How Does Affiliate Advertising Work?

Affiliate advertising is a form of online advertising that provides incentives for generating sales on the advertiser’s website. This is done through the placement of banner ads on affiliate websites. When a visitor of the affiliate’s website clicks an ad or clicks through and makes a purchase, the affiliate is paid a commission from the merchant. The compensation varies, depending on the type of affiliate marketing program.

The affiliate merchant is the business seeking to increase sales and generate quality traffic to their website by placing ads on affiliate website. The affiliate merchant is also known as the advertiser. The advertiser can be anything from a well known brand to a small start up seeking to generate traffic to build their businesses.

The affiliate is the blog or website where ads are placed to direct traffic to the advertiser’s website. The affiliate hosts the ads and is also known as the publisher. For many affiliates, hosting ads for merchants can be an effective tool for monetizing blogs and generating additional revenue for a website. The compensation varies, so finding quality ads that have relevance to your site’s visitors is important for getting the best results.

Although affiliate marketing programs are numerous, there are two basic types of programs. The most common are pay per click and pay for performance advertising campaigns. Each provides the opportunity to generate revenue, but how and when compensation is paid varies, depending on the type of affiliate marketing program you choose.

Pay per click advertising is a widely known type of program. This is the method used by the big search engines, such as Google, MSN and Yahoo. In this model, the advertiser pays for each click on their ads. When a visitor clicks the ad, a commission is paid. The commission is usually low, often just pennies for each click, but can be higher for top ranking for the most popular keyword searches.

Pay for performance programs pay a commission only for results. This means the advertiser only pays a commission when the ad is able to generate qualified leads or sales. As an advertiser, you are paying for results, although you will pay a bit more for each sale. For most advertisers, the commission is well worth it because you are getting a definite increase in sales and generating targeted traffic.

There are many benefits to affiliate marketing programs. The ads are easy to set up and maintain with the right online tools from the affiliate marketing program. Payment is made only for results, whether pay per click or pay for performance. This provides better results, since you are not spending money for an ad that may or may not bring results.

Affiliate marketing programs are great for smaller companies and start ups with a limited advertising budget. You are able to control your expenses and won’t be spending money upfront, as in traditional sources of online and in print advertising. Media Trust provides the technology and expertise to help advertisers and publishers get the best results from affiliate marketing. More information about performance based advertising can be found on our website.

I am an author having knowledge about online advertising. For more information on affiliate advertising, visit www.mediatrust.com.

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