The affiliate model of business, in which a business pays commissions to sellers for performing an action, is one seen largely online. That action is usually securing a sale, but there are other payment methods, such as getting a customer to fill out a form, click an ad, or just visit the company's website. The affiliate model requires an advertiser — the business with the product — and a publisher, the person bringing in sales. In this business model, both partners are making money, but in different ways. This can be used to help garner extra sales for a business while helping website owners make a profit from their website.
With the affiliate model, it all starts with the advertiser. This is the company paying commissions, and it is the one actually selling the product or service. When this company decides it wants to use affiliates to boost sales, it enters the affiliate model. The company promises a commission for each action, and they either run the affiliate program in-house or subscribe to an affiliate service to handle commissions and other administrative duties.
On the other side is the publisher. This website owner subscribes to the affiliate program and embellishes his or her website with banners and links featuring affiliate tracking codes. He or she then gets website visitors who click the link or banner. Depending on the affiliate program, the website owner will optimize his or her website to get the best affiliate sales for the advertiser company.
There are several payment methods in the affiliate model, and the advertiser may use one or several. The four main types are: pay-per-click (PPC), pay-per-impression (PPI), pay-per-lead (PPL) and pay-per-sale (PPS). The most common is PPS, in which a customer purchases a product, and the advertiser pays the publisher a portion of that sale. PPC means that the publisher gets paid each time someone clicks the affiliate link; PPI means that whenever a visitor lands on the publisher’s website, he or she will be paid; PPL is when a customer fills out a form, and the publisher gets paid for each form.
Both the publisher and the advertiser make money in this scenario. The publisher makes money because he or she is being paid a commission for any work that coincides with the affiliate program. Advertisers make money because they keep the majority of the sale, or get new leads and only pay the publisher if they help the advertiser.