Key Terms and Concepts of Affiliate Marketing

Action A specified task performed by a user, which results in the affiliate being awarded commission. Actions include purchasing a product, signing up for a newsletter or filling in a form.

Affiliate or Publisher* The Affiliate or Publisher markets the products of the Merchant.

Click Through A click on a link that leads to another web site.

Commission The bounty paid by a merchant to an affiliate when the affiliate makes a successful referral.

Cookie Cookies are parcels of text sent by a server to a web browser and then sent back unchanged by the browser each time it accesses that server. Cookies are used for authenticating, tracking,
and maintaining specific information about users, such as site preferences or the contents of their
electronic shopping carts.

CPA Cost per Action. Paid when a certain action is performed by a user.

CPC Cost per Click. Paid when a link is clicked upon.

CPL Cost Per Lead. Commission structure where the affiliate earns a fixed fee for a lead sent to a
merchant.

CPM Cost per Thousand (Mil). Amount paid for every 1000 views of an advertisement.

EPC Earnings Per Click. Based on historical data and conversions rates, what an affiliate can expect
to earn per click.

Merchant or Advertiser * This is the owner of the product that is being marketed or promoted.

Referrer The referrer is the URL of the web page that a user was at before reaching yours. The
server’s logs capture referral URLs and store them in their log files.

Revenue Share Commission structure where the affiliate earns a percentage of a sale.

ROI Short for return on investment.

Session The session of activity that a user with a unique cookie spends on a web site during a specified period of time

Traffic This refers to the visitors that visit a web site.

URL Short form for Universal Resource Locator. This is a unique address that identifies a web site.

XML Short for eXtensible Markup Language, XML promises more standardized and organized delivery of data over the Internet. XHTML is the XML version of HTML.

Why advertiser and publisher? Well, the merchant has goods that need to be advertised, and the
affiliate has the medium to publish those adverts. The terms are interchangeable.

According to eConsultancy’s Affiliate Marketing Networks Buyer’s Guide (2006), total sales generated through affiliate networks in 2006 was £2.16 billion in the UK alone. And MarketingSherpa’s research estimates that in 2006, affiliates worldwide earned $6.5 billion in bounty and commissions!

Affiliate networks, which act as intermediaries between affiliates and merchants, came onto the scene in 1996, with the launch of LinkShare and Be Free. Commission Junction, another big player, launched in 1998 and was bought by ValueClick (Nasdaq: VCLK) in 2003 for about $58 million.