The benefits of affiliate marketing is more pronounced today than before. This is one of the main reason for the immense popularity of affiliate marketing programs among so many thousands of internet marketers.

Due to latest web technology, the affiliate marketers are able to get their statistics and income figures the moment they make an affiliate sale. It is also possible now to use services like PayPal for payment and receipt processing. This has greatly reduced the time that an affiliate marketer has to wait for his payments to be realized from the merchants.

Both the affiliates and the merchants have now realised that affiliate marketing is effective for both of them. The merchants perceive affiliate marketing as an opportunity to advertise their products at a much lesser cost. On the other hand, the affiliates see affiliate marketing as a uncomplicated way of earning profits online by doing something which they like most, and that is web publishing.

Just as the popularity of affiliate marketing has gone into overdrive, similarly the outlook of people has changed for the better about affiliate marketing. Affiliate marketing is no longer considered as a secondary method of marketing by the merchants, or as an additional income source by an affiliate marketer. For merchants and affiliates alike, affiliate marketing is now considered as a main source of profits and revenues.

We now need to analyze what type of affiliate marketing will work best for any person? Are there any differences in affiliate marketing programs? Are the paybacks from these programs the same? Which are those affiliate marketing programs that work better than the others?

There are actually different types or classes of affiliate marketing, and the number of types will depend on how one will classify them. The most basic affiliate marketing programs, however, falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).

1. PPC - Pay Per Click is a highly promoted and used affiliate marketing method by affiliates with no websites or small websites. This is also the easiest way for them to start making money. Under this method of affiliate marketing, the affiliate is paid a commission by the merchant when a visitor visits the merchant's site through the affiliate's reference, that is, whenever a visitor clicks and goes to the merchant's site through the banner or text ads that the affiliate has put up. Pay Per Click method is basically used to capitalize on the traffic that arrives at the affiliate's site and the affiliate facilitates the flow of these traffic from the affiliate's site to the merchant's site and the affiliate gets paid for this effort. The merchant's product or services need not be purchased by the visitor, who is referred by the affiliate, for him to earn his compensation from the merchant. However, compensation for each click under PPC affiliate programs are quite small, usually in the range of 10 cents to 1 dollar.

2. PPP - Pay Per Performance affiliate marketing is the darling among merchants and is also the most sought after type by the affiliates. Under this type of affiliate program, the affiliate is paid a commission only when his referral performs an action - that is the visitor that he has referred should actually purchase a product or service from the merchant's site or when the visitor is converted to a lead for the merchant. For the merchant, this translates into a lot of cost and resource savings in terms of his own direct marketing efforts. Also, this type of affiliate marketing is highly lucrative and most rewarding for the dedicated affiliate, since commissions in PPP affiliate marketing usually is in the range of 15% to 20% of the actual product sales. And, in the case of e-products or e-goods, the merchant may offer a commission as high as 70 - 75% of the sale price to the affiliates.

A further classification of Pay-per-performance affiliate marketing can be done into two types: pay-per-sales (PPS) and pay-per-lead (PPL). Both these are very popular:

a) Pay Per Sale (PPS) - In a pay-per-sale type of affiliate marketing, the affiliates get commission from the merchants whenever the affiliate is successful in converting the visitor into a purchaser from the merchant's site. Affiliates are generally paid on percentage basis, although some merchants may opt to pay a fixed fee. But, whichever method is adopted, percentage or fixed, it is generally much higher than the fee paid to affiliates in a pay-per-click marketing methods.

b) Pay Per Lead (PPL) - The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant's site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type. Generally, the sales conversion rate is the highest in the case of PPL, because, the visitor is not required to purchase anything but only complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, etc.

Several types of affiliate marketing exist, apart from these three types discussed above. If the classification is based on the depth of the affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing. There is another type of affiliate marketing that pays the affiliate every time the customer he has referred purchases an item from the merchant's site sometimes the merchant extending recognition for affiliate loyalties to a lifetime arrangement.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on various levels or tiers in the affiliate network by which payments are made.

A) Single Tier - In a single-tier affiliate marketing program, the affiliates are paid based on the direct sales or traffic he has referred to the merchant. Most of the time, unless specified, all the affiliate marketing types mentioned earlier (i.e. PPS, PPL, and PPC) fall under the single-tier classification.

B) Two Tier - In two-tier affiliate marketing programs, the affiliates are not only paid for the direct traffic or sales that he brings to the merchant's site, but also on every traffic or sales referred by other affiliates who joined as sub-affiliate of the above affiliate marketer.

C) Multi Tier - Multi-tier affiliate marketing works the same way, although the affiliate gets additional commission for more number of levels of affiliates in different tiers in the affiliate network.

D) Residual Income Affiliate Marketing - In this type, the affiliate gets paid for every customer he has referred to the merchant's site. Additionally, the affiliate is also paid whenever the customer he has referred goes back to the merchant's site and purchases another product. Commission for such type of affiliate marketing is based on either percentage of sales or based on fixed fee.

Every affiliate marketer finds that these different affiliate marketing methods work differently for each of them. For instance, multi tier affiliate marketing, also called Multi-Level Marketing (MLM) is a highly difficult type of internet marketing and it does not work for everyone. As a matter of fact, many legitimate marketers consider MLM as illegal or something which is undesirable.

Every affiliate marketer has to try out various methods and decide which works best for him. He should then concentrate on those affiliate marketing methods which is suitable for his style of online business building.

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