A blog focused on helping bloggers and online retailers make more money online.

Affiliate Programs
The concept of an Affiliate Program is nothing new and the method of paying commission for referrals predates the emergence of the Internet. However the sheer speed of connections between potential consumer, affiliate and online vendor makes this space a valuable and lucrative marketing and income-generating resource to many. According to MarketingSherpa, in 2006 $6.5 billion US was earned online by affiliates across a broad variety of verticals worldwide.

Technically speaking, affiliate programs could include all of the below employed online advertising methods, as each pays a sum for referrals made. One main difference between the methods lie in where the revenue earned/paid is derived from. Depending on the method it could be a bulk payment per distribution, CPS (cost per sale) or a rev-share model, CPA (cost per action), CPC (cost per click) or CPM (cost per mille), among other lesser popular methods. Let’s talk a little about what these revenue sharing models look like.

Payment per distribution
In methods such as Email Marketing, E-Zine Marketing or sponsored articles, websites or preview pages, sometimes there is a bulk sponsorship payment requested by the distributor. Often depending on certain statistics such as page views or subscription/distribution list size and quality, a lump sum for one or multiple ad slots (via graphic banners, buttons, company descriptions or sponsored editorials or articles) is required prior to dissemination. The advantage to this type of method for the advertiser is that there is very little leg work or calculation required aside from content and graphic requirements and production. The advantage for the distributor/affiliate is that it’s a one-time action resulting in a bulk payment, not a result-driven revenue model. The disadvantages could involve the difficult to predict ad/editorial performance and ROI.

Cost Per Action (CPA, or Pay Per Action (PPA))
CPA is a broad term used to define when an advertiser compensates their ad host based on a particular action generated, such as a purchase, a subscription or a form submission. The advantage to advertisers here is that they only need to pay when their desired action has taken place, meaning they can define what is that they desire greatest to occur and set their budgets accordingly. For example, when an ad is hosted on a website CPA here could mean that the advertiser only pays when a sale has been completed via this specific ad. This is most effective when buying advertising.

Note: sometimes CPA is used to refer Cost Per Acquisition. In this sense, CPA means that the advertiser pays based on the desired acquisition being received, such as a form submission or sale. As at all times Cost Per Acquisition can fall under the definition of Cost Per Action, the opposite cannot be said to be true so it is important to understand the difference.

Cost Per Sale (CPS) / Revenue Sharing
One of the most popular methods of earning income online is via a rev-share model, or CPS. Here, online vendors pay their partners or affiliates a percentage of their revenue generated from sales in exchange for the original referral. This is a very simple and effective method as there is very little calculation involved aside from agreeing upon a fair compensation percentage.

Cost Per Click (CPC)
This is probably one of the most well-known revenue generating ad models. CPC refers to the amount of money paid by an advertiser to their ad host for the number of clicks generated by the hosted advertisement. As a whole, this method is referred to as a PPC model, or Pay Per Click, meaning the advertiser pays their ad host based on the number of clicks generated through the ad. This term is closely linked to search engine marketing, where advertisers bid on keyword phrases that closely match their target market. Here, often the CPC depends on the search network used and the amount of popularity/competition for the desired keyword phrase. However this changes outside of the search marketing world where the advertiser does not use a bidding model. The advantage here is that you have a targeted audience that is encouraged to click based on relevant environment with which they are surfing. Additionally, for the ad host the advantage is that they generate revenue whether or not an action other than the click is made.

Cost Per Mille (CPM)
As in Latin, “mille” means thousand, this term technically means cost per thousand. As such, CPM is a measurement used to quantify the value of 1000 impressions of an ad, and helps define the relative cost of an advertising campaign. So a set amount of money is paid per thousand of ad impressions shown. As with CPC, the advantage to the ad host is that they are paid whether or not a sale is generated.

Hope these quick and dirty definitions help clarify anything with those confusing and similar abbreviations. Anything to add? Or should I say… ATA?

Part of the goal of our blog here is to help educate and pass along helpful information and knowledge to those of you who are just getting started in the online advertising game or perhaps those looking for a little refresher along the way. So considering this, we thought we’d touch on a little of the basics of online advertising…a kind of 101 class, if you will. For those of you who are slightly more seasoned in terminology and methodology, please jump in! We’d love it if you could pass along some of your experiences and insights into these posts. It will help create a deep resource of “getting started”- and “what’s next”-type information that will only prove to help our community grow!

For this first post, let’s talk a little bit about some popular methods found in online advertising and discuss a bit of shift in the ways in which these advertisements are viewed. In a follow-up post we can elaborate on these methods, their pros/cons and their respective effectiveness.

So, in my head at least, I organize methods of online advertising in terms of these categories: Traditional; and Social. I will admit that these are pretty broad categories so I’ll elaborate a little below.

Traditional Online Advertising Methods
Since the dawn of time…well, the dawn of the Internet anyway, entrepreneurs have been looking for new and improved ways to access and draw in a new and targeted audience and make more money online. As a result, there have been many methods tried and developed of promoting products or services (legitimate or not) online. These types of online advertisements are built to catch the user’s eye in the hopes that the content/imagery is enticing enough for the reader to click through to further information, pulling them deeper into the sales funnel. Sometimes, the goal of the methods employed to serve the ad is to increase the ad reach and other times it’s to increase the depth of reach, or in other words, to create a more targeted ad. Some of these seasoned and proven methods of online advertising include:

• Affiliate Programs
• Ad-exchanges
• E-zine Marketing
• Email Marketing
• Pop-up advertising
• Sponsored Articles/Websites, Sponsored Website Preview Pages
• Search Engine Marketing (SEM)
• Banner Advertisements; In-text Advertisements

All of these methods have their pros and cons, not to mention some of these methods proved to be greatly effective for a period of time but have seen their popularity decrease due simply to the evolution of Web usage. These techniques eventually became more intelligent (and at times, controversial) by employing behavioral and/or contextual targeting to help foster a greater ROI through access to a more targeted audience. However in recent years, we’ve seen an emergence of new and/or evolved online advertising methods that have one main difference than that of the Traditional type; interactivity. Read on.

Social Online Advertisement Methods
As the ways in which Internet users navigated the Web and interacted online shifted to a more social practice, thus spawned the emergence of Social Online Advertising. The goal of these new and improved social advertising methods is to provide the viewer with an ad experience that encourages them to want to share it with their own network of connections. Some of the ways in which this is done include:

• Social Online Network Advertising, i.e.:
  • Directly: Facebook Ads, MySpace Ads, Sponsored Tweets, etc.
  • Indirectly: Branded Facebook Groups, Branded Facebook Fan Pages (a.k.a. “Likes”), Corporate/Brand Twitter Account
• Corporate Blogs
• YouTube Videos
• Social, Interactive Banner Advertisements

Should the advertisement and channel with which is used to disseminate the ad is effective, enticing and engaging, then the ad reach takes care of itself aiding in the overall effectiveness of this method. However, the fact that a new group of educated consumers have emerged who enjoy voicing their satisfaction or a distaste for a particular product or service online – sometimes termed “Brand Ambassadors” when the message is positive, the ability for a company/individual to direct their own brand image online has proven to be more difficult than in previous years where open consumer engagement was non-existent. Now, online advertising also must employ a sort of “brand management” wherein much of the actual “advertising”, if meant in the sense of growth of brand awareness, is out of the control of the companies/individual themselves. Therefore an active presence in social networks is in almost all cases prudent for the company or individual as part of an effective online advertising strategy as they can employ proactive advertising measures to help with brand management and awareness, and when necessary, PR issues.

What remains to be seen, although already begun, is ways in which the Traditional methods of Advertising adapt to include a more Social component to continue to fit in with how users/consumers are playing online. How many of those methods on the Traditional list will soon be able to fit under the Social list in…let’s say…a year’s time? Any thoughts?