Examining Affiliate-Program Online Advertising
You can advertise your business online via affiliate programs (also known as partnership programs and associate programs). In an online affiliate advertising program, you contract to place ads on other (affiliated) sites, and you pay each site when a visitor to that site clicks through to or purchases something from your site.
Affiliate programs are carefully targeted to the interests of your potential customers. For example, if you have a Web site dealing with antique furniture, you don’t want to become an affiliate of a sporting good site, for example.
Affiliate programs are good for sites that are narrowly focused — and zillions of topic-specific sites are out there. Amazon.com was the very first affiliate — it offers a percentage of the sale if one of your visitors buys from Amazon.com after clicking on its link from your site.
You can also place affiliate-program ads on your site, which means you receive payment if visitors to your site use those ad links. Online ads have three major pricing structures:
Cost per thousand (CPM): This cost of an ad is for every 1,000 times the ad is displayed (also known as the number of impressions). Most of the time, when you buy a CPM, your banner ad appears on big, highly trafficked Web sites. Sometimes, this type of pricing structure is also called pay per face.
Cost per click (CPC): You pay each time someone clicks on your ad and is taken to your site. Be careful when plunging into this type of ad; your audience is better tergeted, but the cost is higher, and you'd better be able to convert these visits to sales if you want to make money. Some companies don't sell by CPC because the quality of a banner ad is a determining factor in how much they earn, and it's a factor that those sites can't control.
Cost per transaction (CPT): You pay only when someone clicks your ad and then goes on to buy something (or perform some other action on your site). This choice offers great accountability, but you do pay a significant percentage for this type of fee structure, also known as cost per action (CPA).