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There are various types of affiliate programs. Hundreds have been developed to accommodate the different business models that have formed on the Internet over time. Below is a list of the basic types of affiliate programs and how they are meant to be used. Realize that just because it works well for one website, doesn't mean it will work for another.
Multilevel Marketing (MLM)
You're likely already familiar with this form of affiliate program. Many folks argue that MLM is not an affiliate program. Certainly the similarities are there and truly, most affiliate programs concepts are spawned from MLM. The concept is the same as other programs, but the focus generally is different.
In a nutshell, MLM is multi-leveled, meaning three or more tiers or levels. Generally the focus in MLM is to build a downline of prospects and "sell" the opportunity. The product or service of MLM is more of a means to allow the opportunity to exis,t rather than it's main focus.
Two-Tier Affiliate Programs
Two-tier programs have two levels of payout. Similar to the above MLM example, except there are only two levels: you and any sub-affiliates you sign up. It's not really called a downline, because with only one level, the matrix goes wide.
Also, generally the focus is no longer on the downline or opportunity, but more on the sale of the product. For instance, let's say that Sue signs up for the program who's product is cheese cakes. Sue is considered first level or first tier. For any sales she makes, she earns a fixed commission of for example 30%.
John comes along and decides he likes the opportunity to earn money by selling cheese cakes, so he signs up under Sue. He is considered Sue's sub-affiliate or second tier. If he makes any sales, Sue would earn 15% of his sales while John earns the regular 30% commission.
So now, not only can she earn 30% from her efforts, but also 15% of someone else's. It's very similar to the MLM concept. The main difference often is, that the focus isn't the program itself, but more about selling the product.
Pay Per Sale
Pay per sale is either commission based or a flat pay out per sale. For instance, if you sell a $75 product, you can either get paid a certain percentage (like 30%) of the sale or a flat rate (like $25). There is no second level to earn additional income. Obviously the focus here is just selling the product. Often affiliates will integrate this, or the above two-tier example into their existing affiliate business.
Pay Per Click
Pay per click is simply getting paid for every click that you send the company. Let's say that ABC Company is paying 5 cents for every click their affiliates send them. You decide to add their link to your site. Anytime a visitor to your site clicks on the link, you earn 5 cents.
There are pros and cons to this form of program. As an affiliate, you would need to get quite a bit of traffic, before it can be considered lucrative. Folks who gain the most from this form of program are those who have high traffic sites.
Let's say for example, that you have a high traffic site. You have about 1 million visitors per month. By adding a pay-per-click program to your site, you could easily make big money just from the traffic. Not counting the income you might already be making through other methods.
Pay Per Lead or Co-Registration
Pay per lead is the same thing as getting paid for the actions your visitors take. There are multiple programs available that will pay per subscriber, per free report requested, per registration etc.
As an example, I know a company that was paying $1 for every registration they received for their sweepstakes. All you, as the affiliate, would need to do, is place it on your website. For every visitor that filled out the registration for the sweepstakes, you would get one dollar. Again, for best results, this program works great on high traffic sites or with large email lists.
Summary
Regardless of the type of program you promote, be sure to analyze how each works. Use good judgment and you'll be amazed at what you can do!
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