Affiliate Marketing Glossary

Affiliate marketing has a unique language all to itself. Below is an A - Z of some of the most common affiliate marketing terms.

Adsense: Program from Google where relevant ads are displayed on websites. The website owner is paid every time one of these ads is clicked.
Affiliate: Anyone who earns commission for referring clicks or leads to a merchant. In most cases this commission is paid only when a sale is made in some however money is paid just for the referred click. This is most often done from a website but can be done via a mailing list or blog.

Affiliate Link: A piece of code in a graphic or text link that identifies to the merchant which affiliate sent the customer to their site.

Affiliate Directory: A directory of affiliate programs, featuring information such as the commission rate, number of affiliates, and affiliate solution provider. These are great places to find relevant and profitable programs.

Affiliate Network: A third party providing services to affiliate merchants and affiliates, including tracking technology, reporting tools, and payment processing. Click here for the top networks.

Affiliate Program: Where a merchant pays commission to an affiliate who generates traffic to the merchant website. May require a purchase to be paid before commission is paid. For the best Affiliate Programs click here.

Charge Back: an incomplete sales transaction (i.e. merchandise is purchased and then returned within the guarantee period) that results in an affiliate commission deduction.

Click-through: when a user clicks on a affiliate link.

Click-Through Ratio (CTR): percentage of visitors to a webpage who click-through on a affiliate link to visit the merchant's web site.

Commission: income an affiliate receives for generating a sale, lead or click-through to a merchant's web site. Usually received when a sale is made and as a percentage of that sale.

Co-branding: Where affiliates are able to include their own logo on the merchant's site or in a free promotional product provided by the merchant.

Cookie: A small file that is sent to the users PC when they visit the merchants website. This tells the merchant which affiliate sent the user if they subsequently return to the merchants site directly ( not using the affiliate link ). A cookie is usually valid for a period of time i.e. if a cookie is valid for 90 days the affiliate will earn commission if the product is purchased within 90 days of the user arriving at the merchants site by the affiliate's link.

E-mail Link: an affiliate link to a merchant site in an e-mail which is usually set to a large number of people on a distribution list by the affiliate.

Impression: how many times an advertising link is displayed. In some cases merchants will pay per number of impressions i.e. 1$ per 1000 impressions.

Merchant: an online business that markets and sells goods or services.

Pay-Per-Sale: program where an affiliate receives a commission for each sale of a product or service that they refer to a merchant's web site. Pay-per-sale programs usually offer the highest commissions and the lowest conversion ratio.

Pay-Per-Lead: program where an affiliate receives a commission for each sales lead that they generate for a merchant web site. Examples would include completed surveys, contest or sweepstakes entries, downloaded software demos, or free trials. Pay-per-lead generally offers midrange commissions and midrange to high conversion ratios.

Pay-Per-Click: program where an affiliate receives receive a commission for each click (visitor) they refer to a merchant's web site. Pay-per-click programs generally offer some of the lowest commissions (from $0.01 to $0.25 per click), and a very high conversion ratio since visitors need only click on a link to earn the affiliate a commission. Google Adsense is the current leader in this area.

Residual Earnings: programs that pay affiliates not just for the first sale a shopper form their sites makes, but all additional sales made at the merchant's site by that customer. Reliant on cookies.

Sales Page: Merchant webpage that tries to persuade the visitor to buy their product.

Targeted Marketing: offering the right offer to the right customer at the right time.

Tracking Method: the way that a program tracks referred sales, leads or clicks. The most common are by using a unique web address (URL) for each affiliate, or by embedding an affiliate ID number into the link that is processed by the merchant's software. Some programs also use cookies for tracking.

Text Link: link that is not accompanied by a graphical image.

Two-tier: affiliate marketing model that pays a commission for sales made by affiliates signed additional affiliates below themselves, so that when the second tier affiliates earn a commission, the affiliate above them also receives a commission.