's no good to top MSN and be nowhere in Google (the opposite is more acceptable, if you need to make the choice).

But why is this so? The answer is simple - the MSN algorithm is different and that is why, even if the same pages were indexed, the search results will vary.
The MSN Algorithm

As already mentioned, it is the different MSN algorithm that leads to such drastic results in ranking. Otherwise, MSN, like all search engines, first spiders the pages on the Web, then indexes them in its database and after that applies the algorithm to generate the pages with the search results. So, the first step in optimizing for MSN is the same as for the other search engines – to have a spiderable site. (Have a look at Search Engine Spider Simulator to see how spiders see your site). If your site is not spiderable, then you don't have even a hypothetical chance to top the search results.

There is quite a lot of speculation about the MSN algorithm. Looking at the search results MSN delivers, it is obvious that its search algorithm is not as sophisticated as Google's, or even Yahoo!'s and many SEO experts agree that the MSN search algorithm is years behind its competitors. So, what can you do in this case? Optimize as you did for Google a couple of years ago? You are not far from the truth, though actually is is not that simple.

One of the most important differences is that MSN still relies heavily on metatags, as explained below. None of the other major search engines uses metatags that heavily anymore. It is obvious that metatags give SEO experts a great opportunity for manipulating search results. Maybe metatags are the main reason for the inaccurate search results that MSN often produces.

The second most important difference between MSN and the other major search engines is their approach to keywords. Well, for MSN keywords are very, very important, too, but unlike Google, for MSN onpage factors are dominating, while offpage factors (like backlinks for example), are still of minor importance. Well, it is a safe bet that the importance of backlinks will be changed in the future but for now they are not a primary factor for high rankings.
Keywords, Keywords, Keywords

It is hardly surprising that keywords are the most important item for MSN. What is surprising is that MSN relies too much on them. It is very easy to fool MSN – just artificially inflate your keyword density, put a couple of keywords in file names (and even better – in domain names) and around the top of the page and you are almost done for MSN. But if you do the above-mentioned black hat practices, your joy of topping MSN will not last long because, unless you provide separate pages that are optimized for Google, your stuffed pages might pretty well get you banned from Google. If you decide to have separate pages for Google and MSN, first, it it hardly worth the trouble, and second, the risk of duplicate content penalty can't be ignored.

So, what is the catch? The catch is that if you try to polish your site for MSN and stuff it with keywords, this might get you into trouble with Google, which certainly is worse than not ranking well in MSN. But if you optimize wisely, it is more likely than not that you will rank decently in Google and perform well in Yahoo! and MSN as well.
Metatags

Having meaningful metatags never hurts but with MSN this is even more important because its algorithm still uses them as a primary factor in calculating search results. Having well-written (not stuffed) metatags will help you with MSN and some other minor search engines, while at the same time well-written metatags will not get you banned from Google.

The Description metatag is very important:

meta name="”Description”" content="”Place"

MSNBot reads its content and based on that (in addition to keywords found on page) judges how to classify your site. So if you leave this tag empty (i.e. CONTENT=””), you have missed a vital chance to be noticed by MSN. There is no evidence that MSN uses the other metatags in its algorithm that is why leaving the Description metatag empty is even more unforgivable.

Affiliate networks

2007-02-09T21:15:00.000-08:00

An affiliate network is a value-added online media intermediary, providing services including aggregation, distribution of creative materials, and campaign performance tracking/reporting, for affiliate merchants and affiliates.[1]

For affiliate merchants, services can include providing tracking technology, reporting tools, payment processing, and access to a large base of affiliates. For affiliates, services can include providing one-click application to new merchants, reporting tools, and payment aggregation.

The networks are free to join but can be hard to find. They sometimes call themselves names like "marketing solutions provider", "pay-for-performance network", "cost-per-action advertising network", or even "performance-based online marketing services company". They can provide pay-per-lead (PPL), pay-per-sale (PPS), pay-per-action (PPA) – sometimes called cost per action (CPA) – and pay-per-click (PPC) offers from merchants that you promote on your web site or in your newsletter.

Some affiliate networks allow almost anyone to join. Others insist your site must receive a certain number of visitors. Some also let you see a directory of the merchants in the network before you join, whereas others show you their list of offers only after you join.

Search Engine Marketing

2007-02-09T20:44:00.000-08:00

Search engine marketing

In Internet marketing, search engine marketing, or SEM, is a set of marketing methods to increase the visibility of a website in search engine results pages (SERPs). The three main methods of SEM are:

* Search engine optimization attempts to improve rankings for relevant keywords in search results by improving a web site's structure, content, and relevant backlink count.
* Pay per click advertising uses sponsored search engine listings to drive traffic to a web site. The advertiser bids for search terms, and the search engine ranks ads based on a competitive auction as well as other factors.
* Paid inclusion can provide a guarantee that the website is included in the search engine's natural listings. However, as of 2006 the leading search engine, Google, does not offer this service.

Contents

* 1 Methods
o 1.1 Search engine optimization
o 1.2 Pay per click (PPC) and Search engine advertising
o 1.3 Paid inclusion
* 2 Ethical considerations
* 3 Search Engine Marketing Organizations

Methods

Search engine optimization

Main article: search engine optimization

Search engine optimization or SEO aims to index and improve rankings for the webpages which are most relevant to the keywords searched for according to the algorithm of each search engine. The relevant pages are returned in search engine results pages (SERPS). It is important to remember that genuine search engine optimizers are basically marketers who keep their target market in mind as much as the search engine algorithms (a lot of which is known purely empirically). Therefore, while we call this process search engine optimization, good marketers will note that their focus is to optimize their web page for the search engine user, who is their target audience. For instance, at one time it was believed that keyword density was an important ranking factor, but today that view is not generally held among SEO professionals. Today, many SEOs recommend writing copy for visitors first, because the web site cannot achieve its marketing objectives with "unnatural" sounding text, laden with keywords.

In order to further fine tune the pages and keep them user and search engine friendly, the architecture of the website, including its internal link structure, navigation etc., are also suitably modified for human beings and search spiders to navigate through whole website pages. Search spiders then can scan all necessary data about the whole site and store it in the search engines' data base. A good navigation systems has other benefits also, such as helping to improve user experience.

Both the number of inbound links to the site as well as the 'quality' of the links heavily influence the rankings of a site in the search engine. The definition of a 'quality' link is evolving in response to people's attempt to artificially influence the search engine results by obtaining large numbers of 'irrelevant' links to their sites. Search engine algorithms are evolutionary and strive to develop every day in an attempt to provide the most relevant and useful pages to the users and strike out the websites that trick them to attain higher positions for a while.

These processes are known as Organic or Algorithmic Search Engine Optimization (SEO) of websites. Search engine optimization takes considerable time and, as such, many sites make use of Pay-per-Click (PPC) to market their website without having to wait for the results of Organic SEO. However, organic search results can get viewed and clicked on frequently, so a dual strategy of SEO and PPC can provide more exposure than either strategy alone.

Pay per click (PPC) and Search engine advertising

Main article: Pay per click

Advertising with search engines is known by different names. It is also called sponsored search and search engine advertising. The most popular programs are offered by Google, Yahoo!, and Microsoft. Some offer PPC, where the advertiser is only charged when a user clicks on the ad, also known as Cost Per Click (CPC). Others use a Cost Per Impression (CPM) model where advertisers are charged for impressions. Ads can take many forms, including text, banner ads, video ads, map ads, and even audio ads.

Advertising based on a keyword search
Advertising based on a keyword search could take place through a search engine such as google.com, or a search engine partner site, such as shopping.com. For example, Google offers a service called AdWords, which allows companies, for a small fee, to have a link to their website featured when a user searches a specific keyword which the company specified.
Advertising based on content context
Many search engines (e.g. Google, Ask.com, Yahoo! Search) have partner websites with specific content. The websites agree to let the search engines place content-specific advertising on their website, in return for a fee. The search engine then finds companies interested in advertising on websites with their desired content. For example, an online dog food retailer might have their advertisement placed on a site about dogs.

Both of these advertising formats allow advertisers to target specific users with certain interests. Generally these advertisements are paid for based on either a pay per click campaign or an impression based campaign.

Paid inclusion

Main article: paid inclusion

Search engines use computer programs called spiders or web crawlers to automatically discover websites and catalog their content. As this process can take some time and requires a website to be linked to from another website (to allow the crawler to find it), most search engines except for Google provide another channel to be included in search rankings via paying. This is different from pay per click advertising because the inclusion is guaranteed but not placement.

Ethical considerations

Many forms of search engine optimization only amount to ensuring compliance to search engines' guidelines for inclusion and removing any technical barriers that might keep the website from reaching a proper ranking. However, other methods of search engine optimization such as keyword spamming are often viewed as "gaming the system" and considered unethical. See the article on search engine optimization for details.

Displaying advertisements or sponsored results in an area visually separated from the algorithmically determined results is generally considered ethical. However, some search engines allow the ranking of a website to be influenced with a payment and provide little or no indication to the end-user that this has happened. Since the search engines give the impression or claim that the rankings reflect the relevance or popularity of the websites, this is often seen unfair or deceptive.

Search engine advertising products that don't guarantee a specific ranking or an amount of visibility are seen as unethical by some search engine marketers. The product might provide an unspecified "boost" or the final ranking or visibility might be a result of an auction.

Paid inclusion has not caused much concern. However, it has been suggested that search engines should improve the speed they pick up new websites and that paid inclusion services thus create a conflict of interest that discourages improving service levels across the board.

Get Paid to website

2007-02-09T20:13:00.000-08:00

Get Paid to website, also known as a GetPaid or GPT, is a type of website where users are paid to complete certain tasks. Most tasks involve being exposed to advertisements. Users are paid primarily by PayPal and e-gold, usually in United States dollars (and, rarely, euros).

Types of GPT

* Get Paid to Read (PTR): the most basic form of GPT, where users sign up to receive email advertisements. Upon reading the emails, users click on a link provided which opens the advertiser's web site for up to 60 seconds. Circa 2006, users are paid between 0.01 and 3 cents per email read. All amounts and times are specific to the website and advertisement. In its early years (circa 2000-2003), many companies paid members up to 10 cents for clicking these advertisements; this has decreased as online advertising grew and the market became saturated.

* Get Paid to Click (PTC): a variant of PTR, where the user simply clicks on web banners or textual advertisements on the website itself. The PTC program does not need an email server for this, but as users need not read the email first, PTCs usually pay much less than 1 cent per click.

* Get Paid to Promote (PTP): a website provides web pages for users to promote. Whenever another person views this web page, the user is awarded a certain amount of credits. After earning enough credits, the user can redeem them for money, generally at a rate of 50 cents to $1 per 1000 views. PTP pages are often promoted through PTC ads, PTR emails or PTS sites.

* Get Paid to Surf (PTS): users access a website which rotates the page viewed in the web browser window. Users are paid very low amounts (fractions of a cent) per page viewed, because in many cases they need not actually view the rotated adverts or even be at the computer. Traffic exchanges and autosurfs are variations on this concept.

* Get Paid to Sign Up (PTSU, also PTS): Users are paid around 5 to 50 cents for signing up to programs such as other GPT sites, forums or HYIPs. Users of those other programs pay people to sign up as their referral, as they hope to earn more than they spent through receiving commissions.

* Get paid to complete offers: Users are paid several cents up to $50 to complete offers, such as signing up for a credit card, subscribing to a magazine or mail video rental service, or joining a mailing list. Websites which provide such offers normally also have a referral system, and may be paid by large companies to provide them.

* Get Paid to take Online Surveys: Users that fit certain demographics are paid to complete surveys hosted by online market research firms. Payments for surveys can vary quite drastically. A user may be paid a few cents for a three question poll, or hundreds of dollars for sampling a product and participating in a market research discussion group regarding it.

A single website may offer variations and combinations of these basic categories.

Affiliate Root One

2007-02-09T20:01:00.000-08:00

Affiliate Marketing is a method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber, customer, and/or sale provided through his/her efforts. Compensation or commission may be made based on a certain value for each exposure (CPM), visit (Pay per click), registrant or new customer (Pay per lead), sale (usually a percentage, Pay per sale or revenue share), or any combination of them.

Merchants like affiliate marketing because it is a "pay for performance model", meaning the merchant does not incur a marketing expense unless results are realized. Some businesses owe much of their growth and success to this marketing technique, especially small and midsize businesses. However, unlike display advertising, affiliate marketing is not easily scalable.

Some merchants run their own affiliate programs while others use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. (see outsourced program management) Merchants can choose from different types of affiliate management solutions including: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.

Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35 billion in sales in 2005. [1] MarketingSherpa's research team roughly estimates affiliates worldwide will earn $6.5 billion in bounty and commissions in 2006. This includes retail, personal finance, gaming and gambling, travel, telecom, 'Net marketing' education offers, subscription sites, and other lead generation, but it does not include contextual ad networks such as Google AdSense. [2]

Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors[citation needed]. The three sectors expected to experience the greatest growth are the mobile phone, finance and travel sectors[citation needed]. Hot on the heels of these are the entertainment (particularly gaming) and internet-related services (particularly broadband) sectors. Also several of the affiliate solution providers expect to see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their mix[citation needed]. Of course, this is constantly subject to change.
Contents

* 1 Multi Tier Programs
* 2 Types of Affiliate Sites
* 3 Affiliate Marketing and Web 2.0
* 4 A Brief History of Affiliate Marketing
* 5 Compensation Models
* 6 Finding Affiliate Programs
* 7 Affiliate Management and Program Management Outsourcing
* 8 Past and Current Affiliate Marketing Issues
o 8.1 Email Spam
o 8.2 Search Engine Spam / Spamdexing
o 8.3 Adware
o 8.4 Trademark Bidding / PPC
o 8.5 Lack of Self Regulation
o 8.6 CPA Networks "Threat"
o 8.7 The Name Affiliate Marketing
* 9 Important Abbreviations
* 10 References
* 11 Affiliate Services
* 12 See also
* 13 External links

Multi Tier Programs

Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms: publisher "A" signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher "A" attracts other publishers ("B", "C", etc.) to sign up for the same program using her sign-up code all future activities by the joining publishers "B" and "C" will result in additional, lower commission for publisher "A".

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others' existence, yet generate income for the higher level signup. This sort of structure has been successfully implemented by a company called Quixtar.com, a division of Alticor, the parent company of Amway. Quixtar has implemented a network marketing structure to implement its marketing program for major corporations such as Barnes & Noble, Office Depot, Sony Music and hundreds more. This is not considered affiliate marketing. Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Programs beyond 2-tier are not considered affiliate programs, but rather Multi-level marketing (MLM) or network marketing.

Types of Affiliate Sites

Affiliate sites are often categorized by merchants (Advertisers) and Affiliate networks. The main categories are:

* Search affiliates that utilize Pay per click search engines to promote the advertisers offers (Search arbitrage)
* Comparison shopping sites and directories
* Loyalty sites, typically characterized by providing a reward system for purchases via points back, cash back or charitable donations
* Coupon and rebate sites that focus on Sales promotions
* Content and niche sites, including product review sites
* Personal websites (these type of sites were the reason for the birth of affiliate marketing, but are today almost reduced to complete irrelevance compared to the other types of affiliate sites)
* Blogs and RSS Feeds
* Email list affiliates (Owners of large opt-in email list)

Affiliate Marketing and Web 2.0

The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other.

New developments have made it harder for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.

A Brief History of Affiliate Marketing

This is a citation from the book "Successful Affiliate Marketing for Merchants" from Shawn Collins of AffiliateTip.com and [3] which describes how affiliate marketing on the internet came into being.
“

As the story goes, affiliate marketing all started at a cocktail party. Jeff Bezos, CEO and founder of Amazon.com (www.amazon.com), was chatting with a party guest who wanted to sell books on her web site.

This got Bezos thinking. Why not have the woman link her site to Amazon’s and receive a commission on the books that she sold? Soon after, Amazon introduced the "Amazon Associates Program". It was a simple idea. Amazon associates would place banner or text links on their site for individual books or link directly to the Amazon’s home page.

When visitors clicked from the associate’s site through to Amazon.com and purchased a book, the associate received a commission. With that thought, Bezos created Amazon.com’s affiliate program in July 1996.

But Amazon wasn’t the first company to initiate an affiliate program. According to Brad Waller, VP of affiliate and business development for EPage (www.epage.com), the affiliate program for EPage started in April 1996. As documented in “The CDNow Story: Rags to Riches on the Internet,” CDNow’s affiliate program predates Amazon’s by more than a year.

In November 1994, almost a full year before Amazon.com even launched its web site, the venerable CDNow (www.cdnow.com) began its buyweb program. With its buyweb program, CDNow was the first to introduce the concept of an affiliate or associate program with its idea of click-through purchasing through independent, online storefronts.

It worked like this.

CDNow had the idea that music-oriented web sites could review or list albums on their pages that their visitors might be interested in purchasing and offer a link that would take the visitor directly to CDNow to purchase them. The idea for this remote purchasing originally arose as a result of conversations with a music publisher called Geffen Records (www.geffen.com) in the fall of 1994. The management at Geffen Records wanted to sell its artists’ CDs directly from its site but didn’t want to do it itself. Geffen Records asked CDNow if it could design a program where CDNow would do the fulfillment.

Geffen Records realized that CDNow could link directly from the artist on its Web site to Geffen’s web site, bypassing the CDNow home page and going directly to an artist’s music page. By linking Geffen Records to CDNow, the affiliate marketing format was born.

”

Compensation Models

The following compensation models are relevant for affiliate marketing.[4]

Pay-per-impression (PPI) / Cost-per-thousand (CPM)

Cost-per-mil (mil/mille/M = latin/Roman numeral for thousand) impressions. Publisher gets from Advertiser $x.xx amount of money for every 1000 impressions (page views/displays) of the Ad. The Ad can be text (AdSense), banner image or rich media.

Pay-per-click (PPC) / Cost-per-click (CPC)

Cost-per-click. Advertiser pays publisher $x.xx amount of money, every time a visitor (potential prospect) clicks on the advertiser's Ad. It is irrelevant (for the compensation) how often an Ad is displayed. commission is only due when the Ad is clicked. See also click fraud.

Pay-per-lead (PPL) / Cost-per-action/acquisition (CPA) / Cost-per-lead CPL)

Cost-per-action or Cost-per-acquisition (CPA), Cost-per-Lead (CPL). Advertiser pays publisher $x.xx in commission for every visitor that was referred by the publisher to the advertiser (web site) and performs a desired action, such as filling out a form, creating an account or signing up for a newsletter. This compensation model is very popular with online services from internet service providers, cell phone providers, banks (loans, mortgages, credit cards) and subscription services.

Pay-per-sale (PPS) / Cost-per-sale (CPS)

Cost-per-sale (CPS). Advertiser pays the publisher a percentage (%) of the order amount (sale) that was created by a customer who was referred by the publisher. This model is by far the most common compensation model used by online retailers that have an affiliate program. This form of compensation is also referred to as Revenue sharing.

Pay-per-call (no abbreviation exists yet)

This is a new compensation model. No official abbreviation exist yet. Advertiser pays publisher a $x.xx commission for phone calls received from potential prospects as response to a specific publisher Ad. Recently developed call-tracking technology allows to create a bridge between online and offline advertising. Pay-per-call advertising is still new and in its infancy.

Finding Affiliate Programs

Affiliate programs directories are one way to find affiliate programs, another one are large Affiliate networks that provide the platform for dozens or even hundreds of Advertisers.

Affiliate Management and Program Management Outsourcing

Successful affiliate programs require a lot of maintenance and work. The number of affiliate programs just a few years back was much smaller than it is today. Having an affiliate program that is successful is not as easy anymore. The days when programs could generate considerable revenue for the merchant even if they were poorly or not at all managed ("auto-drive") is over.

Those uncontrolled programs were one of the reasons why some of the not so positive examples of affiliates were able to do what they did (spamming[5], trademark infringement, false advertising, "cookie cutting", typosquatting[6] etc.).

The increase of number of internet businesses in combination with the increased number of people that trust the current technology enough to do shopping and business online caused and still causes a further maturing of affiliate marketing. The opportunities to generate considerable amount of profit in combination with a much more crowded marketplace filled with about equal quality and sized competitors made it harder for merchants to get noticed, but at the same time the rewards if you get noticed much larger.

Internet advertising industry became much more professional and online media is in some areas closing the gap to offline media, where advertising is highly professional and very competitive for a lot of years already. The requirements to be successful are much higher than they were in the past. Those requirements are becoming often too much of a burden for the merchant to do it successfully in-house. More and more merchants are looking for alternative options which they find in relatively new outsourced (affiliate) program management or OPM companies that were often founded by veteran affiliate managers and network program managers.[7]

The OPM are doing this highly specialized job of affiliate program management for the merchant as a service agency very much like Ad agencies are doing the job to promote a brand or product in the offline world today.

For further reference see the Wikipedia article about affiliate manager and affiliate program management.

Past and Current Affiliate Marketing Issues

In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, forced clicks to get tracking cookies set on users' computers, and adware, which displays ads on computers. Many affiliate programs were poorly managed.

Email Spam

In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Search Engine Spam / Spamdexing

There used to be much debate around the affiliate practice of spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages each devoted to different niche keywords as a way of SEOing their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic search engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google's algorithm update dubbed "BigDaddy" in February 2006 which was the final stage of Google's major update dubbed "Jagger" which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

Sites made up mostly of affiliate links are usually badly regarded as they do not offer quality content. In 2005 there were active changes made by Google whereby certain websites were labeled as "thin affiliates" and were either removed from the index, or taken from the first 2 pages of the results and moved deeper within the index. In order to avoid this categorization, webmasters who are affiliate marketers must create real value within their websites that distinguishes their work from the work of spammers or banner farms with nothing but links leading to the merchant sites.

Affiliate links work best in the context of the information contained within the website. For instance, if a website is about "How to publish a website", within the content an affiliate link leading to a merchant's ISP site would be appropriate. If a website is about Sports, then an affiliate link leading to a sporting goods site might work well within the content of the articles and information about sports. The idea is to publish quality information within the site, and to link "in context" to related merchant's sites.

Adware

Adware is still an issue today, but affiliate marketers have taken steps to fight it. AdWare is not the same as SpyWare although both often use the same methods and technologies. Merchants usually had no clue what adware was, what it did and how it was damaging their brand. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants' reputations and also hurt the merchants' general affiliate marketing efforts. Many affiliates simply "canned" the merchant or switched to a competitor's affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban adware publishers from their network.

Trademark Bidding / PPC

Affiliates were among the earliest adopters of Pay-per-click advertising when the first PPC search engines like goto.com (which became later Overture.com, acquired by Yahoo! in 2003) emerged during the end of the nineteen-nineties. Later in 2000 did Google launch their PPC service AdWords which is responsible for the wide spread use and acceptance of PPC as an advertising channel. More and more merchants engaged in PPC advertising, either directly or via a search marketing agency and realized that this space was already well occupied by their affiliates. Although this fact alone did create channel conflicts and hot debate between advertisers and affiliates, was the biggest issue the bidding on advertisers names, brands and trademarks by some affiliates. A larger number of advertisers started to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers however did and still do embrace this behavior of their affiliates and allow them, even encourage them, to bid an any term they like, including the advertisers trademarks.

Lack of Self Regulation

Affiliate Marketing is driven by entrepreneurs who are working at the forefront of internet marketing. Affiliates are the first to take advantage of new emerging trends and technologies where established advertisers do not dare to be active. Affiliates take risks and "trial and error" is probably the best way to describe how affiliate marketers are operating. This is also the reason why most affiliates fail and give up before they "make it" and become "super affiliates" who generate $10,000 and more in commission (not sales) per month. This "frontier" life and the attitude that can be found in such type of communities is probably the main reason, why the affiliate marketing industry is not able to this day to self-regulate itself beyond individual contracts between advertiser and affiliate. The 10+ years history since the beginning of affiliate marketing is full of failed attempts[8] to create an industry organization or association of some kind that could be the initiator of regulations, standards and guidelines for the industry. Some of the failed examples are the Affiliate Union, iAfma, USAMC, Affiliate Marketing Advertising Board and Affiliate Marketing Trade Association.

The only places where the different people from the industry, affiliates/publishers, merchants/advertisers, networks and 3rd party vendors and service providers like outsources program managers come together at one location are either online forums and industry trade shows. The forums are free and even small affiliates can have a big voice at places like that, which is supported by the anonymity that is provided by those platforms. Trade shows are not anonymous, but a large number, in fact the greater number (quantitative) of affiliates is not able to attend those events for financial reasons. Only performing affiliates can afford the often hefty price tags for the event passes or get it sponsored by an advertisers they promote.

Because of the anoymity of forums, the only place where you are to get the majority (quantitative) of people in the industry together, is it almost impossible to create any form of legally binding rule or regulation that must be followed by everybody in the industry. Forums had only very few successes in their role as representant of the majority in the affiliate marketing industry. The last example[9] of such a success was the halt of the "CJ LMI" ("Commission Junction Link Management Initiative") in June/July 2006, when a single network tried to impose on their publishers/affiliates the use of Javascript tracking code as a replacement for common HTML Links.

CPA Networks "Threat"

Affiliate marketer usually avoid this topic as much as possible, but when it is being discussed, then are the debates explosive and heated to say the least. [10] [11] [12] The discussion is about CPA Networks and their impact on "classic" Affiliate Marketing. Traditional Affiliate Marketing is resources intensive and requires a lot of maintenance. Most of this includes the management, monitoring and support of affiliates. Affiliate Marketing is supposed to be about long-term and mutual benefitial partnerships between advertisers and affiliates. CPA Networks on the other hand eliminate the need for the advertiser to build and maintain relationships to affiliates, because that task is performed by the CPA Network for the advertiser. The Advertiser simply puts an offer out, which is in almost every case a CPA based offer, and the CPA Networks take care of the rest by mobilizing their affiliates to promote that offer. CPS or revenue share offers are rarely be found at CPA Networks, which is the main compensation model of classic Affiliate Marketing.

The Name Affiliate Marketing

Voices in the industry are getting louder[13] that recommend a renaming of Affiliate Marketing. The problem with the word affiliate marketing is that it is often confused with network-marketing or multi-level marketing what it is absolutely not. "Performance Marketing" is one of the alternative names that is used the most, but other recommendations were made as well, [14] but who is to decide about the change of a name of a whole industry. Something like that was attempted years ago for the Search Engine Optimization Industry, an attempt that obviously failed since it is still called SEO today.[15][16]

Important Abbreviations

The following abbreviations are commonly used in affiliate marketing.[4]

* AD - Advertisement, text, banner, flash, video etc.
* CJ - Commission Junction (Network)
* CPA - Cost per action
* CPC - Cost per click
* CPL - Cost per lead
* CPM - Cost per mil (mil/mille/M = latin/Roman numeral for thousand)
* CPS - Cost per sale
* CR - Conversion rate
* CTR - Click through rate
* DRM - Dynamic rich media (type of Ad, technology). It has nothing to do with DRM as in digital rights management
* EPC - Earnings per click / earnings per 100 clicks
* LS - Linkshare (Network)
* NCS - Nationwide Card Services (Network)
* OPM - (or APM) - outsourced (affiliate) program management
* PFI - Pay for inclusion
* PID - Publisher ID (Affiliate/Affiliate site ID)
* PF - Performics (Network)
* PFP - Pay For performance
* PPC - Pay per click
* PPCSE - Pay per click search engine
* PPI - Pay per impression
* PPL - Pay per lead
* PPS - Pay per sale
* ROI - Return on investment
* SAS - ShareASale (Network)
* SE - Search engines
* SEM - Search engine marketing
* SEO - Search engine optimization
* SERP - Search engine result page
* SID - URL parameter the affiliate can pass to get tracked with sales and leads