An Affiliate Program?~Definition of Affiliate Marketing~Affiliate Marketing Definition~Affiliate Program}
Affiliate marketing is the activity which happens as a result of a connection between multiple parties:
1) the Merchant (sometimes called the Advertiser, or Partner),
2) the Affiliate (aka the Publisher), and
3) the Customer – If we look at the Affiliate Program in its entirety, we must involve an additional constituent as well.
The Merchant makes available the product for sale, and the Affiliate works to sell that product for the merchant and/or drive traffic to the merchant’s website. Therefore, the Merchant agrees to pay the Affiliate a commission for sales and/or agreed upon actions.
Payment Arrangements
Payment plans are usually performance-based (which is a form of risk mitigation by the Merchant) and agreements are frequently defined as Pay Per Click (PPC), Pay Per Sale (PPS) and Pay Per Lead (PPL) – or some hybrid.
Affiliate Program Classes
If we evaluate affiliate marketing in terms of levels, we discern four different groupings:
- single-tier,
- dual tier,
- multiple tier, and
- residual income programs
Single-Tier Affiliate Programs
In Affiliate Program}, the Affiliates earn the commission, only for the visitor’s traffic or revenue to the merchant’s website. Pay/performance and pay/click are included in this grouping.
Two-Tier Affiliate Marketing Program
In Two-Tier {Affiliate Marketing~Two-Tier Marketing}, the Affiliate receives paid commission for every action performed by his direct referrals, plus he gets paid additional commission when one of the people he’s personally referred gets the commission. Thus, he has a two-tier commission plan and the Affiliate gets paid both directly and indirectly.
Multi-Tier Affiliate Marketing
Multi-Tier {Affiliate Marketing} is very similar to Two-Tier Marketing, but here, the Affiliates get paid for the sales made by their affiliated affiliates in multiple, unlimited, levels.
Residual Income Marketing
With Residual Income Affiliate Marketing~Marketing}, the Affiliate marketer is compensated for every sale that is made by any of his referrals. In this type of marketing, Affiliates get paid for every sale that his referral makes at the Merchant’s url.
The only requirement is that on the first time visit, the visitor must come from the Affiliate’s authorized affiliate link. Then, when that person returns to the Merchant website (even without using the affiliate link), the Affiliate will get paid for every sale performed by the individual.
Cookies are what make this strategy work.
A “cookie” is created on the first-time visitor’s computer. This cookie identifies the affiliate id of the Affiliate. Cookies ordinarily end after 3 months; however, some may remain valid longer. Every time a visitor comes to the Merchant website, his computer is queried for any previously created cookie. If a cookie is discovered, the previously deposited ID is retrieved and the Affiliate receives credit for any anything the visitor buys.
Everybody Wins
As long as the affiliate marketing relationship is well-planned and well-executed, everyone comes out ahead:
- The Merchant gets increased visibility and market share, finding customers that would otherwise be beyond the Merchant’s existing market segment.
- The Affiliate generates a commission for online sales, without needing to establish a full e-commerce site or needing to manage inventories and fulfill orders.
- The Customer acquires needed products that s/he would otherwise not find – at least not easily.
Effective affiliate programs are Win-Win-Win situations.
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