Affiliate marketing programs have grown enormously in popularity of the last couple of years as merchants start to understand the channel better, and the affiliates themselves get better at their own techniques.So the question is what type of affiliate marketing will work
best for you? Are all affiliate marketing programs the same or are there affiliate marketing programs that work better than the others?

There are different ways of rewarding your affiliates, which differ depending on your own business model.
Pay Per Click (PPC)

PPC is the most popular type of affiliate marketing for affiliates
with small websites, and probably the easiest way for them to earn
money. Merchants pay their affiliate whenever a visitor is referred to his site, that is whenever someone clicks through the merchant’s banner or text ads.
The affiliate gets paid a certain amount even if the visitor he referred does not purchase anything from the merchant’s site. However, typical fees for PPC affiliate programs are small, usually not exceeding a dollar for every click. The biggest of these schemes is the Google Adsense programme seen on may small sites. Whilst it is a good revenue stream for many content websites with reasonable traffic levels or who operate in a high income niche, many affiliates will only treat it as a bonus stream of income.

Pay Per Performance (PPP)

PPP affiliate marketing is the most popular among merchant and is
also the most lucrative type for the affiliates. In this type of
affiliate program, the merchant only pays the affiliate whenever
his referral translates into an action—that is whenever the visitor
he has referred actually buys something from the merchant’s site or
when the visitor becomes a lead. This means a lot of savings for
the merchant. On the other hand, it becomes the most lucrative type
for the dedicated affiliate, for commissions in PPP affiliate
marketing usually comes in the range of 15% to 20% of the actual
product sales.

Pay-per-performance affiliate marketing can be further classified
into two popular types: pay-per-sales (PPS) and pay-per-lead (PPL).

Pay Per Sale (PPS)

In a pay-per-sale affiliate marketing, the merchants pay
the affiliate a certain fee or percentage of sale whenever the visitor he has referred to the merchant’s site actually buys something from the merchant’s
site. The fee is generally much higher than the fee paid to
affiliates in a pay-per-click affiliate program. This is the most common form of affiliate programme offered by the large networks such as Trade Doubler or Commission Junction

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. Many data businesses use this method to build large direct marketing lists. Remuneration for the affiliate can range from as little at 10p for a competition entry, to £100 for a mortage application

Aside from these three specific types, another classification is
based on the depth of the affiliate network, it can be classified as
single-tier, two-tier, and multi-tier affiliate marketing.
Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on the different levels
or tiers in the affiliate network by which payments are made. In a
single-tier affiliate marketing program, the affiliates are only paid
based on the direct sales or traffic he has referred to the merchant himself.
All the previously mentioned affiliate marketing types (i.e. PPS< PPL,
and PPC) fall under the single-tier classification.

-In two-tier affiliate marketing programs, the affiliate is not only
paid for the direct traffic or sales that he refers to the merchant's
site, but also on every traffic or sales referred by various other
affiliates who joined the affiliate program through his recommendation. This can be an excellent way for the merchant to grow their base of affiliates, and is common in very high margin products.

Multi-tier affiliate marketing works the same way, although the
affiliate gets additional commission for a wider number of affiliates
in different tiers in the affiliate network.

Residual Income Affiliate Marketing

In residual income affiliate marketing, the affiliate gets paid not
only once for every customer he has referred to the merchant’s site.
Rather, the affiliate is also paid whenever the customer he has
referred returns to the site and purchase another product. Compensation
for such type of affiliate marketing is based on either sales
percentage commission or fixed fee basis. These schemes are considered by affiliates to be the ‘gold-standard’ of programmes. Residual programmes allow the affiliate to make the investment in much stronger sales efforts, knowing that their efforts will carry on being rewarded over a longer period.

Residual income, or ‘revenue-share’ programmes as they are also known are common for large affiliates in the sports betting and gambling industries.

If you are considering your affiliate programme and which model suits your business best, Shine Marketing can help you in choosing a network, setting commission levels, recruiting affiliates, and managing your affiliate relationships for the long term success of your business.