Want to know your CPA from a CTR? Confused by the lingo affiliates use?
Our handy glossary should shed some light onto the main terms and terminology that affiliate marketers use everyday.
Affiliate: – An affiliate is an individual who drives traffic to online merchants. When a sale, lead, or other agreed action takes place, the affiliate will earn a commission. Affiliates drive traffic in many different ways but the most common methods are via website or blog content, or paid traffic from search engines’ advertising services. (See also: associate, publisher)
Affiliate Fraud: Fraudulent activity by an affiliate designed to generate illegal revenue. This can include using automated scripts to falsely create leads or clicks, or humans to do the same. Interestingly, some fraudulent affiliates set up dummy accounts with networks and generate large value cheque transactions for which payment never arrives. They are betting that the merchant may not reverse commissions generated in this way.
Affiliate Link: Is a special link containing code which tracks web visitors sent to a site by an affiliate. Each affiliate link contains a unique id specific to an individual affiliate and will record sales, visitors, and impressions generated and allow the merchant to attribute commissions.
Affiliate Network: An affiliate network provides a third party service to merchants and affiliates. The network will provide tracking, reporting and payment fulfilment services and allows merchants access to a large pool of affiliates. Networks generate performance based revenue by charging the merchant anoverride on top of affiliate commissions. (See also independent affiliate programmes).
Affiliate Programme: An affiliate program is a performance based form of marketing products or services offered by a website. The merchant pays a commission or lead rate on sales, enquiries or other actions to affiliate partners.
Associate: (See Affiliate)
Banner Ad: Graphic advertisement displayed on an affiliate site. (See Also Creatives, Skyscraper)
Charge Back: (See Reversals)
Click Through: A web user clicks on an affiliates banner or link and is directed to the merchant’s site.
CTR: Click Through Rate / Ratio. Click through rate is calculated by dividing the number of clicks an ad receives by number of impressions. Thus if a banner ad was shown 100 times and received 20 clicks it would have a click through rate of 20%.
Click Reference: Most affiliate networks offer a facility to create unique tracking links containing a click reference. This allows affiliates to identify sales that have come via a particular page or link within their site or PPC campaign. (See Also EPI).
CPA Model: Refers to two different metrics. CPA marketing is a Cost Per Acquisition models that is the umbrella terms for all lead based payment models defined below
- CPA: Cost Per Action. Metric for payment of commission based on a recordable action,
- CPL: Cost Per Lead. A metric used for the payment of actual consumer data or contact information.
- CPC: Cost Per Click.
- CPI: Cost Per Install. A payment metric used the install of a mobile application to a device.
- CPM: Cost per thousand impressions. There are some affiliate programs paying on a CPM basis.
CR: Conversion Ratio. This is obtained by number of click throughs to merchant divided by number of sales generated.
Creatives: (See Banner Ads)
Commission: An affiliates payment for sales generated by their traffic based on percentage of sales or a fixed lead payment basis.
Cookie: A cookie is a small file placed on a user’s pc as they travel through the affiliate link (or any other link where the site wishes to track user activity). A cookie allows sales generated by affiliate traffic to be recorded out of session (i.e. if the web user subsequently returns to the site and does not use the affiliate link). Cookies are usually valid for a set period of time such as 60 days, during which time the affiliate will still earn commission on any purchases made by the customer they originally referred. Cookies can also be set by merchants to specify if commissions would be payable on a repeat basis within the cookie period (recurring commissions).
Cookieless Tracking: In response to growing concerns about increasing numbers of web consumers routinely deleting cookies from their PC’s and the impact of spyware programmes, some networks are beginning to introduce tracking solutions not reliant upon cookies. Webgains is one such network.
Contextual Linking: This refers to the process of placing affiliate links to appropriate products within related text or articles on a website.
Conversion Rate (CR): Percentage of clicks that convert to a sale. I.e. 4 sales for every 100 visitors would constitute a 4% conversion rate.
Data Feed: A data feed is a file (usually in CSV or XML format) containing product information for a merchant. This file will typically contain url’s, names, images & descriptions of products offered by the merchant. These files are used by many affiliates to create relevant commercial content for their own sites.
Drop Shipping: A lesser known form of affiliate marketing. This involves an affiliate taking orders and payment, and having arranged for a merchant to deliver product direct to client. No stock is required, and buying stock at wholesale prices means commission income is higher.
EPC: Earnings per hundred clicks. This is the most commonly used metric for determing the financial return provided by an affiliate programme. It refers to the average earnings of affiliates for every hundred clicks they deliver to merchant. Many affiliate networks make this data available to affiliates, but tends to be calculated in a slightly different way by each network.
Google Adsense: Google programme offering web site owners the opportunity to include ads from its pay per click advertisers. Site owners are paid a percentage of the click cost to advertiser when one of these ads are clicked.
Google Adwords: Is the pay per click advertising solution offered by the Google search engine. Advertisers pay a cost per click which is relative to the type of site content, and how much other advertisers are willing to pay. Ads are shown alongside Google results and advertisers also have the option of ads being displayed by Google’s search network including AOL, Ask Jeeves, & Netscape. Ads are also distributed via the “content network” which consists of many thousands of sites which are not search engines.
Impressions: Refers to the number of times a banner ad or web site page is requested from the server.(see also CTR)
Link Popularity: Also known as backlinks & incoming links, this refers to the number of other sites linking to yours.
Lifetime Commissions: See Two Tier Affiliate Programme.
Network Override: This is the charge applied by networks to merchants on top of commission payments. The cost to merchant is typically 30%.
Merchant : Online retailer / business owner.
PPC: Pay Per Click. The practise of paying for traffic from search engine advertising services on a cost per click basis. Ads are served based on keywords or themes. (see also Google Adwords)
Product Feed: (See Datafeed)
Publisher: (See Affiliate)
Residual Earnings: Income generated from programmes where merchants pay commission on subsequent transactions by customers originally referred by an affiliate.
Reversal: Is when a merchant removes sales commissions from an affiliate. This is usually due to returned goods, declined credit cards, or fraudulent activity. (see Also Chargeback)
SkyScraper: Banner ad in format 120 x 600 or 160 x 600.
Super Affiliate: What we all strive to be! These rare and dynamic affiliates generate huge amounts of revenue for the programmes they promote. Generally the top 1% of sites / revenue generators.
SEO: Search Engine Optimisation. The process of altering and refining a site to ensure better performance and positions in the search engines.
Tiered Commission: Commission structure offered by merchants which increases on a sliding scale based on performance. This can be based on number of sales or sales value.
Two Tier Affiliate Programme: Programmes of this kind reward you for signing up sub affiliates. This means that you are paid a certain percentage of their earnings for the life of the affiliate.
Unique Visitor (UV): This differs from the number of clicks in that it is a metric which refers to the number of unique individuals clicking on a link. For example, one person could click on a link 3 times in one day creating 3 visitor sessions and one unique visitor session.
White Label Solution / Site (See Also Co-branding): Many merchants offer a facility where affiliates are provided with an unbraded version of their site via which to channel traffic.