Affiliate Marketing Lingo: Definitions of commonly used terms

We live in a world of acronyms, abbreviations and secret handshakes. Well, maybe not the handshakes so much. But every industry has its own glossary of commonly used terms. Some are obvious, while others may require a secret decoder ring to figure out.

The Affiliate Marketing Industry is no different. There are plenty of insider terms that will leave a layman scratching his head. CPC, CPA, PPC, PTO… wait, scratch that last one. But you get the picture. If you want to walk the Affiliate Walk, you need to talk the Affiliate Talk. So here’s a rundown of some of the more commonly used terms in Affiliate Marketing.

Affiliate – Someone who signs up for an affiliate program to promote an online store or service. This is generally done via a website, but can also be through email or social media channels. By using special trackable URLs, affiliates can earn commissions for referring users to a merchant’s site. Commissions are earned in a variety of ways including clicks, sales or leads.

Affiliate Management Agency – A company or agency that runs a merchant’s affiliate program for them.  Sometimes known as an OPM, or outsourced program manager.

Analytics –  The analyzing of data in regards to your website across any number of criteria such as page views, users, demographics, clicks, traffic sources, and much more. Data can be calculated across any time period from daily to weekly to annually.

Bounty –  A Bounty Program is one in which affiliates are paid a fee for every customer (i.e bounty) that they send to the merchant’s site.

Charge Back – One phrase that affiliates and merchants don’t like to hear. A charge back is when a merchant cancels a specific affiliate commision due to either an invalid sale or the return of merchandise.

Click-Through – When a user on your site clicks on one of your affiliate links and is directed to the merchant’s site, it’s known as a click-through. Everyone likes these!

Click-Through Ratio – Sometimes known as the CTR, the Click-Through Ratio is the percentage of users on your site that actually do click on a link and go to a merchant’s website.

Co-Brand – A co-brand is when a merchant and affiliate team up to create a more seamless transition for users. It can be as simple as including the affiliate’s logo on the merchant’s site when user’s go through that merchant’s affiliate links. Or it can be much more integrated where the user clicks through but the merchant’s site has the same look and feel as the affiliate’s site.

Commission – At the end of the day, it’s all about the commission. That’s the actual income paid out to an affiliate based on the number of sales, leads, or click-throughs to a merchant’s site.

Cookies – Cookies are used by Web browsers to save specific user or website data. Affiliate cookies record all relevant data of that session including which affiliate site the customer came from, what time and day they clicked on the link, and what exact link or banner they originally clicked on to get to the merchant’s site. This cookie is invaluable in keeping track of affiliate commissions.

Conversion Rate – Out of the users who do click through an affiliate link to a merchant site, the conversion rate is the percentage of those users who actually make a purchase.

CPA – Stands for Cost Per Action. This specific program earns the affiliate a commission based on a successful conversion. Generally a flat rate per user who subscribes to the merchant’s services, fills out a survey, signs up for a free trial, etc.

CPC – Stands for Cost Per Click. This type of program sees an affiliate paid for every click they send to the merchant’s site. A 5-cent CPC means an affiliate will earn a nickel for every user that clicks on that specific affiliate link.

CPM – Stands for Cost Per Thousand Impressions. Usually in reference to banner ads, the CPM is the amount of commission an affiliate will earn on a 1,000 rotation basis. So a campaign that pays a $10 CPM, means that for every 1,000 impressions of a specific banner ad, the affiliate will earn $10.

Pay-Per-Click – See CPC.

Pay-Per-Lead – See CPA

Performance-Based Marketing – The act of paying out marketing costs only when there is a successful performance. Affiliate marketing is performance-based, as a merchant won’t pay out any commissions to an affiliate until specific performance requirements are met (i.e. sale, lead generation, etc.)

Publisher – Alternate term for Affiliate.

Merchant – The online store that’s selling a product or service. These are the ones who pay out commissions to affiliates in exchange for traffic.

OPM – Stands for Outsourced Program Manager. A company or agency that runs a merchant’s affiliate program for them.

Rev Share – Revenue Share is the percentage of a sale that a merchant pays out to an affiliate. Every merchant can set their own rev share percentage, and many will offer a higher percentage as a reward for good performance or even as an incentive.

ROI – Stands for Return on Investment. It’s the answer to the marketing department’s question of how much are you getting back after spending a certain amount of dollars on marketing and advertising. A good ROI means you spent much less on marketing than you took in via sales.

Super Affiliates – No capes necessary. These are the best of the best. The affiliates in your program who outperform the majority. They generally make up about 1% of your affiliate pool, but account for 90% of the revenue.

Tracking Code – Just a small piece of code (usually a 1×1 invisible pixel graphic) that helps record the number of sales or visitors to a specific page on your website.

Two-Tier Program – An interesting program that allows affiliates to have affiliates of their own. So there are two levels of affiliates earning commissions on a merchant’s program.

Unique Visitors – Used in calculating site statistics, wherein you count each visitor only once in that timeframe, regardless of how many times they visited your website.