Understanding Affiliate Marketing Lingo (Glossary of Terms)

Ok, I know this post isn’t going to be earth shattering for most. But I get a lot of newer, aspiring affiliates on the Sugarrae site and when you’ve never done affiliate marketing before, all of the terms can get a little confusing.

So this post is more being done for me to have a reference to send people to when folks have questions about affiliate terminology.

Affiliate Dictionary

Above the Fold

The section of a website or blog that appears in a browser when someone lands on a page on your site without them having to scroll.

Advertiser

This is the company that produces the products or services that you promote as an affiliate. More commonly referred to as the Merchant.

Adware

Also referred to as “spyware”. Adware is usually included in free computer programs users download without realizing the Adware is also part of the package. In many cases, the advertisements are unwanted and difficult to get rid of, even after uninstalling the offending program. Most merchants will not work with affiliates who want to promote their offers via Adware. Get more information on affiliate adware.

Affiliate

An individual who promotes products or services for a merchant in exchange for receiving compensation for the sales or leads they drive. See my post on how affiliate marketing works for additional information.

Affiliate Agreement

The agreement between the merchant and the affiliate regarding the affiliate relationship. It usually defines the roles, rules, responsibilities and legalities of the relationship on both sides.

Affiliate Link

A link provided to you by the merchant that includes a unique tracking code specifically assigned to you for the merchant to track the sales you are responsible for generating for them.

Affiliate Manager

The person who manages an affiliate program for a merchant. They are responsible for affiliate recruitment, ensuring that the affiliates are using above board promotional methods and for increasing affiliate sales for the merchant. They also act as the liaison between the affiliate and the merchant. The affiliate manager may work directly for the merchant or be an independent service provider contracted by the merchant to run their affiliate program. Also referred to as an OPM.

Affiliate Network

A third party who provides affiliate program management to a merchant. Affiliate networks provide the technology for tracking affiliate efforts, ensure that sales are properly tracked, commissions are paid to affiliates, handle reporting for both the merchant and individual affiliates and help expose the merchant to potential affiliates for their products and services. You can find a list of the more mainstream affiliate networks here.

Affiliate Program

A program offered by a merchant to allow individuals to recommend or refer people to their products or services in exchange for the person doing so receiving a commission based upon a predefined desired outcome generated by the referral. The “individuals” sending the referrals are called affiliates.

Affiliate Software

A software program that a merchant can use to run their own affiliate program in house as opposed to using an affiliate network that helps the merchant track affiliate efforts and generate affiliate reporting.

Affiliate Tracking

A unique ID attached to the links you use to send traffic to the merchant that is specifically for you to track your sales for or referrals to the merchant. Example of affiliate tracking in a link: merchant.com/?ID=YOURUNIQUEID

Associate

Another word for affiliate.

Auto Approval

Merchants approve or deny affiliates entry to their program in one of two ways – via automatic approval or manual approval. Auto-approval means they approve all affiliate applications automatically and instantly.

Banner Ad

A graphical ad that an affiliate puts on their website to advertise a merchant.

Charge Back

Refers to a product being returned or a sale “falling through” that you were already paid for. Since the sale didn’t actually finalize, the merchant will deduct the amount you were previously given in commission for that sale from your affiliate commissions. In lead generation, this can also occur if the merchant decides the leads sent were unqualified or fraudulent in nature.

Click Fraud

In regards to affiliate marketing, click fraud most often refers to generating “fake” clicks to a merchant program that is based on a PPC compensation method. The fake clicks (which can be generated in a manual or automated fashion) have no chance of converting for the merchant since the traffic clicking the ads have no real interest in the product or service the merchant is selling.

Click-Through

Also sometimes spelled as “Click Thru”. This refers to the act of someone clicking on your affiliate link and being taken to the merchant’s website.

Click-through Rate (CTR)

Also sometimes spelled as “Click Thru Rate”. A metric used to show the number of times your affiliate link has been clicked on compared to the number of times the link has been viewed displayed as a percentage. To find your CTR, simply take the number of clicks the link has received and divide it by the number of impressions (times the link was shown) and times the result by 100 to get your CTR percentage. Example – if you are displaying a banner ad that has had 100 impressions and received 1 click, then you would take 1 (clicks) and divide it by 100 (impressions) to get .01 (result) and multiply that by 100 to arrive at a CTR of 1%.

Cloaking

Hiding content on a webpage or hiding affiliate tracking code in links. Hiding content on a webpage is bad as it is against the guidelines of the mainstream search engines such as Google. Hiding affiliate tracking in a link is an acceptable and widely used practice. If you’d like more information, I wrote an article on why and how I cloak affiliate links.

Contextual Link

Refers to a text link placed within your website or blog content versus a link that is placed in the sidebar as a more traditional advertisement.

Co-Branding

Some merchants will create a specific and custom landing page for an affiliate to send referrals to that contains both the merchant’s branding and the referring affiliate’s branding. Example – a merchant might create a page on the merchant’s website that shows a lead form that contains both the merchant’s logo and the specific affiliate’s logo on the page. This is referred to as Co-branding. Many times merchants limit Co-Branding opportunities to only being available to Super Affiliates.

Commission

The predefined money or fee a merchant pays an affiliate for generating a predefined, desired outcome for the merchant.

Conversion

Getting a user to take a specific, desired action. It could be buying a product or service, filling out a form, signing up for an email list or whatever the intended goal may be.

Conversion Rate

A metric used to show the number of times your affiliate link has generated a predefined conversion compared to the number of times the link has been viewed displayed as a percentage. To find your conversion rate take the amount of sales a link has generated and divide it by the number of impressions the link received and multiple the result by 100 to get your conversion rate percentage. Example – if your link was viewed 100 times and generated 2 sales, then you would take 2 (sales) and divide if by 100 (impressions) to get .02 (result) and multiply that by 100 to get a conversion rate of 2%.

Cookies

A text file that is sent from a website to a file within a user’s web browser. Cookies are used for various reasons on the web as a whole. In regards to affiliate marketing, Cookies are used to assign an ID to a user that has clicked on your affiliate link to get to a merchant website for a predefined period. If the user returns within that predefined period (whether or not they click on your affiliate link again) then you will be credited with the sale. Example – a user clicks your affiliate link (cookie gets “dropped” to their browser) and then bookmarks the merchant’s website to buy later. The user returns before the Cookie Expiration and makes the purchase. You would receive credit – and this commission – on the sale.

Cookie Expiration

The amount of time a Cookie set by someone clicking on your affiliate link has to show a conversion before you are no longer credited with a sale even if that user eventually ends up making a purchase. The standard length of a Cookie is typically between 30-90 days. Anything below 30 is considered low/short while anything above 90 is considered to be healthily above average.

Cookie Stuffing

A practice that underhandedly deposits cookies from merchants onto users computers when the user has never visited the merchant through the affiliate’s link and potentially may not have even the affiliate’s website. Cookie stuffing is done with the intent of stuffing as many cookies as possible onto as many user computers as possible in the hopes that they eventually come accross the merchant website and make a purchase. The larger and broader the merchant, the more likely that is to occur (think Amazon). Cookie stuffing is heavily looked down upon by legitimate affiliates and most merchants ban affiliates using cookie stuffing in their affiliate agreements.

CPA

Cost Per Action (also referred to as Cost Per Acquisition). Refers to the amount of money paid to obtain a desired outcome (usually something like a sale or signup).

CPC

Cost Per Click. Refers to the amount of money paid to generate a click by a user on one of your links. Example – if you spent $200 on an ad campaign and received 100 clicks on that campaign, then your CPC would be .50 cents (clicks generated / campaign cost = CPC).

CPM

Cost Per Thousand. Refers to the amount of money it costs to display an advertisement per 1000 impressions. Example – if you wanted to buy advertising on a website that offered their advertising at a $6 CPM and you wanted that ad to show 10,000 times, then you would need to pay $60 (desired impressions / 1000 * CPM) for that advertising.

Creative

A type of graphical ad or text link provided to the affiliate for use in promoting the affiliate program.

Customer Bounty

Also referred to as a commission. A bounty is the predefined money or fee a merchant pays an affiliate for generating a predefined, desired outcome for the merchant.

Disclosure

A page or notice on your website or blog that makes your site visitors aware if you are being paid or compensated (via affiliate marketing or any other methods) for any purchasing recommendations or product or service endorsements you make on your site. A disclosure is required if you’re doing affiliate marketing to be in accordance with a new law recently enacted by the FCC.

E-mail Link

An affiliate link with the specific intent of being utilized in an email advertisement.

EPC

Stands for Earnings Per Click. Your earnings per click is the average amount you earn every time someone clicks on your affiliate link. To find your EPC you would take the amount you have generated in commissions from an affiliate link and divide it by the total number of clicks that link received. Example – if an affiliate link has generated $4000 in sales over the lifetime of your affiliate relationship and the same link was clicked on 12,000 times, then you would divide $4,000 (sales) by 12,000 (clicks) to get an EPC of 33 cents. This means you earn an average of 33 cents each time someone clicks on your affiliate link.

First Click

In affiliate marketing, first click is often used to describe an affiliate program where the first affiliate to get a user to click a link and make a purchase within the limits of the cookie expiration is the one to be credited with the sale, even if the user landed on another affiliate’s website and actually converted after clicking on a link from the second site. There has long been a debate between whether first click or last click is most beneficial to both the affiliate and the merchant.

Impression

An impression is measure of how many times a ad is shown on a page. For every time the ad is shown, one impression will be counted.

In House

Refers to a merchant who runs their affiliate program by themselves using an Affiliate Software and not by using an Affiliate Network.

Indie program

Short for “independent affiliate program” and refers to a merchant who runs their affiliate program in house themselves using Affiliate Software and not via an Affiliate Network.

Joint Venture (JV)

This typically refers to a business relationship for one event, product or project versus an ongoing, more permanent relationship. Example – if two well known bloggers were to create a single product together and market it simultaneously as a joint effort, it would be referred to as a Joint Venture or JV partnership.

Last Click

In affiliate marketing, last click is often used to describe an affiliate program where the last affiliate to get a user to click a link and make a purchase is the one to be credited with the sale – even if a valid cookie from a prior click on a different affiliate’s link still exists on the users computer. There has long been a debate between whether first click or last click is most beneficial to both the affiliate and the merchant.

Manual Approval

Merchants approve or deny affiliates entry to their program in one of two ways – via automatic approval or manual approval. Manual approval means that the merchant or affiliate manager for the program look at each individual application for entry to their program before deciding whether or not to approve them for participation in the program.

Merchant

This is the company that produces the products or services that you promote as an affiliate. Less commonly referred to as the Advertiser.

Niche

A specific topic or vertical. Example – if you own a site about dogs, then your niche would be dogs – as well as pets in the broader definition of a niche.

OPM

Outsourced Program Manager. Also known as an Affiliate Manager.

PPS

Stands for Pay Per Sale. In a PPS based affiliate program, the affiliate is paid a commission whenever an actual sale is generated.

PPL

Stands for Pay Per Lead. In a PPL based affiliate program, the affiliate is paid a commission whenever a lead is generated. A lead could be a form filled out, a quote requested or whatever else the merchant has specifically identified as a commissionable lead.

PPC

Stands for Pay Per Click. In a PPC based affiliate program, the affiliate is paid a commission whenever someone clicks on their affiliate link to the merchant, whether or not a sale or lead is generated. Pay Per Click can also refer to an advertising option like Google AdWords.

Payment Threshold

The dollar amount of commissions an affiliate has to accrue before being paid. Some merchants set a minimum payment threshold themselves (to lower accounting costs by paying less frequently to people sending very few sales) while others allow the affiliate to do so (usually to avoid receiving frequent smaller checks and instead receive one larger one).

POD

Point of Difference. This is the service, product, content, advantage or angle your website has versus competitors within the same niche that makes your website or blog different and stand out.

Privacy Policy

A page on your website or blog that informs site visitors what you do with their personal information – whether received via contact forms, etc or through any anonymous tracking methods. A website is required to have a privacy policy by many merchants to participate in their affiliate program. It is also required to use Google AdSense and Google Analytics.

Raw Clicks

Refers to a term often used in affiliate reporting that allows you to see how many overall clicks have occurred on your affiliate link. Raw clicks show every click that occurs, even if it is the result of the same person clicking an affiliate link 8 times in a day. Raw clicks are often shown in conjunction with Unique Clicks to give an affiliate a fuller picture of affiliate link activity.

Recurring Commissions

Most commonly offered by “Services”. With recurring commissions you are paid on the initial signup of the customer and continue to receive commissions as long as the customer continues to pay for the service. Example – if you refer a visitor to a hosting service that offers recurring commissions and they sign up, you will be paid a predefined commission for the initial signup and receive a predefined commission for every month the customer continues to stay with and pay their bill with that hosting program.

Residual Earnings

Also referred to as “lifetime commissions”. In an affiliate program that offers residual earnings, you are credited on the lifetime sales for any new customer you refer to them, indefinitely versus only being paid on the first, initial purchase made by the referral.

ROAS

Stands for Return on Advertising Spending, also shortened many times to Return on Ad Spend and can also be referred to as ROI. It refers to the amount of money made as a result of a specific advertising campaign. To find the ROAS of a campaign, you take the revenue divide it by the ad spend and multiply the result by 100. The result is presented in percentage form. Example – if you spent $200 to run a campaign and you made a gross profit of $600, you would take $600 (revenue) and divide it by $200 (ad spend) to get 3 and then multiply that by 100 to get 300 – displayed as a 300% ROAS. The amount over 100% using this method of calculation is your profit. In this example, that would mean you received a 200% profit on the campaign.

ROI

Return on Investment. I can be calculated via the same method as ROAS, but in the interest of diversity, I’ll show you an alternate option to calculate it. To calculate the ROI on a campaign, you can take the gross profit from running the campaign minus the cost of running the campaign and divide it by the cost of running the campaign and times it by 100 to get a percentage that the investment returned. Example – if you spent $200 to run a campaign and you made a gross profit of $600, you would take $600 (gross profit) – $200 (campaign cost) to get $400 and then divide $400 by $200 (campaign cost) to get 2 and multiply that by 100 to find a 200% ROI for the campaign.

SID Tracking

Also referred to as CID tracking, MID tracking and TID tracking. “SID” is the abbreviation for the sub campaign tracking abilities offered by Commission Junction. Almost every mainstream network refers to it differently. SIDs allow you to create specific tracking codes for your affiliate links to track the success of a specific effort. I wrote a whole article about SID, CID, MID and TID tracking codes if you’d like more information about what they are and how they’re used.

Squeeze Page

Refers to a page where designed to only have one goal or desired conversion in mind. Typically, squeeze pages remove any and all distractions for the desired goal. Example – navigation elements on the page may be removed to keep the user focused solely on the specific “pitch” being made.

Super Affiliates

Refers to the top affiliates in an affiliate program – usually the top 5% who combined typically generate more than 80% of the total sales for the affiliate program. In the early days of affiliate marketing, this term was also used to refer to affiliates who made more than $10,000 per month promoting various affiliate programs.

Tracking Method

Refers to the kind of tracking a merchant or network uses to track affiliate activity, sales and leads.

Text Link

Refers to a link that is formed by linking text to a webpage versus using a banner ad or other image to link to a webpage.

Tracking Code

Same thing as affiliate tracking. A unique ID attached to the links you use to send traffic to the merchant that is specifically for you to track your sales for or referrals to the merchant. Example of a tracking code in a link: merchant.com/?ID=YOURUNIQUEID

Two-Tier (2-Tier)

A two-tier affiliate program allows affiliates to not only earn commissions on their own sales, but to also get a percentage of the commissions (usually much smaller) earned by people they’ve recruited into the affiliate program (either directly because they knew them or indirectly – meaning someone signed up to be an affiliate by using the first affiliate’s link).

Unique Clicks

Refers to a term often used in affiliate reporting that allows you to see how many unique people have clicked on your affiliate link versus seeing all clicks (Raw Clicks) that have occurred. If a person on their home computer clicks your affiliate link 3 times, then 1 of those clicks would be considered a unique click. What is defined as unique typically resets after 24 hours with most programs. So, if that same person in the above example comes back 6 days later and clicks on your affiliate link 1 more time, they would now account for 4 raw clicks and 2 unique clicks.

Whitelabel

Whitelabeling refers to a merchant allowing an affiliate to sell products under their own brand with no mention of the actual merchant. Visitors to the affiliate’s website would likely believe it was the affiliate who was actually selling the items or taking the leads since there is no mention of an outside merchant. This typically occurs by the merchant creating a website branded solely to the affiliate on their own server under their control and allowing the affiliate to “mask” that website as appearing to be a subdomain on the affiliate website. Many times merchants limit Whitelabeling opportunities to only being available to Super Affiliates.

Additions?

If you feel like I missed anything or need to add something, please let me know in the comments below!

About Rae Hoffman

Rae Hoffman aka "Sugarrae" is an affiliate marketing veteran and the CEO of PushFire, a search marketing agency specializing in SEO audits and link building strategies. She is also the author of the often controversial Sugarrae blog. You can connect with Rae via Twitter, Google+ and Facebook.

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Comments

  1. Hi Rae,

    Awesome post. I disagree with one thing though. Many of the programs I come across actually do work with adware because they don’t know better. Many of them assume the partners are driving incremental sales because the toolbars, bho’s, loyaltyware, couponware, reminderware, etc… is not explained to them and they are not shown live examples of how it can work within their programs. These are especially common in programs on many of the major networks, name brands and CPA networks. When the Affiliate Manager learns about it, they then look through their top performers and many times will get scared to kick them out because it will mean removing many of their top performers and tanking their channel. The sales lost from the program can usually be found properly attributed to their proper channels like SEO, PPC, Email, etc… if you are measuring where everything is coming from and the loss from the Affiliate Channel and increases in others.

    The Affiliate Manager usually doesn’t want to remove these partners because they are afraid that their job will be in danger if the channel drops so they deny it. The Networks will often deny it or give you reasons to keep in the program. That is why it is important to have proper channel attribution and to actually download the adware and see how it interacts with your site. Once you do and show it to your higher ups, or the CFO in your company, you can get the ok to remove them, potentially save your company money and then grow an Affiliate friendly and more value adding program.

    The adware can be installed by having the end user install a toolbar or shopping helper that will show coupons, let the person earn cash back by clicking on the ad that is displayed, injecting logos over SERPs, PPC ads or when the shopper gets to the Merchant’s website. The person doesn’t actually even have to go to the Affiliate’s site to have it installed. Some cash back and coupon sites will even contact charities and offer $10 per download if they get their members, etc… to download the toolbar not even knowing it is Affiliate based adware. Other times it comes bundled with screen savers and other things you get for free or pay for online.

    Unfortunately many of the programs I come across on the larger and smaller networks have issues with adware and cause people to lose sales to these applications. This also makes it appear that Affiliate Marketing isn’t working or is less profitable than other channels for Affiliates. In an ideal world, many Affiliate Managers, OPMs and Networks would not allow adware, but unfortunately that would mean less money for all of them so they turn their heads when they find out, deny it or ignore it completely. Some of the networks parent companies actually have coupon and loyalty sites which run in their own networks and other networks that use toolbars and that is another reason they try to not explain it to their Merchant’s and other Affiliate partners. A great resource is to hire Kellie Stevens from Affiliate Fair Play and she can walk you through how to find it, what to look for and what is happening in your programs. I offer these services as well, but only with my management services.

    • NOTE: Adam is going to be doing a guest post here on Sugarrae to go a bit more in depth (if that’s possible, awesome comment!) on his above comment. I’m looking forward to it. :)

  2. OPM should be Outsourced Program Manager. I have never heard the term Online program manager before. :)

    • Thanks for spotting that Vinny – I swear my hands simply type things sometimes. ;-) I’d proofed this several times, but I knew it was a large enough post that I was going to miss a few things. Corrected!

  3. This a great resource! I will be linking to it as a primer for those who want to learn affiliate marketing! (Learned a few things myself!)

  4. Nice job Rae. Thanks for posting.

  5. Good article. I’ll will be sending n00bs this link every time they refer to an “affiliate program” as an “affiliate”. :-)

  6. Hi Rae,

    This post is truly not an earth shattering one, but it is certainly helpful especially to those who are just newbies to affiliate marketing. Thank you.

  7. Hi Rae, Could you comment on services like skimlinks? Do you use them?
    Thanks, Kevin

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