The 2 types of affiliate programs

If you're just starting out in affiliate marketing, you'll notice that there are several different types of programs you can join - and this can be somewhat confusing. So before you jump in with both feet, you'll want to learn a bit more about the programs you can promote, the differences between them and the qualities that make a program match your marketing style.

Affiliate programs can be divided in two main areas: PPC and PPP.

PPC stands for "Pay-Per-Click". This type of program pays you each time that one of your visitors clicks an ad and visits the merchant's website. The goal of this type of program is to generate web traffic for the merchant - and it will be entirely up to him what he, in turn, does with the traffic. The largest PPC campaign broker is Google, and their program is called "AdSense" (it's those blue link ads you see at the end of this page).

The main advantage in PPC for you, as an affiliate, is that as long as you can generate clicks for the merchant, you will get paid... no matter if the traffic you're sending converts into sales or not.

The biggest disadvantage of this type of affiliate marketing program is the payout. Each click that you generate for the merchant will usually pay you anywhere between a few cents and a couple of dollars (depending on the niche or industry that you are targeting).

PPP stands for "Pay-Per-Performance" (also known as CPA or Cost-Per-Action). In this type of affiliate program, the merchant pays you when the visitor takes a particular pre-defined action. This action can be a sale or it can be a signup or lead. In the PPP model of affiliate programs, the merchant can pay you a percentage of the sale you generate or a fixed fee (that decision is up to the merchant, so keep your eyes open for the terms of each program you join).

The main advantage of PPP affiliate programs is that the payouts are usually larger than those programs that pay per click.

On the downside, the visitors that you generate for the merchant *must* take the action required. If they don't buy (or subscribe), then you don't get paid. For this reason, the PPP model requires you to learn how to drive targetted traffic that is relevant to the merchan'ts website.

But wait! There's more...


Single-tier, 2-tier and multi-tier affiliate programs

Affiliate programs can also be organized in tiers or levels. These programs can pay you not only for the traffic, subscribers or sales that you generate directly for the merchant, but also for the traffic, subscribers and sales resulting from affiliates that have signed up under you.

This is essential a kind of multi level marketing, where there various level of tiers, below the first tier affiliate. The first tier affiliate, will not only get paid, for sales referred directly, but also from those generated, by those in the tiers below him. It is always wise to keep your eyes open for affiliate programs with more than one level, the end results may vary a LOT.


And the holy grail: Residual income affiliate programs

In residual income affiliate programs, you get paid whenever one of your referrals makes a purchase... but you also keep getting paid for as long the customer you referred keeps buying from the merchants website. These types of program are normally reserved for merchants who offer services that require a maintainance fee (like web hosting).

Residual income affiliate programs hold the potential of earning you a HUGE amount of money, because your promotion efforts are not lost after a single sale is made - and the commissions you earn with them can really add up in a hurry!

Next tip (3/7) » How to find a good niche for affiliate marketing

(Or, go back to the Free Affiliate Marketing Tips page)