Affiliate Marketing
Instructor: Salik Khan
Learning Outcomes
● Understand the principles, benefits, and pitfalls of affiliate marketing and
identify which types of affiliates are best for your business.
● Develop an effective affiliate marketing strategy and measure and evaluate
affiliate marketing programme.
● Integrate affiliate marketing into wider marketing activity.
Unit 1 Content: What Are We Going To Learn
● Internet as a Marketing Channel & Brief History of the Internet
● Basic terms and definitions
● Introduction to affiliate marketing
● How Affiliate Marketing Works
● Tracking Methods: Cookies, Cookie Stuffing
● Pricing models /Affiliate Program payment methods
● Affiliates- Google Ad sense
● Fraud and violation of rules: Email spam, search engine spam, Google slap
● Adware, trademark bidding-Tiered Affiliate Marketing,
● Cross-selling and up-selling-
● Multi-tier marketing and commissions.
The Customer-Seller Paradigm & Marketing
● Traditional Marketing Channels: TV, Newspaper, Billboard, Flyers, Posters.
● Technology and Marketing: The Birth Of The Internet
● Heart Of Every Marketing Channel: People
● Why Internet Marketing Matter: Targeted & Trackable
● Where Traditional Marketing Fails
In The Beginning
“Half the money I spend on advertising is wasted; the trouble is I
don't know which half.”
John Wanamaker
A Brief History Of The Internet
● Computers in the '60s were large and immobile- Data was centrally located at a
physical location.
● In order to make use of information stored in any one computer, one had to either travel
to the site of the computer or have magnetic computer tapes sent through the
conventional postal system.
● The Internet started in the 1960s as a way for US Defence/Military researchers to share
information virtually even after a nuclear attack by USSR.
● US Defence Dept’s ARPANET (Advanced Research Projects Agency Network)
ultimately evolved into what we now know as the Internet.
The Internet In 1969
It only connected the University
of Utah with three research
centers in California.
Source: BBN / DARPA
The Internet Today
The digital world is a universe in its
own right - 60 Seconds seems to
be an Eternity!
Internet as a Marketing Channel
On 27 October 27, 1994, the first banner went live on hotwired.com. For over four
months, 44% of those who saw it clicked on it.
Internet as an Affiliate Marketing Channel
Internet as an Affiliate Marketing Channel
It was an online service from 1984 to 2001 that offered its subscribers access to a broad range of
networked services, including news, weather, shopping, bulletin boards, games, polls, expert
columns, banking, stocks, travel, and a variety of other features.
Affiliate Marketing & Other Importance Definitions
Affiliate
The affiliate, or publisher, is the person who tries to sell the products of the
advertisers using his or her own channels. Affiliates may forward visitors to the
advertiser using the promotional material provided by the advertisers.
Advertiser
The brand which uses affiliate partners to promote their product/service.
Affiliate Marketing & Other Importance Definitions
Affiliate link
An affiliate link is a link that informs the advertiser through which affiliate a sale has
taken place. In this way, the affiliate marketer receives the commission to which he or
she is entitled. An affiliate link is always unique and can be ‘picked up’ from the various
affiliate marketing networks.
Affiliate Marketing – a type of marketing that is based on performance. In affiliate
marketing, affiliates are paid for successfully promoting a product or a service.
For example, a person running a tech blog can be an affiliate of a technology company
that wishes to advertise their product on that blog. The affiliate earns money each time
they refer a visitor to the company’s landing page, i.e., when a blog visitor clicks on
that company’s ad.
Affiliate Marketing & Other Importance Definitions
AFFILIATE NETWORK –
acts as an intermediary between affiliates and advertisers. Affiliate networks allow
affiliates to easily find and participate in affiliate programs which are suitable for
their inventory. Advertisers who offer affiliate programs work with affiliate networks
to reach larger audiences, i.e. all affiliates participating in the affiliate network.
OFFER URL – the final URL where the visitor will land after clicking the promotion
link or banner.
Affiliate Marketing & Other Importance Definitions
CONVERSION – an event generated by a user that an advertiser is willing to pay
for.
This is usually a target action of the end user, defined by the advertiser. It can be
a subscription to a service, lead generation, sale of a product, installation of a
mobile application. Conversion is the final goal of advertising for which
advertisers pay to affiliates.
CLICK-THROUGH RATE (CTR) – the percentage of clicks for the number of
advertising impressions displayed to visitors or bought from other networks.
Affiliate Marketing & Other Importance Definitions
CONVERSION RATE – the percentage of clicks that converted, i.e. turned to lead
or sales.
For example, if one in every hundred visitors to your site makes a purchase, then
your conversion rate is 1%.
TRACKING LINK – also called click tracking link or affiliate link, it is a unique URL
to which a certain affiliate sends clicks for a particular offer. This is the advertised
link, e.g. link behind the banner. When users click the banner, they go to that
specific URL.
How does affiliate tracking work?
Example Affiliate Tracking URL
How does affiliate tracking work?
Cookies
This is one of the most common tracking
methods. As Internet users, we’re aware
of Cookies because we receive new
notifications about them every time we
visit a new site.
Cookies are designed to recognize users, in particular those who visit a website
more than once.
How does affiliate tracking work?
Client-based tracking: Client-based tracking utilizes cookies on the user’s end.
Cookies are placed in the user’s browser when they click on an ad, which leads
them to a landing page.
Different types of internet cookies
Session cookies: Also known as 'temporary cookies', help websites recognise
users and the information provided when they navigate through a website.
Permanent cookies: Also known as 'persistent cookies', remain in operation
even after the web browser has closed. For example : Login details and
passwords.
First-party cookies: They are installed directly by the website (ie domain) the
user is visiting (ie the URL shown in the browser's address bar).
How does affiliate tracking work?
Different types of internet cookies
Third-party cookies: They are installed by third parties with the aim of collecting
certain information from web users to carry out research into, for example,
behaviour, demographics or spending habits. They are commonly used in online
marketing.
For example, when you visit a news outlet’s website, the website will create a
both first-party and third cookie. Since this is a news outlet, like many other
publisher websites, use ads developed by other websites that create a third-party
cookie and save it to your computer.
What Is Cookie Stuffing (a.k.a. Cookie Dropping)?
Cookie stuffing is an illegitimate technique where a malicious affiliate drops
multiple cookies in the user's browser or system to monetize the sales
happening through that browser.
Through cookie stuffing, the threat inhibitors can either stuff unwanted cookies or
overwrite the legitimate existing cookies. It's difficult for advertisers to detect this
kind of trap, and they lose their marketing revenue.
What Is Cookie Stuffing (a.k.a. Cookie Dropping)?
Types Of Cookie Stuffing
There can be different ways the fraudsters sneak and overwrite cookies on the
user's web browser. The most common ones are listed below:
Adware: Adware is software that displays ads in the form of pop-ups once
installed on a user system. Marketers use these for effective promotions, but the
malicious ones can change users' browser settings, add spyware, or bombard
users' devices with advertisements. The malicious affiliates use adware to inject
the user system with the affiliate cookies and earn a commission without getting
user traffic for the advertisers.
Types Of Cookie Stuffing
Pop-Ups: A pop-up advertisement is a common and attractive way of catching
user attention. Affiliate marketers use this tactic to instantly get users to click on
their links and redirect them to the advertiser's page.
Iframes: iFraming or inline framing is inserting/embedding a separate HTML
page within an existing HTML page. Most advertisers have a readable product
page, and the affiliates embed an iFrame on the target page with an affiliate
URL.
Types Of Cookie Stuffing
JavaScript: The malicious affiliates can use JavaScript to redirect visitors to a
different product page and inset affiliate cookies. Cybercriminals seek an
advantage for an additional redirection without acknowledging the visitors.
Image Cookie- Stuffing Image cookie-stuffing makes it even easier (and
potentially cheaper) for an affiliate to drop cookies without the user’s knowledge.
In this model, an affiliate uses an affiliate link as the source of an image file and
then places that image file on a website.
Let’s Get Technical
https://partnerkin.com/en/blog/articles/cookie-stuffing-in-2022
eBay Affiliates Steal $35 Million in Fraudulent Commissions
One of the biggest cookie stuffing fraud schemes ever conceived was committed
by two of eBay’s biggest affiliate partners.
Use Case of cookie stuffing
Collecting User Data : Another use of cookie stuffing is to collect the users'
data by storing their information like email address, contact details, browsing
history, shopping preferences, and more.
Tracking browser history: Cookies are used to track and monitor the user
browser history to provide a personalized experience to the end-users. At the
same time, this information is sensitive and private and requires approval from
the user, affiliates record and use it without consent from the users.
Other impacts of Cookie Stuffing
General Data Protection Violation: The data security regulations, such as the
European Union's (EU's) General Data Protection Regulation, states that it is
unethical to collect the user's data and expressly forbid collecting data without
permission. In contrast, cookie stuffing violates such rules and stores the user
data via cookies without seeking approval.
Legitimate Affiliates Lose Commission: Such acts affect the legitimate
affiliates' earning capacity as the traffic they get to the advertiser's website is
tracked by the cookie already stuffed in the user's system. And, the advertiser
ends up paying Illegitimate affiliates.
How does affiliate tracking work?
Server-to-server tracking: This method of tracking works basically the same
way, but without the cookies.
This time, no cookies are stored in the user’s browser when they click on an ad.
Instead, the advertiser stores the transaction ID on his end. So, users click on a
unique tracking link, which sends them to a landing page. If a conversion occurs,
the system on the advertiser’s landing page (or Offer URL) sends a so-called
postback with the transaction ID to the conversion tracking system.
Affiliate Pricing Methods
Commission models in Affiliate Marketing: Remember Conversions?
Affiliate Pricing Methods
CPC (cost per click): One of the oldest commission model on the Internet,
started by Google when it launched Google AdWords and AdSense.
The affiliate receives a fixed or variable amount each time the advertising banner
or text link receives a click from a user.
Advantage: Affiliate is not dependent on the final result, i.e. the user buying the
product.
Disadvantages: A difficult model to scale since earning a lot of money would
require hundreds of thousands of clicks.
Affiliate Pricing Methods
CPM (cost per thousand impressions/cost per mille): In this commission
model, the affiliate received a fixed amount for every thousand impressions of an
advertising banner, regardless of whether the user clicked on the banner or not.
Impression: Engagements of a piece of content, usually an advertisement, digital
post, or a web page. In other words, impression is metric which tells you how
many times an ad/promotion was viewed by a user.
How Impressions are calculated: ad servers provide an image (or "pixel") that
can be found on each publisher page. When a page with that pixel image loads,
that is when an impression is made.
Affiliate Pricing Methods
CPA (cost per action): The commission-per-action model, much known as the
CPA commission model, is one of the most popular and effective commission
models in affiliate marketing. In this model, the affiliate only receives their
commission when the user clicks on the banner or link and performs a specific
action, which may be the completion of a form, the purchase of a product, or any
other action.
CPA is usually high paying as compared to CPC and CPM.
Affiliate Pricing Methods
CPS (cost per sale): The sales commission model is widely used in e-
commerces affiliate programs, it means that once the publishers made a sale of
the advertiser’s product, they will receive a commission based on the percentage
of the sales or a fixed amount already determined before.
Somewhat similar to CPA, but in case of the Cost Per Action, it can refer to any
action.
One is not necessarily better than the other and it depends on the business
model and the goals. For example, the CPA with the law firm makes more sense
than a CPS for that same campaign, because they are not likely to gain a client
without a consultation first.
Affiliate Pricing Methods
CPL (Cost per lead): The CPL model is extremely used in B2B businesses,
where the objective is to capture contacts from potential new customers. In this
commission model, as a rule, the affiliate receives a fixed amount for each lead
generated.
CPI (cost per install): The CPI commission model only appeared when
smartphones and mobile applications began to emerge. It is a commission model
focused on mobile traffic, in which the affiliate receives a fixed commission for
generating installations of a particular application.
Affiliate Pricing Methods
CPE (Cost Per Engagement) : The Cost Per Engagement commission model,
known as well as CPE, is a model based on how the users engage with the
application or ads. It is really common for incentive traffic to run campaigns
based on engagement.
Example: “Reach level 5” from a game or “sign up for a music subscription”.
RevShare (Revenue Sharing): The Revenue Sharing model, better known as
RevShare, is a commission model in which the affiliate receives a percentage
commission on the acquisitions made by users. This model is extremely used in
sports betting sites, porn sites, relationships, stock investments, forex, etc.
Affiliate Program Payment Methods
Affiliate Program Payment methods
1. PayPal: One of the leading payment methods, PayPal, is
also used for making affiliate payments by numerous
companies. Creating a PayPal account is effortless and does
not involve any maintenance costs.
2. Payoneer: Payoneer is a reliable platform trusted by
several Bloggers, Freelancers, Affiliates, and Amazon sellers
for receiving affiliate payments. The platform made the entire
payment process seamless, that too in lower transaction fees
than PayPal.
Affiliate Program Payment methods
3. PingPong: PingPong is another popular service for
receiving cross–border payments. It is widely used by
Amazon affiliates and Amazon sellers to receive payments
from overseas.
4. Bank Wire transfer: This is another method that many of
you could use to receive large affiliate payments. Many
companies offer direct withdrawal options that could be used
for affiliate withdrawals. However, banks charge high amount
of tax.
Affiliate Program Payment methods
It is recommended to choose the payment method that charges lower fees and
conversion charges.
Google Adsense Affiliate Program
Google has a product named Google AdSense, which allows blogger, YouTube
channel owner and website owner to earn money.
How does Google earn from AdSense?
Google acts as an Affiliate Network.
It pays some part (68%) of the money, charged from advertisers to the
What Do You Need To Create AdSense Account
Getting Started With AdSense Account
Getting Started With AdSense Account
Getting Started With AdSense Account
Verify Your Phone Number
Getting Started With AdSense Account
Verify Address & Payment Methods
Getting Started With AdSense Account
Connect Your Website To Google AdSense
Getting Started With AdSense Account
Auto Ads
Getting Started With AdSense Account
Manual Ads
Affiliate Fraud and violation of rules:
Affiliate fraud refers to incorrect or unethical activities that aim at providing
commissions from an affiliate marketing program. It can be performed by
sending junk traffic to your site or using bots to trigger affiliate rewards. In any
case, it is a relationship with an affiliate where the other party is using deceiving
practices to take money from you.
● Cookie Stuffing
● Email spam
● Search engine spam
Trademark Bidding
Also known as “brand bidding”—is simply the act of targeting paid search
advertisements to branded keywords (searches that include a brand name, or some
variation). Why brands bids on their own keywords?
Clicks are inexpensive—Because your own ads are highly relevant to searches for
your brand.
Blocking out competitors—By occupying paid results with your own ads, you can
prevent competitors from trying to divert your customers away.
Control over messaging—Unlike organic results that take time for the search
engines to update, paid search makes it easy to adjust high level messaging on the
fly.
Trademark Bidding
Some of the common types of advertisers that we see:
● Affiliates
● Lead Generators
● Channel Partners (Resellers, Retailers, Wholesalers, Dealers, OTAs, etc.)
● Comparison Shopping Engines (CSEs)
● Franchisees
● Competitors
Trademark Bidding & PPC (AdWords) In Affiliate Marketing
Spend money to make money.
If a merchant allows you to bid on their trademarks and you have enough
budget for the AdWords, Trademark Bidding can be done.
How Trademark Bidding can help Affiliate ?
Because it’s about the “Intent” of the customer- a consumer is using a brand
name or a store name, they are further along in the buying process than those
searching for non-trademarked items.
Trademark Bidding & PPC (AdWords) In Affiliate Marketing
How It Helps Brands?
Brand Protection: There are also situations where allowing trademark bidding
can actually protect your brand. If competitors are ranking in the top of search
results for ‘your keyword + coupon’, then you may benefit from adopting this
approach.
Boosts Online Exposure: Allowing affiliates to bid on your trademarked
keywords can also boost online exposure for your brand.
Greater Credibility: Consumers are increasingly savvy when it comes to online
shopping. When people see a ‘discount code’ box on the checkout page, many
will then search for ‘brand + coupon code’ to benefit from extra discounts.
Google Slap
Google tightened its quality scoring of
websites making the cost per click skyrocket
for many who were sending traffic to direct
links and can even ban the website.
This is known as the "google slap".
Multi(Two) tiered Affiliate Marketing
Multi(Two) Tiered affiliate Marketing is a way to earn more money within that
affiliate program by recommending others to join the program as affiliates
themselves.
Example: Printful is a company that will print your art (or photography, words,
etc.) on a variety of products and ship them directly to the customer on your
behalf. If you are an Printful affiliate, but I also refer others to the platform,
Printful pays you 10% commission on anything that person sells for the first
nine months.
In the first level, you can get your standard commissions as usual. The
relationship is between you (as a regular affiliate) and the merchant. In the
lower levels, you can earn extra commission on revenue that is generated by
any sub-affiliates you refer.
Multi Level Marketing & Commissions
Multi-level marketing (MLM), also called
network marketing or pyramid selling, is a
controversial marketing strategy for the
sale of products or services where the
revenue of the MLM company is derived
from a non-salaried workforce selling the
company's products or services
Multi Level Marketing & Commissions
MLM commission structure will vary according to each company's custom
plans. Based on the products or services offered by the company and the profit
distribution decided by the company, commission payouts and the percentage
will be different.
Cross-selling and Up-selling
What if you could turn a INR 100 sale into a INR 200 one? Or INR 299 into INR
599?
This is exactly what upselling and cross-selling can accomplish.
Cross Selling: Cross-selling presents an opportunity for them to increase their
spending by offering add-ons or additional related products to the initial sale.
Up Selling: During the course of the sale, upselling invites the customer to
purchase a higher ticket item – a premium version of the product they’re
already buying.
Cross-selling and Up-selling
Cross-selling and Up-selling
Affiliate cross/up-selling example:
Brands can incentivize Affiliate Partners in cross-selling by asking them to send
a message to leads 7 days after they purchase to encourage them to take part
in a new offer.
It’s useful when you have a group of leads whose interests and behavior
(spending habits, participation in your specials or events) show they might be
interested in your premium offer – for example, upgrades or add-ons.
References
1. Bruce C. Brown: The Complete Guide to Affiliate Marketing on the Web:
How to Use and Profit from Affiliate Marketing Programs. (2008)
1. Evgenii Prussakov: Affiliate Program Management: An Hour a Day (2011)
1. Affiliate Marketing: Launch a Six Figure Business with Clickbank Products,
Affiliate Links, Amazon Affiliate Program, and Internet Marketing (Online
Business) Paperback (2017) by Noah Gray
