How do Affiliates get Paid?

There are three payment mechanisms used in affiliate programs:

• Pay-Per-Action (also called cost-per-sale): Credit card affiliate programs are an example of a pay-per-sale arrangement. With these arrangements, the merchant site pays an affiliate when the affiliate sends them a visitor who then successfully applies for a credit card. Some merchants are paying a huge $88 for every person who gets a business credit card as a result of filling in a quick form after clicking through from your web site.
  
  
• Pay-Per-Click (Cost-Per-Click): In these programs, the merchant site pays you based on the number of visitors who simply click on the affiliate link on your web site to come to the merchant's site. They don't have to actually buy anything for you to get paid as an affiliate, and it is not important to the affiliate what a visitor does once they are on the merchant's site.
  
  
• Pay-Per-Lead (Cost-Per-Lead): A company offering this type of program will pay out to their affiliates based on the number of visitors who the affiliate refers that in turn sign up as leads (people indicating their interest in the product who have not yet made a purchase). All this means is that the visitor fills out some basic information about themselves at the merchant site, which the merchant can then use as a sales lead or sell to another company as a sales lead.

There are a number of other arrangements as well. Basically, a company could set up an affiliate program based on any kind of action that would be of benefit to them, and then payout based on the number of customers who performed that action once they arrived at the merchant site via the affiliate link on your web site.

Popular variations on these base payment plans are as follows:

• Two-tier: These programs have a similar structure to Multi Level Marketing organizations such as Avon cosmetics, which profit through commission based sales and sales recruitment to increase potential sales. In addition to receiving commissions based on value of sales made, number of clicks or leads originating from their own site, affiliates in these programs also receive an added bonus of a commission tied to the activity of affiliate sites they have referred to the merchant site. So in addition to the percentage you make on what you sell – you make a percentage on the sales of anyone who you have introduced to affiliate marketing!.
  
  
• Residual: These lucky affiliates can keep making money from a visitor they send to the site if the visitor continues to purchase goods or continues a subscription to services from the merchant site. Merchants such as online dating sites who receive regular payments from their customers run this sort of affiliate program.

Next - Who operates Affiliate programs?