Business Model
If you intend to go into affiliate marketing, you must be aware of the compensation methods available.
Cost Per Sale (CPS)
About 80 percent of affiliate marketing programs today use revenue sharing. Revenue sharing is basically the commission for a referred business. It is also called Cost Per Sale or CPS. It is basically a low risk but high profit strategy of getting new customers and is an innovative way to drum up new business.
It is a cheap way to pursue brand awareness and knowledge as compared to other marketing avenues, such as print ads, television commercials and direct mail campaigns. Cost Per Sale maximizes dollars since it charges the business based only on the success of the marketing campaign of the affiliate.
Cost Per Action (CPA)
19 percent of affiliate marketing programs use Cost Per Action or CPA. It is also known as Pay Per Action (PPA). An action can be a purchase of a product, a submitted form and others that is linked to the advertisement. Pay Per Click or PPC is another form of PPA but has since become a scheme of its own.
Cost Per Click (CPC) and Cost Per Mile (CPM)
Less than one percent of affiliate marketing is CPC or CPM. This is best personified with the Pay Per Click advertising model that is used on websites. It is more of a pay per performance model. CPC is the cost that an advertiser pays to a search engine and other Internet publisher for a single click on their advertisement. Examples of CPCs are the Google Adwords, Microsoft AdCenter and Yahoo! Search Marketing. Google offered their AdWords in 2006, but was discontinued in October 2008 and was replaced by another Google-owned service called DoubleClick.
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