As a continuation from Part 1 of Affiliate Marketing Terms, Definitions and Abbreviations today we look at what the most common affiliate program models are.
Common Affiliate Program Models
CPA – Cost Per Acquisition
This is a term used to describe the action of acquiring a new customer. CPA can be used to describe a type of network (such as CPA network) or a $ or % payout to an affiliate for a particular action taking place.
CPC – Cost Per Click
This is a term used to either describe an affiliate marketing model where the affiliate earns on every click they send to a merchant or advertiser, exactly how Google AdSense works.
CPL – Cost Per Lead
This terms is used to describe an affiliate program model where an affiliate or publisher is rewarded once a “lead” is completed through a form or other means, such as a newsletter sign up. CPL programs can pay anywhere from $0.10 per lead to $150 per lead or more. These models are most common with programs in insurance, finance and education as examples.
PPS / CPS – Pay Per Sale or Cost Per Sale
This is a term used to describe an affiliate marketing model that pays out (generally) a percentage on a sale that took place for a tangible product. Depending on the product, an average PPS or CPS payout usually looks anywhere from 1-4% to 15-30%. The average CPS commission payout is usually between 8-10%.
CPM – Cost Per Thousand Impressions
The model of paying on impressions is most common in display networks, in international affiliate programs such as in China, and in ad buys. However it’s important to be mentioned here because it is in fact an option for an affiliate program and because the term is used within the industry.
MLM – Multi Level Marketing (Not Affiliate Marketing!)
Personally, not my favorite thing in the world, and not one that many people in this industry consider affiliate marketing, however, multi-level-marketing (also known as a “pyramid scheme” or "network marketing") is very popular with some types of products and term is sometimes used in the industry so it's important to mention it here. It is NOT affiliate marketing. See this post here for more.
Stay tuned for Part 3 of our Affiliate Marketing Terms, Definitions and Abbreviations when we define commonly used terms related to reporting metrics and key performance indicators.