We may earn money or products from the companies mentioned in this post. Our opinions are our own.
Affiliate Marketing Glossary
It can be hard to wrap your brain around an industry and how it works, if the language is completely foreign to you. Affiliate marketing really isn’t as confusing at it might seem. To help you along, I’ve created this quick reference guide to understand the lingo used in affiliate marketing.
Affiliate: A publisher that partners with a merchant to drive leads or sales in exchange for a bounty or commission.
Affiliates can be:
Loyalty Sites: Sites that offer their users cash, points, or incentives for shopping online and using their links. These sites share a portion of their affiliate commissions with their users. Examples include Ebates, iGive, and MyPoints.
Display: Typically refers to sites that run affiliate banner ads and/or videos.
Online stores and services offer affiliate programs to get other sites to promote them to their readers. They pay affiliates commissions for generating sales and/or leads. In the middle of affiliates and merchants we have several kinds of facilitators.
Affiliate Manager/Program Manager: A person who is in charge of running an affiliate program for a merchant. He/she is the main point of contact for affiliates who want to contact the company.
OPM: Acronym stands for outsourced program manager. OPMs are a single agency that manages many different affiliate programs for many different merchants. Examples include Schaaf-PartnerCentric, OPM Pros, and All Inclusive Media.
Network: Third party site that brings merchants and affiliates together, provides links for affiliates, tracks sales and commissions, and is typically responsible for making payments to the affiliate. Examples include ShareASale, CJ, and Affiliate Window.
Kinds of Affiliate Programs
Pay-Per-Sale: Merchant/Advertiser pays a commission when a purchase is made. These are the most common.
Pay-Per-Lead: Merchant/Advertiser pays a commission for new user registrations, sign ups, entry, or downloads. A purchase is not typically required.
Pay-Per-Call: Merchant/Advertiser pays commissions for referring leads to their call center.
Pay-Per-Click: Merchant/Advertiser pays when an ad is clicked.
ViewThrough: Tracking conversions within a predetermined timeframe after a reader sees a display ad but does not click on it.
Tools of the Trade
Creative: Promotional methods advertisers use to attract consumers such as banners, text links, email copy, and videos.
Campaign: Ad, promo, or offer a merchant is running at a network.
Direct Linking/Deep Linking: The ability to create an affiliate link to any page on a merchant’s site. Deep linking is always better than landing on a homepage and telling a shopper to search for something.
Vanity Code: A coupon code created exclusively for one specific website that typically incorporates that website’s name. It is generally frowned upon to publish a vanity code that was created for another site.
Datafeed: A digital file filled with information pertaining to a merchant’s promos, offers, sales, etc. A datafeed can be used to keep your site content up-to-date automatically. See FMTC’s Content Datafeeds for details.
SEO: Acronym stands for search engine optimization.
SEM: Acronym stands for search engine marketing.
Geo-targeting: The ability to detect where a visitor is geographically and display relevant offers accordingly. For example, if you wanted to show your readers offers from Groupon, you would only want to show them deals in their area, not deals all around the country. If your site is able to geo-target, check out FMTC’s Local Deals Feed!
And now on to the good stuff. Getting Paid!
Monetization: The act of incorporating vehicles to earn money from your online traffic. Examples include affiliate links, banner ads, AdSense, and sponsored posts.
Commission: Compensation for driving a sale or lead
Tracking URL: Affiliate link generated by the network that tracks which affiliate sent the shopper to the merchant’s site. This link must be used in order to earn commissions.
Placement/Slotting Fee: Flat rate sum a merchant will pay for being featured on high value pages, on social channels or in email campaigns.
Bonus/Performance Incentive: Extra money a merchant might pay for exceeding a specified threshold of sales or leads.
Base Rate: Standard commission rate offered publicly to all affiliates. *Tip* If your site is performing well, it never hurts to ask for terms that are higher than the base rate!
Conversion: An event that occurs when a visitor clicks a link on an affiliate’s site and makes a purchase or registers for a lead program. Affiliates earn commissions when conversions occur.
Cookie: A small file stored on a consumer’s computer that records information about that consumer. Cookies are used to track where sales originated from so that an affiliate can earn a commission.
Cookie Duration/Referral Period: The time period in which a merchant/advertiser allows their cookies to remain active in order to credit affiliates for their referrals.
Last Click: Refers to the attribution method of giving the affiliate who had the last click before the transaction occurred credit for the sale/lead. Currently, most affiliate programs pay on a “last click” model, meaning, if your reader clicked through to a store, added something to their cart, got distracted, clicked on another affiliate’s link to that store, then made the purchase, you would not get a commission for that purchase.
Measurements of Success
ROI: Acronym stands for return on investment. It is the monetary sum derived by subtracting net revenues from total costs.
EPC: Acronym stands for earnings per click. EPC is calculated by averaging the earnings per 100 clicks. It is one way to judge how well a merchant program or campaign is performing.
CPC: Acronym stands for cost per click.
CPM: Acronym stands for cost per impression. Cost per impression is calculated based on advertising cost and the number of ad impressions, usually quoted at a rate per 1000 impressions.
AOV: Acronym stands for average order value. It is calculated by dividing the total value of all purchases by the total number of purchasers over a given time period.
LTV: Acronym stands for lifetime value. Refers to the total amount a consumer will spend with a particular merchant during that consumer’s lifetime.
Conversion Rate: Refers to the proportion of website visitors that take an action before leaving the site. For example, 100 people visit a store and 5 of them place an order, the conversion rate is 5%.
Reach: The number of readers exposed to an ad. It is measured by impressions.
Trademark Bidding: Creating ads that incorporate a merchant’s name. This practice is typically not allowed. Doing so could violate a merchant’s terms of agreement and result in termination from the program. Be sure and read a merchant’s terms before engaging in this type of marketing.
Copyright Infringement: Distributing or hosting copyrighted work without the consent of the copyright holder. Copying and pasting another site’s images and content is not going to make you any friends in this business. In fact, it might even land you in hot water. Be original with your content and don’t steal from others.
Cookie Stuffing: The act of deceptively depositing affiliate cookies onto users computers without the user ever having taken an action to receive such a cookie in an attempt to gain illegitimate and unearned commissions.
And a few other miscellaneous words you might hear being dropped from time to time.
Q4: The period between October 1st and December 31st when a significantly higher number of retail sales occur due to holiday shopping.
New To File: Refers to a new customer. Often considered most valuable kind of customer by many merchants.
Niche Marketing: Refers to concentrating marketing efforts on a small but specific and well defined segment of the population.
Incremental Sales: Number of items sold through a promo that exceeds the assumed number that would have been sold without it. Example, you promote a pair of slippers that are on sale for $5 and the customer ends up spending $100 on other things while they are there.
Referring URL: The web page a consumer clicked from to reach a merchant’s website.