The Definitive Affiliate Marketing Guide Explained!
Is this business something completely new and mind-blowing to you? Are you scared of how much info is just lying around in forums? Have you just started to explore the awesome online affiliate marketing world?
Do you have tons of questions about how everything works?
You managed to get to the right spot! This is our latest and updated Affiliate Marketing Guide!
In fact, this is the article that’s really gonna help you. By reading it, you’ll become fully able to understand the general idea of the affiliate marketing ecosystem. I’ll let you know all about the main market concepts and players, allowing you to get a glimpse of what’s waiting around the corner!
Still not sure about this whole thing? Thinking about a way to read an introductory post that saves you the balderdash and gives you the whole juice?
After you read that article I bet you’re gonna be prepared to start your journey in affiliate marketing and explore more great posts!
Ready to jump to the concepts in the affiliate marketing world?
Let’s hit it!
Affiliate Marketing Network
One of the most important partners a Media Buyer has is an affiliate network. It’s basically an intermediary between publishers (affiliates) and advertisers (offer owners).
On the one hand, it helps publishers find the best offers all over the world; on the other hand, it helps advertisers aggregate an immense amount of traffic and users from the variety of sources to their offer.
Some affiliate networks work with renewals. This means they’ll pay affiliates when a user renews the subscribed service. However, most affiliate marketing networks work based on a pure CPA basis. This means they charge affiliates only when an acquisition is made.
In case an offer fails to convert, the affiliate network won’t pay the affiliate. The amount paid is a percentage of the payout of the converted offer. This percentage is commonly known in the business as “RevShare.”
In affiliate marketing industry, an affiliate vertical is a group of offers divided by category.
There are two main verticals in affiliate marketing:
Mainstream consists of a number of sub-verticals. The biggest of these are Games (e.g. Fruit Ninja, Magic Rush), Utilities (e.g. Opera Mini Browser, Turbo Cleaner etc.) and Sweepstakes (e.g. win money, win iPhone).
Adult can be divided into the VOD (Video on Demand) and the Adult Dating sub-verticals. VOD is actually the major vertical in the market.
Time to check the most trending verticals of 2017!
An affiliate is a person who’s registered in an affiliate network. He/she uses its tools and sends traffic to the advertiser’s offer.
When users click on the offer and make an acquisition (which may be a subscription, sale, install or even just a visit), the affiliate gets paid by the advertiser. Simple.
There are four affiliate types: Media Buyer, Webmaster, Social marketer and Network (yes, an Affiliate Marketing Network can be an affiliate to another Affiliate Marketing Network).
- A Webmaster is someone who owns a website, promoting offers to his website’s visitors.
- A Media Buyer is someone who doesn’t have his own traffic. He buys it from ad networks, DSPs or direct publishers.
- A Social Marketer is basically someone who advertise on social media.
The only difference?
He only buys traffic on social networks.
How can an affiliate monetize his traffic?
In case you’re a Webmaster, you can choose between two options:
a) You can work with affiliate networks based on performance marketing, meaning they promote offers and earn from acquisitions made by users (mostly CPA and CPI models)
b) You may not want to depend on the offers’ performance, ultimately deciding to sell traffic to the ad networks by impressions, visits or clicks (CPM, CPV and CPC models)
An affiliate doesn’t have his own traffic?
Not a problem! He can buy and monetize it based on a CPA model. This is what everyone calls Media Buying. You should also read more about how to become a Media Buyer.
What about Social marketers?
They’re affiliate marketers who may also buy traffic on social media platforms (e.g. sponsored posts). If they buy it, they won’t do it on specific websites via ad networks, but from social networks such as Facebook or Twitter.
You can find more info about the Social Marketer path in this article.
An ad network is the intermediary between an advertiser (who’s an affiliate with an offer from an affiliate network) and a publisher (the owner of the traffic/webmaster). An ad network aggregates traffic from many sites, which advertisers buy to promote their offers.
This is the second most important partner of any Media Buyer.
On the ad network, a Media Buyer can target specific segments (such as country, operator, OS, devices, etc.) or sites and put the price he’s willing to pay for the traffic in an auction system: the one that pays more has better or more traffic.
After gathering relevant stats, he can exclude segments that don’t work for his offer and adjust the bid.
Want more info about targeting and optimization?
Don’t know any good ad networks yet?
Don’t worry. We’ve got the most in-depth, full-throttle, comprehensive analysis of the biggest ad networks for you!
An ad exchange is another digital marketplace where publishers and advertisers can sell/buy traffic that’s coming from multiple ad networks.
An ad exchange provides more traffic to advertisers than any single ad network can provide, giving them the option to optimize it all in one place.
In an ad exchange, unlike an ad network (where you buy impressions in bulk), each impression is auctioned and the highest bid wins the impression.
This system increases the transparency of the pricing process, as you always know how much you’ll pay and what’s your position.
DSP & SSP
A DSP (Demand Side Platform) is the platform that aggregates traffic from the multiple ad exchanges and SSPs (Supply Side Platform), thus helping advertisers find as much traffic as possible with the cheapest market price.
DSP bids are based on the RTB (Real-Time Bidding) system on behalf of advertisers. RTB allows advertisers to buy traffic per impression through a real-time auction.
The system gets info about the web page and the user while the ad spot is loading and sends its bid to the ad exchange, where it’ll compete against bids being issued from other DSPs or bidding systems for that same impression.
The ad will then be displayed on the web page of the advertiser with the highest bid. The system minimizes the number of wasted impressions, helping advertisers cut costs.
An SSP (Supply Side Platform) is the equivalent of a DSP, but on the publisher side. An SSP is a platform that helps webmasters automate and optimize the process of selling traffic by providing valuable statistics such as the number of visitors, time spent by visitors, and % of visitors returning to a specific website.
Monetizing Traffic – Performance-based Models
CPA (cost-per-action) is the mobile pricing model where an advertiser pays for the subscription to his offer.
The flow of the subscription can vary according to the country and operator policy. It can be single opt-in, double opt-in, or pin submit. It seems obvious that – the easier the flow – the higher the conversion rate.
CPI (cost-per-install) is the model used to promote mobile apps, where an advertiser pays to the publisher when users install his app or perform an action.
CPA and CPI are performance-based models. They’re used by the affiliates of affiliate networks so as to gain from the difference of buying traffic on a CPM/CPC basis and earning based on a CPA/CPI method.
Read more about CPA and CPI right now!
Apart from the CPA and the CPI model, there are other less popular models in the market.
One of them is CPL or PPL which is the abbreviation of Cost per Lead.
In this model, the advertiser pays as soon as the user provides his personal info in a form. CPL is a common model for Dating offers.
Another pricing model is called CPS (cost-per-sale) or PPS, where the advertiser pays when the user is charged by the service.
The payout is normally higher and the conversion rate is generally lower compared to other models, due to the credit card billing used in this model.
Media Buying – Bidding Models
The CPM (cost-per-mile) is the cost per 1000 impressions. You set the maximum you wanna pay per 1000 impressions of your ads.
The biggest advantage is that you can play with your banners so as to get a better Click-Through Rate (CTR). By doing so, you get to decrease the costs compared to other models.
Some ad networks have the option to bid based on the Smart CPM pricing model, which is even better than the common CPM.
When using Smart CPM, you set the maximum bid you’re willing to pay, but the actual price you pay is a bit higher (the % depends on the ad network) than the bid of your next competitor, which makes you save money.
In case there are no competitors in the segment, you’ll pay the minimum bid, regardless of your preset bid.
CPC (cost-per-click) is the model where an advertiser pays for each click on his ad (usually a banner ad).
Be careful! You’re gonna be paying for each user that’ll see your landing page.
What does that mean?
Each click is important!
CPV (cost-per-visit) is the model where an advertiser pays when the user visits the landing page of his offer.
Asking yourself what is the difference between CPC and CPV?
The thing is that a certain percentage of users may click on the banner, but then close it before the page is loaded.
In this case, the user’s action counts as a click, but not as a visit.
Notice that the potential for sweet profit is higher with the CPM model than with CPC. In order to create a profitable CPM campaign, you gotta find high-performing creatives which are in tune with the offer and the source of traffic.
If you want to know more about CPM and CPC models, you can read our previous post regarding this topic.
Affiliate Marketing Guide – Summary
You already know the main actors that are part of the Media Buying play!
Now let’s sum it all up for you real tight!
Imagine you’re a Media Buyer: you sign up for an affiliate network and – after talking with your account manager – you pick a very good CPA offer for Argentina.
Later, you sign up for any ad network and buy banner traffic in Argentina with a link to the offer.
What happens is that users in Argentina visit the sites (the ones which you buy traffic from) from your adnetwork and see your offer.
If you buy traffic per impression, that’s the moment when you pay for it: the users see your banner, you pay.
Your banner grasps the attention of some of them, so they click it and see the landing page of your offer (in the case of CPA).
On the landing page, the user can see the offer, terms, and conditions. If he agrees with everything, he clicks on the confirmation button and he’s subscribed (the flow may vary according to the country and operator).
At this point, an advertiser of this offer pays you a fixed amount for the subscribed user and the money later appears on your affiliate network account. As this amount is large (when compared to the CPM, CPC or CPV) you earn money!
This is the general idea of the business. This industry is all about pressure, stress, hard work, analysis, numbers, sheets, data, testing, testing, testing, and a lotta sleepless hours!
Even so, this is the sort of addiction that impacts your life, allowing you to choose your own fate and make a whole lotta paper bills!
Still not convinced that it’s all for you? Check these very compelling reasons to start doing affiliate marketing right now!
I hope this affiliate marketing guide has helped you put the puzzle of the online affiliate marketing world together.
I’m sure you’ve gotten a real taste for the business and are eager to go for it like a king! 🙂
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Dima Butuzov - North America & Africa Expert