The Glossary of Affiliate Marketing

The Glossary of Affiliate Marketing

Affiliate marketing is getting more complicated as it’s becoming more integrated with other marketing disciplines for a holistic marketing approach. In addition to grasping sophisticated concepts, those embarking on the affiliate marketing journey must learn lots of jargon, terminology, and acronyms. It can get even more confusing as some terms are used interchangeably.

While this is not a comprehensive list, every affiliate marketing pro should know these common terms.

First, the Players

At its core, affiliate marketing is an agreement between two parties. The first party has a product or service to sell, and the second party has a website or social presence on which to promote those products or services in exchange for a commission. The two parties need help, though! Who can facilitate the relationship between them? Who will track the transactions? Meet the players.

Advertiser (also referred to as a merchant, retailer, or brand): A business that markets and sells goods or services they manufacture, create or license for resale. Advertisers take in the traffic that affiliates send and hopefully convert a high percentage of it to paying customers.

Affiliate (also called publishers, influencers, partners, or associates): A person or company that drives qualified traffic to an advertiser and receives a commission when the traffic converts to sales or leads. We call affiliates who primarily promote coupon codes “coupon affiliates” and affiliates who mainly produce content (like bloggers or YouTubers, for example) “content affiliates.”

Network: (also known as tracking platforms though there are some distinguishing factors) A company that facilitates the tracking of sales or leads generated by the affiliate’s traffic. Once sales or leads are successfully tracked, networks pay the affiliates their commissions. Some networks hold commission money in escrow, waiting for transactions to occur, while others bill the advertiser after the fact. Apogee is certified on the ShareASale, Impact, and Refersion networks, and we have experience with many others.

Affiliate Manager: A person or agency that runs the day-to-day operations of an affiliate program for an advertiser. A manager recruits and guides affiliates, monitors transactions, and generates regular reports for the advertiser. Management can be in-house (an employee of the advertiser) or contracted to an affiliate program management agency).

Now, the Terminology

Some of these terms might be found in reports, while others are used in conversations between folks in the industry. Looking for more? We’re here to help.

Active with clicks: In a report to an advertiser, this is the number of affiliates who successfully send traffic to an advertiser.

Active with sales: In a report to an advertiser, this is the number of affiliates who successfully send traffic that converts to one or more sales.

Affiliate Agreement: Terms between an advertiser and an affiliate governing their relationship. An Affiliate Agreement need not be a legal document or written in legalese. Apogee uses the agreements as guidelines, written in human language, to inform affiliates about allowed and disallowed activities in the programs we manage.

Affiliate fraud: Bogus activity by an affiliate to generate illegitimate, unearned revenue.

Affiliate link: A hyperlink containing a unique identifier that, when clicked, tells an affiliate network or tracking platform that a publisher should be credited for a sale or lead on the advertiser’s website.

Affiliate recruiting: The act of seeking and enrolling a person, company, or organization to become a partner in sales for an advertiser’s program. Popular affiliates receive hundreds of pitches each day.

Arbitrage: A practice through which some web publishers—second-tier search engines, directories, and vertical search engines, for example—engage in the buying and reselling of web traffic.

Auto-approve: An affiliate application approval process wherein all applicants are automatically approved to be in an affiliate program. Apogee manually approves all applications to our managed programs.

Average Order Value: The calculated value of all revenue generated for a certain amount of time divided by the number of orders. AOV is expressed as an average.

Chargeback: An incomplete, voided, or reversed sales transaction that results in an affiliate commission deduction or reversal. A customer who purchases through an affiliate link but returns the product will generate a chargeback for the affiliate. It also refers to the fees advertisers pay to credit card companies when fraud occurs.

Click fraud: The deceitful practice of posing as pay-per-click traffic to generate false revenue by the affiliates serving the ads. In PPC advertising terms, it generates a charge per click without having actual interest in the target of the ad’s link.

Click-through rate (CTR): The number of clicks an ad or affiliate link receives, divided by the total number of times that ad or link is displayed or served. For example, if an ad has 100 impressions and three clicks, the CTR is 3 percent.

Cloaking: A process that sends search engine spiders to alternative pages that are not seen by human end-users. Search engines record content for a URL different from what the visitor sees to obtain more favorable search positions.

Commission (also called a referral fee, finder’s fee, or bounty): The income an affiliate receives for generating a sale, lead, or click-through to an advertiser’s website.

Contextual link: An affiliate link integrated with related text.

Conversion:  When a customer takes the desired action, such as a purchase or registration sign-up.

Conversion rate: The number of customers who take the desired action after clicking through on an ad, divided by the total number of click-throughs to a site for that ad.

Cookieless tracking: A method of tracking that uses server-side code—scripts—that runs when a user visits a web page. Streaming information and data captured by the script are sent to an analytic server for storage instead of being stored in a cookie in the user’s browser.

Cost of Acquisition (CAC): The total cost including manufacturing, distribution, advertising, discounts, and fees associated with selling a product to a new customer.

Cost Per Acquisition (CPA): The cost metric for each time a qualifying action, such as sales and registrations, takes place. Not to be confused with Cost Per Action.

Cost Per Action (CPA): The cost metric for each time a commissionable action takes place.

Cost Per Click (CPC): The cost metric for each click to an advertising link.

Cost Per Lead (CPL): The average cost an advertiser pays per qualified lead.

Cost Per Order (CPO): The cost metric for each time an order takes place.

Cost Per Sale (CPS): Advertising in which the advertiser pays only for clicks (through a banner or text link) that result in the purchase of a product on the advertiser’s website.

Cost Per Thousand (CPM): The average cost an advertiser pays for one thousand banner advertising impressions. The amount paid per impression is calculated by dividing the CPM by 1,000. For example, a $10 CPM equals $.01 per impression.

Coupon affiliate: An affiliate whose business model consists of making coupons available.

Customer bounty: A commission or bonus paid by an advertiser to an affiliate partner for a new customer.

Data feed (or datafeed; either is acceptable): A plain text file that contains the information needed to populate a website with product information. Feeds may be provided to a publisher by an advertiser but are more commonly accessed through a network.

Deep linking: Linking to content buried deep within an advertiser’s website, usually to an individual product or category page.

Earnings Per Hundred Clicks (EPC): Earnings or average payout per hundred clicks.

Earning per Thousand Impressions (EPM): Earnings or average payout per thousand impressions. This metric is most often used with images or videos.

Effective Commission Rate: What was actually paid out to affiliates in the prior month, as opposed to the program’s listed default rate. Apogee sets individual punisher rates based on the publisher’s primary promotion methods.

Escalating commission (also called sliding scale or tiered commissions): A compensation system based on an increase in the money paid to an affiliate. Commissions increase based on achieving certain goals, such as a specific number of transactions, a dollar amount generated, or a level of click activity.

Hybrid model: An affiliate commission model that combines payment options. Some affiliates require fees to create content. In a hybrid model, the fees are negotiated based on future commissions earned as affiliates.

Influencer marketing: A type of social media marketing that uses endorsements and product mentions from individuals who have a dedicated social following.

In-house: An alternative to using an affiliate solution provider; it builds an affiliate program architecture—management, tracking, or both—within a company.

Key Performance Indicators (KPI): Metrics that are used to quantify objectives that reflect the strategic performance of an online marketing campaign. They provide business and marketing intelligence to assess a measurable objective and the direction in which that objective is headed.

Landing page: The specific webpage a visitor reaches after clicking on a search engine listing, pay-per-click ad, banner ad, or text link.

Lead, lead generation: Websites that generate leads for another company’s products or services. The visitor completes a contact form on a lead generation site to get more information about a product or service. The submitted contact form is considered a lead.

Lock date: The date upon which an affiliate transaction cannot be reversed, voided, or edited.

Loyalty affiliates: Affiliates who offer incentives to their members with cash back or other benefits and rewards to shop through their website. The incentive is usually a portion of the affiliate commission paid to the affiliate.

Manual approval: An affiliate application approval process where all applicants are manually vetted. Affiliates who meet specific criteria are approved for the affiliate program.

Niche sites: A website oriented towards a very specific topic or audience. Niche sites often have high traffic because they serve customers looking for unique content.

Paid placement: The payment of a fee to a publisher that guarantees an advertiser a specific position on a publisher’s page or inclusion in specially created content (such as a newsletter or gift guide).

Pay Per Call: Similar to pay-per-click, advertisers pay a commission for every incoming phone call directed by a publisher. An affiliate link isn’t required, but each call will have an associated code with which to credit a publisher. Not usually called PPC to avoid confusion with the more common pay-per-click.

Pay Per Click (PPC, also Paid Search): Affiliates buy ads on Google or other search engines promoting a product, and they either send the traffic back to their own website for more information or they direct link to the advertiser.

Pay Per Impression (PPI): Advertisers pay commissions to publishers based on how many times their ads were served on a publisher’s site.

Pay Per Lead (PPL): Publishers receive a commission for each lead they generate, such as completed surveys, contests, or sweepstakes entries. Pay-per-lead generally offers midrange commissions and midrange-to-high conversion ratios.

Pay Per Sale (PPS): Publishers receive a commission for each sale of a product or service that they refer to an advertiser’s website. As a result, pay-per-sale programs usually offer the highest commission rates and the lowest conversion ratios.

Payment threshold: The minimum accumulated commission an affiliate must earn to trigger a payout from an affiliate program.

Rate card: A document that details an affiliate’s various ad placement options.

Return on Advertising Spending (ROAS): The revenue generated for every dollar spent on advertising is expressed as a percent.

Super affiliates: The affiliates in a program who, based on performance and earnings, generate most of the revenue for a program. Usually, the top one percent of performers.

Tracking method: While the affiliate link is the most common way to track affiliate transactions, others can be effective. The advertiser’s shopping cart software may track coupon codes linked to a specific publisher. The advertiser may set up a co-branded page on their site. Sometimes third-party analytics platforms are used to inspect traffic and pay publishers according to an agreed-upon scale.

Trademark poaching: Using PPC ads, without permission, to directly link to an advertiser’s site while using trademarked names or branding, as if acting on behalf of the advertiser. Search engines only allow one link per domain, which sometimes overrides internal paid search efforts, therefore “poaching” the customer and taking credit for sales.