Primarily four actions are undertaken while sending their visitors to a merchant's website.
1. Pay per Sale: – Herein the customer buys something from the advertiser
2. Pay per Lead: — In this the visitor completes a lead form
3. Pay per Action: — The visitor downloads, installs, or uses some product or service.
4. Pay per Click: — The visitor clicks on a link and visits the merchant's website. Below are detailed explanations of each action: —
1. Pay Per Sale:
In the affiliate business Pay per Sale is the most popular and common type. In Pay per Sale program the visitors are referred to a merchant that sells products or services. And in return you earn a commission when that visitor buys something from the merchant. But in majority of the cases you earn a percentage of the sale. However at times you're provided with a flat dollar amount. But almost all the merchants that sell products online pay their affiliates a percentage of sales. Merchants particularly falling in this category are Home Depot, REI, Dell Computers, Yahoo, MSN, Amazon and most big e-retailers on the Internet. But those merchants who deal in web hosting, online dating, and other online services tend to compensate their affiliates with a flat dollar amount, rather than a percentage of the sale.
Benefits of Earning a Percent of Sales
Herein you tend to gather a ton of cash on big ticket items. Also you can earn cash when your visitors buy multiple items at once. That's why some visitors pay their affiliates agreements on repeat purchases.
Disadvantages of Earning a Percent of Sales
However, your potential visitor may buy a small ticket item. Also there's a possibility that visitor may return the merchandise, resulting in your commission being reversed.
2. Pay Per Lead:
Pay per Lead is the second most important and desirable merchants to promote. In this you are provided with amount when your visitor completes an online lead form. Pay per Lead is primarily popular in the insurance, mortgage, and service businesses. But in this merchants only pay affiliates for qualified and legitimate leads. It means if by any means you send a California insurance company a lead from New York where the company can not provide insurance, which is an unqualified lead. Here, no compensation as such.
Benefits of Pay per Lead Programs
Conversion rates are the best advantage of the Pay per Sale. Here, this ensures big responsibilities in industries like mortgage loans and insurance.
Disadvantages of Pay per Lead Programs
However, the earned commission can be less than Pay per Sale programs and also some leads forwarded from your website may not be qualified.
Pay Per Action:
Pay per Action is the most advanced action as in this visitors download, install, or use some product or service. This is very popular software or web service companies. Yahoo is the best example of this as they compensate their affiliates when their visitors download and install their Instant Messenger application, Search toolbar, or Music Jukebox software.
Benefits of Pay per Action Programs
In this you're not forced to buy anything. As all you have to do is to try some software or web service.
Disadvantages of Pay per Action Programs
A visitor you refer may not meet the minimum software or hardware requirements to install the software.
Pay Per Click:
Currently pay per click is out of fashion and strictly used. But earlier it was massively used and misused. Many fraud merchants created click-bots that automatically click on their links. The cost and time involved with monitoring the fraud had become cost-prohibitive for many merchants.
Benefits of Pay per Click Programs
o Healthy conversion rates – The visitor simply click a link and visits the merchant's website.
o If you generate a lot of traffic, you could make a lot of money.
Disadvantages of Pay per Click Programs
o Merchants that offer this type of affiliate program are few and far between.
o At times the payout per click can be very small.
An Important point about Pay per Click Programs
Nowadays, majority of the advertisers with affiliate programs are moving away from this payout model. As now they have been swapped by advertising networks such as Google Ad Sense, and the Yahoo Publisher Network.