The Different Types Of Affiliate Marketing Programs You Can Use To Make Money Online

Affiliate marketing’s popularity continues to grow. There are many reasons for this, especially since the benefits of becoming involved in the business are better known then they once were. Merchants and affiliates alike see the many benefits available to them through affiliate marketing – merchants can advertise their wars in a very cost effective manner, while affiliates have a relatively easy way to generate an income online by making websites and producing content.

People are looking differently at the business model of affiliate marketing than they once did – rather than seeing it as a supplemental form of advertising or producing a revenue, it has now come to be seen as a primary means of advertising and for some affiliates, even as a career.

The question is really which type of affiliate marketing will bring you the best results? Are all programs the same? Do they all offer the same benefits? Are some programs better than others? There are a few different kinds of affiliate marketing programs, depending on how you choose to classify them. Basically, though, there are two types. Pay per click (or PPC) and pay per performance (or PPP)
• Pay Per Click (PPC) This is the most common type of affiliate marketing program and presents the easiest way for affiliates with small websites to earn an income. In this model, the affiliate is paid when a visitor clicks through the affiliate’s ads – whether or not a sale is made. However, the commission per click tends to be very small, much less than a dollar per click on average.

• Pay Per Performance (PPP) This model is popular with merchants and is the most potentially lucrative for affiliates. In this type of affiliate program, the affiliate is paid only when the visitor performs a specified action; usually making a purchase, though in some cases for signing up on a mailing list or other action. This is the best value for the merchant and for a truly dedicated affiliate, can bring in a lot of money – since commissions tend to be 15-20% of sales (but digital products are typically a lot higher 50%+).

Pay per performance affiliate marketing can then be classified into two subtypes: pay per sale (PPS) and pay per lead (PPL).

Pay Per Sale (PPS) In the pay per sale model of affiliate marketing, an affiliate is paid a flat fee or a commission each time a visitor that they have directed to the merchant’s site makes a purchase. Regardless of whether this is a commission of a flat fee, it is almost invariably higher than in a pay per click program.

Pay Per Lead (PPL) Pay per lead is a variant of the pay per sale model and is used most commonly by finance and insurance companies; any company which relies heavily on leads to grow their business will be likely to us pay per lead affiliate programs. In these programs, the affiliate is paid when a visitor they have referred signs up, fills out an application or some other action which lets them be counted as a lead for the company. These models generally pay the affiliate a flat fee along the lines of those seen in a pay per sale program.

Other than these three types of affiliate marketing programs, there are other kinds of programs as well. They can also be classified based on whether affiliates can be paid for referring other affiliates to the program; these can be termed as single tier, two tier or multi tier programs. There are also residual programs, where the affiliate is paid every time one of their referrals makes a purchase from the merchant’s website.

• Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing These types of affiliate marketing programs pay affiliates based on not only customer referrals, but also for finding other affiliates to market thee merchants’ products and services. A single tier system is the conventional model, where affiliates are paid only for their own customer referrals.

• In a two tier affiliate marketing program, affiliates are paid for their own referrals as well as those brought in by affiliates who they have referred to the program. Multi tier affiliate marketing programs work the same way, but on a larger scale and over multiple tiers.

• Residual Income Affiliate Marketing In residual income affiliate marketing, the affiliate is paid each time a customer they have referred to the merchant returns to the merchant’s site and makes a purchase. These programs pay either a flat fee or on a commission basis.

These different types of affiliate marketing work differently for affiliates and merchants and each has its own benefits. Which type is best for you? That’s up to you to decide.


  • Arthur

    Reply Reply November 8, 2008

    Hi, Reed,

    Another well thought out post but one which barely scratches the surface of the subject.

    Realistically, to have a real chance of this post becoming valuable, it needs a lot of follow up and even more qualification.

    In these days of very high competition in the paid advertising arena and the enormous danger of the ill informed and less knowledgeable affiliate losing a huge amount of money before they see a profit, if they ever do, more attention needs to be paid to the every day reality rather than the rose tinted view that too many people promote.

    Arthurs last blog post..Samsung HP-R5052 50 plasma TV $ 1000

  • Claude Pelanne

    Reply Reply November 8, 2008

    Great article on the different ways to create a revenue stream. It’s a great primer for anyone starting out trying to understand how the system works.

  • Saul Maraney

    Reply Reply November 8, 2008

    Hi Reed,
    Thanks for the very informative post.
    Saul Maraney
    Johannesburg, South Africa

  • John Austwick

    Reply Reply November 8, 2008

    Hi Reed,
    a well thought out post, I agree with Arthur it does only just scratch the surface all reading should do due diligence on the specific method they choose to use.

  • Sue Baker

    Reply Reply November 8, 2008

    Hi Reed

    A really informative post.

    Many thanks


    Sue Bakers last blog post..Dieter’s Quiz

  • Timothy Millar

    Reply Reply November 8, 2008

    Hey Reed, Great post! Even though some thought
    it was not informative, Is it not 2008? can’t you
    find any information you desire on the Internet?
    Thank you for steering me and others in the right direction and giving us the path to follow.
    Have a wonderful day! “The Leprechaun”

    Timothy Millars last blog post..The Truth about Top Google Rankings

  • Timothy Millar

    Reply Reply November 8, 2008

    Pretty bold for someone blogging about TV’s
    Strictly my opinion, and probably not a good one.

    Timothy Millars last blog post..The Truth about Top Google Rankings

  • John Counsel

    Reply Reply November 8, 2008

    If you’re looking for the best rewards, they’re ALWAYS going to be for the person who brings the buyer and seller together in a successful exchange of goods for money.

    Any program that pays you for leads or click-throughs is going to pay very little. The risks are just too high for the merchant that the quality will be too meagre, despite any high quantities coming through an affiliate link.

    Yes, Pay Per Click can be lucrative, but it usually takes a trusted intermediary, such as Google or Yahoo! or Microsoft, to convince merchants to adopt that model, because they have strict safeguards and sanctions in place to protect everyone from abuse.

    But it’s still the merchant who ultimately pays, and if the sales conversions aren’t high enough to cover the costs, then they soon drop out of the game.

    If you’re a serious affiliate, you’ll upgrade your online selling skills, pre-qualify your referrals so that they’re primed and ready to buy by the time they click on your affiliate link, and find ways to attract prospects who are genuinely interested in what you’re promoting.

    That means tightly-targeted, high-quality traffic — not just traffic for traffic’s sake.

    That means you need really intelligent, powerful, long-term sales STRATEGIES, not dumb, short-lived gimmicks.

    A staggering 85% of the success of most top online marketers (and affiliates) boils down to a tiny handful of words — often less than 100 characters!

    (Very large doors swing on very small hinges.)

    Text ads include Pay-per-click ads (PPC), Pay-per-thousand-impressions ads (PPM), Pay-per-action ads (PPA), Pay-per-view ads (PPV), Classified ads, Ezine ads, Safelist ads, Backlinks, Traffic exchange ads, Auction ads, Directory listings, Twitter and Facebook updates, ‘InstantBuzz’ ads (or similar), Email subject lines, Email signature files, Forum signature files, Article author’s bio boxes, Web page description meta tags, ‘Ticker tape’ ads – and
    offline they include things like Bumper stickers, Business cards, Billboards, Taxi back or roof ads, A-boards, Hoardings, Window signs and more.

    John Counsel
    CEO, The Profit Clinic

  • normz2

    Reply Reply November 8, 2008

    Good Post. I have to agree on what Arthur and John have mentioned. Just like any business you have to promote, promote, promote. It is much easier to put in more time and effort, when you start seeing results.

  • Rick Eckel

    Reply Reply November 9, 2008

    Thanks Reed,
    My question is: How do you find the partners to set up Joint Ventures with. From a list we already have, we’d like to expand and invite new joint venture partners. We have an invitation posted, but in a short time, I don’t think adwords or organic rankings will do us much good.

  • Ari Lestariono

    Reply Reply November 9, 2008

    Hi Reed,

    It is well said, all that you written is true, I have a site, and keep growing, in my opinion I will research to do what would be the best affiliate programs, likely these days putting banner makes real money than PPC, the PPC as I learned you have to understand the detail process of business to master it and it’s not a cheap course.Many ways to get rank well in Google and it’s a non stop working to get traffic, especially SEO knowledge keeps growing every moment.

  • Rafael Cervantes

    Reply Reply November 9, 2008

    solo quiero felicitarte ,por todos esos exitos de ,ganar dinero en el Internet,pero te pregunto cuando yo ,ganare algunos cuantos dolares ,por este sistema de internet,ya quiero que me incopores aeste sistema ,ya le he dedicado mucho tiempo,en internet ,he gastado muchas horas de Internet ,de lo contrario me tendre que dar de baja ?.
    por todo ello espero tu respuesta ,saludos ,desde mexico.gracias .Lae.Rafael.cervantes.

  • Dale Kydd

    Reply Reply November 9, 2008

    Hi Reed,
    Like your post and that of the others that have posted their reply.
    Affiliate marketing is a hard nut to crack I have found and would not recommend it to newbie’s at all.
    From my experience anyway.
    I would prefer them to get a web page going first and learn the jargon of the internet test out different things and items. Maybe start with an info web until they get confident enough to handle the web sites that come up from their own site.
    If I had done this when I first started I would not have wasted so many years struggling to get going. Learn who you can trust is a must as there are so many that say you can trust them and in the end you cannot. Don’t get me wrong here, you can trust most of them IF YOU ARE PC SAVY AND KNOW WHAT YOU ARE DOING but most of the newbie’s have not a clue.
    To be honest in your sales you have to know your product. Then you must buy it so you can try it out. MONEY MONEY MONEY. This is the downfall of all newbie’s including me.
    You can get an affiliate site where you get a web site provided. Great they save you having to get a site done. NO NO NO there are so many people using the same site that you are lost in the maze.
    When a newbie starts they get their domain and hosting and a free web site template where they can use everything there to make the web site their own just with a few minor changes and their own words of information or description.
    If I had to start from scratch again I would go this way and I do encourage the newbie’s to try it. It will take a little longer but you are not forking out $ and getting none back.
    I think I would own a good sized house by now with the money I have paid out with no returne.

    Thanks again for your great posts everyone.
    Take care.

  • Phil Eugene

    Reply Reply November 9, 2008

    Nice intro to Affiliate Marketing, along with Listbuilding (like your giveaway event)an essential ingredient in an Internet Marketers arsenal. Affiliate Marketing SOUNDS easy but old hands know it takes a bit of experience and work to get anything rolling.

    Best Regards

    Phil Eugene

  • Rebecca Beasley

    Reply Reply November 9, 2008

    I’ve been online for more than 16 years and I’m just scratching the surface of affiliate marketing. It’s such a widespread industry that it’s nearly impossible to make a good living at it unless you’re paying a huge amount of money for pay per click ads. If you have any suggestions for what I can do to improve my click through rates, please let me know.
    Rebecca Beasley

  • Geoff Dodd

    Reply Reply November 9, 2008

    Reed, Amazing how some commenters on Affiliate Marketing think this is an advertising board! Your article is introductory and the trend is that we comment and add some points and ideas that may have been missed. I’d like to see more specific stuff about CPA Networks and how to choose between them. There are so many. Affiliate Marketing has exploded exponentially because it is so easy to do, once you’ve conquered copy writing, content creation and link building. I’d say focus on inbound links.

    Geoff Dodd

  • Dale Kydd

    Reply Reply November 9, 2008

    Hi again Reed,
    I wish to comment on Geoff Dodd’s post just above.
    Geoff I am reasonably new to Forums but I do know that if you have a site that will help others then you give it. You may have your affiliate link but are you going to put my URL on your site even if it is to help others. No you would join up first so you can use your own URL.
    I have been with this program for quite a while and am not about to change it.
    I have many sites that could help people get going but would not post them unless it was in regard to the subject and only then if it was a need that was very obvious.
    I do believe that we are aloud a signature on our posts also but I very seldom use these as this is someone else’s sight.
    Also I did request that I be notified if I do the wrong thing by doing so.
    But thanks for your concern and your replies as you do have some very interesting info and I thank you.
    Take care

  • Alwin chuah

    Reply Reply November 9, 2008

    Hi Reed
    You have written a good summary that will make the newbies understand the various ways to make money in the internet.

    However it will be good if you can post an in-depth explanation for each method.

    Alwin chuahs last blog post..There is Risk with WordPress ID

  • Ray Cassidy

    Reply Reply November 9, 2008

    Good overview article Reed I’m curious to know where you source your info from. Picking up on Geoff Dodds comment, I did have a look at the CPA networks, but being unable to take in much info at first glance, I was totally bamboozled. As always the problem in this game is the tension between information overload and trying to get focussed on a course of action. However, I’m trying to set up a local community website for the area where I live and one of the funding streams for that will have to be the CPA networks. I’ve just laid down a large wedge of dosh for a professional web designer to rewrite and optimise the site, to make sure I pull in the maximum possible amount of traffic. The CPA networks are very choosy about who they let in though and you need a significant dollop of traffic to be accepted. The rewards though, when you get in are pretty impressive as Reed says. So wish me luck!!

  • Angelina

    Reply Reply November 9, 2008

    Hi Reed,

    Good article. You are giving great tips here that people can apply immediately to start making money.

    Keep it up!


  • Make FREE Money

    Reply Reply November 9, 2008

    Nice posting!
    Making money online has become very easy nowadays. There are many business opportunities available on the internet which lets you make money easily.

  • admin

    Reply Reply November 9, 2008

    @Arthur thanks for the feedback, although none of these posts are meant to be the ONLY post someone reads on a topic.

    @Claude thanks

    @Saul you’re welcome

    @John we must do our own due diligence

    @Sue you’re welcome

    @Timothy thanks

    @John agreed we need traffic that actually converts

    @normz2 agreed it’s easier to invest more time and money once you start seeing results

    @Rick this video can help

    @Ari I’d suggest building a list

    @Rafael what?

    @Dale thanks I agree a lot of newbies have no clue about computers

    @Phil agreed yes it takes some time to achieve success

    @Rebecca PPC can be challenging. Are you building a list?

    @Geoff yes that’s bugging me too if you have any suggestions to automatically help fix that let me know

    @Dale I think Geoff’s comment was more aimed at people who are basically just posting their links

    @Alwin that may happen at some point thanks

    @Ray A few things Stuff I’ve learned since ’99 and various PLR articles that I’ll have my writers rewrite

    @Angelina thanks

  • Peter

    Reply Reply November 9, 2008

    Hallo Reed,
    This is my last comment on your site. I cannot support this like other commenters do this and praising this to be a good article. The counting of possible methods of affiliate marketing you can take from Wiki or better from Google ,Yahoo, MSN and Internet Marketing pages itself and you can get everything out of it. Most about the costs and methods of such projects also what is supported and how. I always asked you when producing articles where is the content? where is the beef ???
    sincerely Peter

  • admin

    Reply Reply November 9, 2008

    @Peter Fine by me. Bye. Thanks for your feedback though.

  • There is a lot to learn about how to make money with affiliate marketing. Thanks for the post, I’ll do more research on each method and try them out

    Luca – Reach Success Onlines last blog post..I Won – Get More Buyers – from Michael Rasmussen

  • admin

    Reply Reply November 10, 2008

    @Luca you’re welcome

  • Jussi Koiranen

    Reply Reply November 11, 2008

    Yummy article. I just love hearing the words residual income… There is some magic to those words. Just like seeing the money roll into your account month after month… Just my personal favourite.

  • Jorge EZ Affiliate Blog

    Reply Reply November 11, 2008

    Residual income is GOOD!

    I am personally working on building that stream of income for my business 😉

    Jorge EZ Affiliate Blogs last blog post..The BEST Affiliate Programs to Make Extra Money Online with a Website

  • admin

    Reply Reply November 15, 2008

    @Jussi I love it as well

    @Jorge awesome keep us posted.

  • delords

    Reply Reply November 28, 2008

    Thanks Reed for the breakdown in earning opportunities available in affiliate marketing.

    delordss last blog post..What types of Affiliate Programs To Join

  • admin

    Reply Reply November 30, 2008

    @delords you’re welcome

  • Diane Gray

    Reply Reply January 19, 2009

    Nice post. It gives people a starting point to understanding affiliate marketing.

    Diane Grays last blog post..Hi Everyone!

  • Great information for people who are just starting out in affiliate marketing.

  • “Cost Per Action” or CPA marketing is one of the simplest methods for beginner Internet marketers to begin making money online and get paid for the “actions” taken by the traffic you steer to advertisers

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