Back to Basics: Affiliate Program Terms (continued, part 3)
CPM: The practice of calculating a cost per thousand ad displays. It is used with programs that pay on a impression basis, with the CPM rate being the amount you earn for every 1000 times an advertisement is displayed. For example a $5 CPM means you earn $5 every time 1000 ads are displayed on your site. CPM can also be calculated for pay-per-sale, pay-per-lead and pay-per-click programs by using the following formula:
Amount Earned from Program/# of Ad Impressions/1000
Calculating the CPM of affiliate programs can be an effective way to means of comparing results over time from various programs, allowing you to put more emphasis on the strong programs, and dropping the poorly performing programs.
Two-Tier Commission: Two-tier, or multi-tier, refers to the practice of an affiliate merchant paying commissions to both the affiliate that referred a sale, lead or click, but also to the affiliate that referred that affiliate to the program. A descendent of multi-level marketing, two-tier programs are generally quite legitimate and offer the merchant an effective means to promote their program quickly. However, be wary of any programs which try to charge start-up or membership fees to join. Only programs which are free to join are reviewed on ClickQuick.
Residual Commission: Residual commissions refer to programs that provide affiliates the ability to earn an income month after month for referring a sale to a merchant. They are generally programs that offer some type of service for which the customer is charged a monthly subscription fee. Examples include web hosting, telecommunications, and e-commerce solutions. They offer an effective benefit to affiliates since the affiliate can earn income for an extended period, perhaps even years, from one initial sale.
Tracking method: Tracking refers to the way that a program tracks referred sales, leads or clicks. The most common are by using a unique web address (URL) for each affiliate, or by embedding an affiliate ID number into the link which is processed by the merchant's software. Some programs also use cookies to track sales.
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