Struggling with understanding affiliate marketing terms?
Affiliate marketing isn’t difficult if you know how to start an affiliate marketing business the right way. All that is there to it, is to follow a few proven steps and you are on your way.
But then, it isn’t uncommon for people who are just starting out in affiliate marketing to feel overwhelmed with the amount of information that is available online.
So how do you ensure that you are starting off the right way?
By learning the most important affiliate marketing terms.
This will help you understand the finer aspects of affiliate marketing and also help you in profitability.
In this post, I have 50 of the most important affiliate marketing terms that are most commonly used today.
Affiliate Marketing Terms that Every Affiliate Marketer should know
These affiliate marketing terms cover every aspect of starting and running an affiliate marketing business and should be a good glossary for your handbook.
Here they are –
The term “affiliation” means to officially attach or, connect with an organization. An affiliate is somebody who enters into an agreement with a merchant or, a network to promote a product or, service in return for a commission.
A merchant is the person who is the creator or, service provider of the product or, service you are promoting as an affiliate.
Otherwise called as the Customer, a buyer is the one who clicks on your links and buys the product or, services that you are promoting as an affiliate.
Commission is the money you earn from promoting a product as an affiliate. It is usually expressed as a % of the price of the product/service.
For programs that pay a flat commission, it will be expressed as an amount paid per sale or, lead as the case may be. The higher the commission the better it is for you.
Payout is revenue that is earned by way of promoting an affiliate program or, product/service. Suppose you promote product X and at the end of the month you are paid a total commission of $Y, then your payout is $Y.00.
An affiliate program is also called as an associate program and it is the arrangement or, agreement between an affiliate and a merchant who agrees to pay a specific commission to the affiliate for promoting and generating sales.
An affiliate network is an intermediary organization that facilitates an affiliate program for a merchant and makes it accessible for an affiliate to promote it.
They usually work with multiple merchants thereby making it easier for affiliates to pick and promote the best products that fits their marketing strategy.
Working with affiliate networks also adds to the confidence of an affiliate because he is protected against fraud which isn’t uncommon with merchants who fail or, do not pay due affiliate commissions.
Cookies are small files that are generated and stored in a visitors browser, when they visit a specific site. In affiliate marketing, cookies are used by merchants to track the source of a sale.
So, if a visitor clicks on your affiliate link and visit’s a merchant’s website, the cookie that is stored on the visitor’s browser will have an identification that the visitor has clicked a link that was tagged with your affiliate ID, thereby helping the merchant know that the sale was generated from one of your links.
A cookie expiry is the period until which a cookie lives on a user’s browser, unless the user manually deletes the cookies.
For eg:, if a merchant has a cookie expiry of 30 days, it essentially means that a cookie will live in the user’s browser for 30 days. So if the user clicked over to the merchant’s website from a link you were promoting but didn’t make a purchase immediately, instead completed the purchase after 28 days, you will still be credited for the sale and hence will be paid a commission by the merchant.
But if the user cleared his cookies before that period, then all records of your promotions will be lost and you won’t get credit for the sale.
From an affiliate’s perspective, the longer the cookie expiry the better it is. The Amazon associates program has one of the lowest cookie expiry which is one of the biggest disadvantage of promoting amazon products as an affiliate.
A “tiered program” is an affiliate program where you are paid an affiliate commissions at multiple levels. The first level is usually the same as all affiliate programs.
But, some programs will pay you an affiliate commission on sales generated by other affiliates whom you helped recruit as affiliates.
These tiered programs can go down to multiple tiers like for instance,
- 1st Tier – Commissions on your sale
- 2nd Tier – Commissions on sales of affiliates your recruited
- 3rd Tier – Commissions on sales of affiliates whom the affiliates you referred had recruited and so on..
Cloaking is a process of hiding an affiliate URL that is provided by a merchant and replacing it by a cleaner link. This is done for multiple reasons –
- Affiliate URLs are ugly URLs that can be extremely long. Hiding them by cloaking makes it look a lot cleaner
- There are people who at times steal affiliate commissions, if they can find out the affiliate ID of an affiliate marketer. These IDs are clearly visible in an affiliate URL. Cloaking hides these IDs and makes it difficult for commission robbers to rob you of your hard earned money
- A cloaked affiliate link is easier to remember and is hence preferred over the long URLs that merchants otherwise provides
A hoplink is another term for an affiliate URL. This term is mostly used by Clickbank for the URLs that they generate for the products that are marketed through their affiliate network.
Gravity is a term that is used to show the effectiveness or, popularity of a specific affiliate program. This term is also used primarily by the Clickbank affiliate network.
Gravity is the number of unique affiliates who have promoted that specific product from the vendor and had earned a commission, in the past 12 weeks and indicates how popular that product is amongst affiliate marketers.
Something to keep in mind when looking at the gravity of a product is that while a high gravity means that the product is extremely popular and hence has good conversion rates, it also means that the competition will be extremely high. So, as an affiliate marketer it is advisable to look for products that are in the mid range on gravity.
CTR (Click Through Rate)
CTR or, Click through rate is defined as the number of people who are clicking on a link that you are promoting, out of the total number of people who are viewing the link.
The higher the CTR the better it is.
A tracking link is a link that has certain variables included in it which helps in tracking the activity from a specific website, webpage, affiliate or, any other source.
These links are used to track the sales that are generated by a specific affiliate.
A pixel is an HTML code that snippet that is embedded into a website. It fires (or, loads) whenever a visitor opens that specific website or, webpage.
A pixel is useful to track a user behavior or, conversion.
A tracking pixel helps advertisers and publishers collect data about their marketing and advertising efforts.
PPL or, Pay-per-Lead is a affiliate system where an affiliate is paid for every single lead that is generated from his affiliate link.
The definition of a “Lead” varies depending upon the merchant’s requirements. The most common is a name and an email address.
Some merchants add other information like phone numbers, post codes etc.
CPA, also called as Cost per Action is a form of affiliate marketing where an affiliate is paid by the advertiser for generating a specific form of action.
These actions can be anything from filling out a form to installing an app.
CPA payouts are often small, but if you can generate volumes then this can be an extremely profitable passive income. It is easier as well because of the lower barrier for entry. Unlike getting somebody to buy a product, CPA often requires actions that wouldn’t necessarily involve paying or, spending.
CPA is sometimes also used as a synonym to “Cost per Acquisition” though there are debates which question this usage.
CPM is also called as “Cost per thousand impressions” and is a form of payout where a publisher or, affiliate is paid on the basis on every thousand impressions that he generates to a specific ad, product page or, link.
If you are wondering as to why “M” in “CPM” refers to thousand, then it is because this “M” is a Roman Numeral, which stands for thousand.
CPM offers are very lucrative because all you need to do is generate impressions to the offer page. Media buys often fall into this category.
EPC (Earnings per Click)
EPC or, Earnings per Click is an affiliate marketing term that refers to the average amount of money every click on an offer or, a link generates.
The formula for calculating EPC is pretty simple. It is commissions earned divided by total clicks on the link.
Conversions is a term that is used in affiliate marketing analytics and is the % of customers who are buying the products that an affiliate recommends in comparison to the total number of prospects who were sent to the sales page for that product.
CPL (Cost per lead)
CPL or, Cost per lead is a type of performance marketing where an advertiser or, merchant pays an affiliate for every lead that he generates.
CPL can also be considered as a part of CPA method and is one of the most preferred forms of CPA affiliate offers.
There’s a lot of successful affiliate marketers whose business model is solely based on CPL
PPV (Pay per view)
PPV or, Pay per view is a type of affiliate marketing where a payout is done based on the number of views that an affiliate generates.
While this is a very uncommon form, you will still be able to find such offers with most affiliate networks. PPV is a method that is usually applicable on videos.
A lead refers to the details of a prospective customer acquired by a marketer or, a merchant. What details go into the definition of a “lead” depends entirely upon how it is defined by the merchant.
A lead can be only an email address and a name or, can be a combination of a phone number, an email address and a name or, any other combinations of information there of.
Some companies collect a lot of information including the demographics of the prospect in order to classify them as a qualified lead.
ROI, also referred to as “Return on Investment” is a measure of how profitable a marketing campaign is. It is measured as a ratio of net returns to the total investment.
The formula for calculating ROI is simple. It is equal to Net returns divided by total investment or, expenses on the campaign.
So, if you earned $10 by spending $5 on a marketing campaign, then your ROI is 200% = (10/5)*100. Isn’t that simple?
An advertiser is the person, merchant or, product creator who is recruiting affiliates to promote their products.
The term “advertiser” is usually used by affiliate networks, who classify the 2 participants in an affiliate program as a publisher or, an affiliate and a merchant or, an advertiser.
An offer is an agreement that a merchant, brand or, an advertiser agrees to enter into in return for an affiliate promoting their products or, services.
This offer is usually a monetary compensation in the form of a percentage commission or, a per sale amount that they agree to pay the affiliate.
An offer URL is the link to a page where the product or, service that the offer corresponds to is being sold.
In other words, this is the landing page where all visitors who click on the affiliate link that is promoting the product or, service is directed to and where the sale happens.
A creative is referred to the advertising material that an affiliate uses to promote a specific product or, service. These materials are usually provided by the merchant themselves and may include banner graphics, emails, tracking links etc.
A landing page is a page where the prospect is directed to after they click the affiliate link, in order to purchase the product or, service that is being promoted.
Since this page is the one where a user lands on clicking a link, they are called as a “landing page”.
A presell is a step that occurs just before an actual sales pitch.
In order to warm a cold prospect to what is being promoted, affiliates use a presell page. This page usually addresses a major problem that the prospect might be facing and offers the product or, service being promoted as a solution.
Then the prospect is directed to the actual sales page (landing page) where the product’s sales pitch happens.
A niche is a specialized segment of the market for a particular product or, service. It is a small segment, is very targeted, focused and very specific.
Profitability in affiliate marketing depends hugely on how an affiliate is able to pick the right niche to target and market the offer.
Attribution refers to the identification of which affiliate sent the prospect to the sales/landing page and which resulted in a sale.
The affiliate commission as agreed in the offer is paid to the affiliate to whom the sale is attributed.
A charge back is a recovery of the commission that was previously paid to an affiliate for a sale, after the product or, service is returned or, cancelled.
A payment threshold is a predetermined minimum amount that an affiliate needs to earn in terms of affiliate commissions before the merchant or, the affiliate network can make the payout.
A publisher is usually referred to a website owner/blogger who has a real estate on the internet which he/she is willing to use to promote products and services as an affiliate.
An affiliate agreement is an agreement that an affiliate and the merchant enters into after the two of them has agreed to promote a specific product or, service.
This agreement usually lays down the terms of promotion including promotional methods, payouts, payment thresholds etc.
Direct linking refers to linking to a merchant’s offer URL/landing page directly from an advertisement that an affiliate is running to promote the offer.
It is usually not recommended to do that and a lot of times, sites do not permit direct linking too.
The ideal way of promoting is to link to a presell page from where you can then link to the affiliate URL.
An offer is said to have recorded an impression when the webpage with the offer is shown to a visitor. In technical terms, it is the downloading of the page from the server that it is hosted in order to show it to the visitor.
Impressions are always analyzed in conjunction with the number of clicks generated and is never analyzed independently.
But it is still considered an important metric in affiliate marketing.
Performance based marketing or, performance marketing is a term that broadly includes all forms of digital marketing where a compensation is paid to the referrer or, affiliate solely based on a specific action taking place.
These actions could include generating a sale, a lead, a click or, even a download.
Since the compensation is paid based on performance, it is called as performance based marketing.
An affiliate manager is a person who manages the affiliate program for a merchant who uses affiliate marketing to promote their products.
These affiliate managers usually have the responsibility of recruiting and onboarding an affiliate, supporting them with information that they need and helping clarify their queries.
A Contextual link is a link placed within the body of a content which aligns to the idea that is being spoken about in the content, thus making it contextually relevant to the article/post.
Contextual links look more natural because the link is an extension of the core idea being discussed in the post.
Retargeting is a method of marketing a specific product or, service again to those visitors or, prospects who didn’t engage or, buy the product or, service in the first instance when they visited the page.
The website traffic that bounces off your website is often considered as lost traffic. But re-targeting or, re-marketing can help put yourself and your product/service in front of the same visitor again thus giving you the opportunity to recover that lost sale again.
Lifetime Value is a metric that is used to measure the value of a customer to the business and is an estimate of the average revenue that a customer will generate throughout the life-span as a customer.
A pay bump is an option that affiliate networks and merchants offer affiliates who are good performers. This involves offering a higher % commissions for a sale in comparison to the normal commission payout.
A funnel is a step-by-step path that a customer goes through while making a purchase.
It is called a funnel because of two reasons – the first is that it is a filtering journey that the customer is taken through to separate high value customers from the others and secondly, the % conversions in each step of the funnel decreases as the customers go through each of these steps.
A sales funnel usually involves multiple products of different values in the form of upsells and downsells.
An upsell is an offer that a customer is shown immediately after he makes a purchase and is usually a product with a higher price tag and one that offers additional benefits to the base product.
A downsell is an offer that a customer is shown when he is hesitant to make a purchase of a higher value and is usually a product/service that is of slightly lesser price and with a little less benefits in comparison to the initial offering.
OTO, also called as “One-time-Offer”, is an offer that is given to a prospect or, a customer as a time bound offer that will only be available till the time, he/she stays on the page that the offer is being shown.
This is usually a sales technique that triggers the FOMO (Fear of missing Out) feeling in a prospect, hence resulting in a sale.
JV (Joint Venture)
JV or, Joint Venture is an agreement between 2 or, more persons to work together on the creation/promotion of a specific product or, service.
JV is also a term that is often used by affiliate networks for an implied agreement between an affiliate and a merchant.
Conclusion – Putting them to Good Use
This list of affiliate marketing terms is not an exhaustive list. There’s a long list of terms in affiliate marketing, but what I have included here are only the most important ones.
These terms will make real sense only if you are even a tiny bit interested in affiliate marketing and in making a passive income from it.
So, while we are at it, do check out the complete guide on what is affiliate marketing, in order to learn in depth about affiliate marketing and how to make money with it.