Affiliate Program Glossary

Affiliate: Person or organization which has entered into an agreement with a merchant site in which they are monetarily rewarded for driving traffic to the parent site and or converting these visits to sales.

Affiliate Agreement: Legal contract by and between a merchant and an affiliate which outlines the nature and terms of the business relationship.

Affiliate Program Directory: Listing compilation of affiliate programs, featuring information such as commission rate, number of affiliates, and affiliate solution provider. Some of the largest affiliate program directories include: Associate-It, AssociatePrograms.com and Refer-it.

Affiliate Link: A piece of code residing in a graphic image or piece of text placed on an affiliate's web page that notifies the merchant that an affiliate should be credited for the customer or visitor sent to their web site.

Associate: Synonym for affiliate.

Auto responder: Piece of software that automatically replies to an email message by sending a pre-composed reply that can be structured to include images, text, PDF files etc. Many auto responders can be set up to send multiple follow-up messages at pre-defined intervals, or in response to certain actions such as a recipient clicking on a link within a prior message.
Auto responders can be used for tasks as simple as sending a confirmation email when someone signs up for a newsletter, submits an application form, or sends feedback , or as complex as sending a series of targeted email marketing messages at pre-determined intervals. The most advanced auto responders i.e GetResponse, incorporate additional functionality such as the ability to track responses.

Banner (ad): A banner or banner ad is a graphic-based advertisement, typically 468 pixels wide by 60 pixels tall (although many other standard and less standard banner sizes exist.) The single most popular form of advertising carried by websites, banner ads used to be synonymous with web advertising. With the advent of so many additional types of web advertising such as text ads and ads embedded within the content of a page, banner ads now cordon only a fraction of the web ad market as opposed to being the dominant vehicle.

Browser: Client program (software), such as Internet Explorer, Netscape, or Opera, employed by users the purpose of inputting a keyword or phrase in order to receive a list of related internet resources.

Charge Back: Incomplete sales transaction (i.e. merchandise purchased and then returned) that results in a deduction from the affiliate's commission account.

Click & Bye: Term used to describe what happens when an affiliate loses a visitor to the merchant's site once they click on a merchant's banner or text link.

Co-branding: Promotional strategy in which affiliates are permitted to include their logo | identity branding on each web page to which visitors pass through affiliate links.

Collaborative Commerce Networks: Networks of merchants and web sites in which all work in a cohesive manner as true business partners. Merchants provide their affiliates with a level of sales and distribution support equal to that of what manufacturers give their resellers.

Commission: Payment an affiliate earns for generating a sale, lead or click-through to a merchant's web site. Commission is also referred to as a referral fee, a finder's fee or a bounty.

Cookies: Minute date files stored on the visitor's computer, which record and track information designated by the merchant site. With respect to affiliate programs, cookies have two primary functions: 1) to track what a customer purchases, and 2) in order to pay a commission earned, to track the sale back to the affiliate from which the sale originated.

Context-Centric: Matching promotional text for good and services with like-minded affiliate web sites. By placing advertisements for good and services next to content that is related both in tone and subject increases the potential for sales.

Contextual Link: The act of integrating affiliate links with related text.

Conversion Rate: The percentage of clicks that constitute a commissionable, i.e. sale or lead, activity.

CPA, (cost per action): a cost metric associated with the attainment of each commissionable action.

CPC, cost per click(through): Cost incurred to get one person to click on an advertisement (banner, text or other form of web advertising) which, in turn, leads to his\ her usage of the site referred by the link.. An affiliate program that compensates per CPC pays a nominal amount for each clickthrough, essentialy per visitor, delivered to the target site via an affiliate link. Pay Per Click search engines. offer advertising paid for on a per-click basis.

CPM: Also known as, cost per thousand, CPM, used to measure the cost to display 1,000 advertisements (banners, text ads or other online advertisements with the ability to be tracked). For example, a CPM rate of $10 for banner ads means that it will cost $10 to purchase 1,000 banner ad impressions.
CPM is a helpful tool to employ when comparing the revenue potential of two affiliate programs with completely different commissions and conversion rates. By calculating the value of each affiliate program on a equivalent CPM basis it becomes possible to quantify which of the two is the more profitable.

CTR: click-through ratio or click-through rate, expressed as a percentage, refers to the number of ad impressions required to generate a click-through (i.e. entice a visitor to click on the link referenced by the ad). In other words, if it takes 10 ad impressions to generate one click-through, this represents a CTR of 10%.

Customer Bounty: Money earned by the affiliate partner for each new customer they are able to direct to a merchant's site.

E-mail Link: Affiliate link to a merchant site in an e-mail newsletter, signature, or a dedicated e-mail blast.

eZine: Shortened term for electronic magazine, some e-zines, are merely the online version of their print counterparts while others are only available in digital | online format.

EPC (Metrics): [average] earnings per (100) clicks, has been touted by many affiliate networks as a highly effective method for gauging the relative performance of different affiliate programs and of different ad creatives within each affiliate program. Beware: Many affiliate networks employ different definitions of EPC. The true method of calculating EPC can is to divide the commission earned by the number of clicks required to generate that commission.

FAQ: or frequently asked question, is used by a website to pre-empt the most likely questions that site visitors may have by listing succinct answers to common questions.
"Hit" is probably the most abused term used to measure web traffic. A "hit" is recorded every time a web browser makes a request for a single item of information, such as the HTML code underlying a web page or the graphics on the page.
As a hit is recorded for every such element on a page, i.e. 41 hits will be generated by loading a page with 41 graphics on it ONCE (HTML + 40 graphical elements = 31 hits) Therefore, hits are not an accurate measurement for anything beyond making the traffic to a website "sound impressive".

HTML code: Lines of programming code used by affiliates to add links onto their Web sites. Affiliate solution providers often provide a software tool to establish links by copying the code from an affiliate link and pasting it into their own HTML pages.
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Hybrid Model: Type of affiliate commission structure that combines dual payment options (i.e. CPC & CPA).

Impression: Metric that indicates how many times an advertising link will be displayed.

Lifetime Value of a Customer: Amount of sales in dollars that a customer in his lifetime will spend with a particular company.

Media Metrix: Service provider that measures traffic counts on all the web sites and digital media properties on the internet. They regularly publish the names of the Top 50 sites in the US, the Global Top 50, and, something called the Media Metrix, a comprehensive listing of the top 500 web sites.

Merchant: Online business that markets and sells goods or services. Merchants establish affiliate programs as a cost effective method to get consumers to purchase a product, register for a service, fill out a form, or visit a Web site.
While merchants are typically ecommerce sites, which compensate affiliates for bringing in customers, other types of sites. i.e. those that pay a bounty for each new subscriber to its free newsletter, can also be grouped into the merchant category.

Opt-in: Also known as permission marketing, is a consent-based method of subscribing people to a newsletter or mailing list. The important note of distinction is that people must actively choose to join the mailing list i.e. by providing their email address on a signup form.
Double opt-in is a closer monitored form of opt-in, whereby a confirmation action i.e. return of a confirmation email, is required to activate a subscription. As double opt helps alleviate possible spam problems, many mailing list hosting companies and affiliate merchants require that their mailing lists be of this type.

Opt-out: The flipside to opt-in, opt-out is a non-consensual method of subscribing people to a mailing list. The fundamental difference between an opt-in and an opt-out mailing list is that a person has to say take an action to join to get on an opt-in mailing list, whereas, they are automatically included on an opt-out mailing list and have to request their email address be removed to get taken off the list.
The dividing line between opt-out and outright spam is a flexible one, and the two are interchangeable in many contexts. Opt-out relationships tend to take some liberties with respect to users' original interests and intentions. Hence, commercially speaking, to establish medium to long-term relationships, it is a sounder business practice to utilize opt-in methodologies.

Pay-Per-Sale: Program wherein affiliates receive commissions for each visitor to a merchant's site who, in turn, makes a purchase. Pay-per-sale programs usually offer the highest commissions and the lowest conversion ratio.

Pay-Per-Lead: Program wherein affiliates receive commissions for each sales lead they generate for a merchant web site. Examples of this type include completed surveys, applications, contests and sweepstakes entries. Pay-per-lead generally offers midrange commissions and midrange to high conversion ratios.

Pay-Per-Click: Program wherein affiliates receive commissions for each click (visitor) they refer to a merchant's web site. Pay-per-click programs generally offer some of the lowest commissions (from $0.01 to $0.25 per click), and a very high conversion ratio since the earning of commissions only requires a visitor to click on a link.

Pyramid Scheme Scam (illegal in most countries): that relies upon chains of contact to expedite a sham-based multi-level-marketing hoax. In a pyramid scheme, the originators of the scheme rely on the income generated by the recruiting of new members by existing members to compensate the people (more established) in the organization. Since these kinds of schemes are always predicated on exponential growth, once the supply of new folk is extinguished, the lower ranking members often find themselves unable to recoup their investments. Note: This is a precautionary explanation as pyramid schemes are not and have never been an acceptable form of Affiliate Program.

Residual Earnings: Programs that pay affiliates for not only a visitor's first purchase but for each additional sale made over the lifetime of the customer.

ROI: 'Return on Investment' or ROI is how marketing managers determine the success of their advertising and promotional campaigns. They want to see a measurable increase in the number of sales directly derived from their strategic efforts. The higher the sales, the large the number of shoppers and the greater the profit margin generated by sales - the better the ROI.
Second-page click Method of tracking and rewarding actions made in a CPC affiliate program whereby a payment is only made after visitors reach a target site AND, subsequently, take further action. Typically, the number of second-page clicks can be from 10%-50% of the number of visitors sent to the page on which the clicks are tracked, meaning that revenue expectations should be adjusted accordingly.

Server: Computer, or a software package, that provides a pre-specified type of service to client's software running on other computers. The term can refer to a particular piece of software or to the machine on which the software is running. A single server machine could simultaneously run several different types of server software packages, thus providing many different servers to various clients on the network.

Spam n. or Spamming v.: The phrase which has taken on many additional terms, i.e. electronic junk mail or blanket newsgroup postings, generally refers to mass e-mail advertisings sent to a mailing list or newsgroup.

Storefront: Prefabricated HTML pages designed for affiliates that integrate affiliate links with advertisements for new or specialized products.

Super Affiliates: A very small percentage of sites - i.e. top 1% of affiliates, that qualify based upon stellar performance and earnings quotients. In turn, this elite group tends to yield the bulk of revenue for a given merchant site.
Targeted Marketing: Research on the demographics, interests and lifestyle orientation of company's primary audience and, subsequent implementation of applicable strategies, in order to more effectively sell goods and services.

Tracking Method: Methods employed to record referred sales, leads or clicks. The most common include: coding a unique web address (URL) for each affiliate, embedding an affiliate ID number into the link processed by the merchant's software and | or using cookies.

Text Link: Link not accompanied by a graphic image.

Two-tier program: Two-tier affiliate program rewards affiliates on two levels or for two different types of action. The first tier represents the "standard" merchant-affiliate relationship, i.e. the affiliate is paid for generating an action such as a lead or sale. The second tier provides for a way to motivate affiliates to bring more affiliates on board.
Two-tier programs can sometimes be seen as a combination straight affiliate relationship (whereby affiliates get paid for generating a sale or lead) and multi-level-marketing relationship (where affiliates rely upon those under them to create a bulk of their revenue.)

Viral Marketing: Any advertising that propagates the way viruses do i.e. the rapid adoption of a product among demographic groups or the swift forwarding of an offer to friends, family and colleagues through email networks.