Because of the ability to track results of online advertising at a more granular level than what is available through traditional advertising, varying ways have developed for the advertisers and publishers to do business. The three most common ways in which online advertising is purchased are CPA, CPC, and CPM.

CPA (Cost Per Action) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser only pays for the media on the basis of the number of users who complete a transaction, such as a purchase or sign-up.

CPC (Cost Per Click) advertising is also performance based and is common in search marketing, where it is often known as Pay per click (PPC). In this scheme, an advertisement may be displayed (and assumedly viewed) many times, but the advertiser only pays based on the number of user clicks. This system provides an incentive for publishers to target ads correctly (often by keyword), as the payment depends upon the ad not only being seen, but the viewer responding and following the hyperlink.

CPM (Cost per Thousand) advertising is the most common basis in the business and is used for most display advertising and rich media. This scheme most closely resembles offline advertising, wherein the advertiser is paying for exposure of their message to a specific audience. CPM costs are priced per thousand, so that a $1 CPM, means that the advertiser pays $1 for every thousand impressions.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

A significant number of firms, from small businesses to multinational corporations, incorporate online advertising into their marketing strategy. This is even true of firms which conduct their business through more traditional brick and mortar channels. In response to this demand, a number of firms specialize in facilitating online marketing. Therefore, online advertisements typically involve at least two separate firms: the advertiser or agency which purchases or sponsors the advertisement and the publisher or network which distributes the ad for display. Additional parties may also be included, such as an ad serving technology provider, a third party sales network, or other combinations.

In capitalizing on the increasing importance of the Internet as a marketing medium, the online advertising industry has developed specialized technical systems to manage the ways ads are distributed and viewership totaled. The Internet Advertising Bureau (IAB) has established guidelines for the counting methodology, size requirements, and other aspects of the business.

Because of the close relation between technical innovation and online advertising, many firms specialize in both. For example, most search engines couple their search service with an advertising program, exploiting the benefits of keyword-based search technology by including ads in search results. Many technology firms specialize in ad serving, the systems used to select the ads to show, optimize results, and generate reports.

Email advertising

Legitimate Email advertising is often known as opt-in email to distinguish it from spam.

Affiliate marketing

Affiliate marketing is a form of advertising where the advertiser allows a potentially large number of small publishers to pick specific creative elements or offers to market in exchange for payment should such marketing create sales or other revenue. This is usually accomplished though a self-service online system, such as those offered by third parties Performics, BeFree, CommissionJunction, or Linkshare. Affiliate marketing was an early innovation of online retailer Amazon, which has used its program to generate enormous volumes of low cost brand exposure.

Contextual advertising

Many advertising networks display text-only ads that correspond to the keywords of an Internet search or to the content of the page on which the ad is shown. These ads are believed to have a greater chance of attracting a user, because they tend to share a similar context as the user’s search query. For example, a search query for “flowers” might return an advertisement for a florist’s website.

Another newer technique is embedding keyword hyperlinks in a webpage which are sponsored by an advertiser. When a user follows the link, they are sent to a sponsor’s website.

Ads and malware

There is also class of advertising methods which may be considered unethical and perhaps even illegal. These include external applications which alter system settings (such as a browser’s home page), spawn pop-ups, and insert advertisements into non-affiliated webpages. Such applications are usually labeled as spyware or adware. They may mask their questionable activities by performing a simple service, such as displaying the weather or providing a search bar. Some programs are effectively trojans. These applications are commonly designed so as to be difficult to remove or uninstall. The ever-increasing audience of online users, many of which are not computer-savvy, frequently lack the knowledge and technical ability to protect themselves from these programs.

Links

• IAB

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

A few spyware vendors, notably WhenU and 180 Solutions, have written what the New York Times has dubbed “stealware”, and what spyware-researcher Ben Edelman terms affiliate fraud, also known as click fraud. These redirect the payment of affiliate marketing revenues from the legitimate affiliate to the spyware vendor.

Affiliate marketing networks work by tracking users who follow an advertisement from an “affiliate” and subsequently purchase something from the advertised Web site. Online merchants such as eBay and Dell are among the larger companies which use affiliate marketing. In order for affiliate marketing to work, the affiliate places a tag such as a cookie or a session variable on the user’s request, which the merchant associates with any purchases made. The affiliate then receives a small commission.

Spyware which attacks affiliate networks does so by placing the spyware operator’s affiliate tag on the user’s activity—replacing any other tag, if there is one. This harms just about everyone involved in the transaction other than the spyware operator. The user is harmed by having their choices thwarted. A legitimate affiliate is harmed by having their earned income redirected to the spyware operator. Affiliate marketing networks are harmed by the degradation of their reputation. Vendors are harmed by having to pay out affiliate revenues to an “affiliate” who did not earn them according to contract. [1]

Affiliate fraud is a violation of the terms of service of most affiliate marketing networks. As a result, spyware operators such as WhenU and 180 Solutions have been terminated from affiliate networks including LinkShare and ShareSale.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

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Early days

In the early days of affiliate marketing, there was very little control over what affiliates were doing, which was abused by a large number of affiliates. Affiliates used false advertisements, trademark bidding on search engines, forced clicks to get tracking cookies set on users’ computers, and Adware. Many affiliate programs were poorly managed.

This changed dramatically over the last few years for multiple reasons. Revenue generated online grew quickly. The e-commerce website, viewed as a marketing toy in the early days of the web, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. Many companies hired outside affiliate management companies to manage the affiliate program.

When Google, the most popular search engine on the Internet, introduced AdWords (pay-per-click advertising pioneered by Goto.com, then Overture.com and now Yahoo! Search Marketing) many Merchants became aware of the issue of trademark bidding by affiliates. The terms of service were quickly modified by most merchants and structures were put in place to monitor affiliate activities.

Adware

Adware is still an issue today, but affiliate marketers have taken steps to fight it. Merchants usually had no clue what adware was, what it does and how it was damaging their brand. Affiliate marketers became aware of the issue much quicker, especially because they noticed that adware often overwrites their tracking cookie and results in a decline of commissions. Affiliates who do not use adware became enraged by adware, which they felt was stealing hard earned commission from them. Adware usually has no valuable purpose or provides any useful content to the often unaware user that has the adware running on his computer. Affiliates discussed the issues in various affiliate forums such as ABestWeb and started to get organized. It became obvious that the best way to cut off adware was by discouraging merchants from advertising via adware. Merchants that did not care or even supported adware were made public by affiliates, which damaged the merchants’ reputations and also hurt the merchants’ general affiliate marketing efforts. Many affiliates simply “canned” the merchant or switched to a competitor’s affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban adware publishers from their network.

The new Web

The rise of blogging, interactive online communities and other new technologies, web sites and services based on the concepts that are now called Web 2.0 have impacted the affiliate marketing world as well. The new media allowed merchants to get closer to their affiliates and improved communication between each other. New portals like Return on Affiliates allow affiliates, merchants, and networks to interconnect easily, on a professional and a personal level.

New developments have made it harder for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

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Affiliate Marketing is a popular method of promoting web businesses in which an affiliate is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder’s-fees for the introduction of new clients to a business. Compensation may be made based on a certain value for each visit (Pay per click), registrant (Pay per lead), or a commission for each customer or sale (Pay per Sale), or any combination.

The most attractive aspect of affiliate marketing, from the merchant’s viewpoint, is that with this pay for performance model, no payment is due to an affiliate until results are realized.

Some e-commerce sites run their own affiliate programs while other e-commerce vendors use third party services provided by intermediaries to track traffic or sales that are referred from affiliates. Some businesses owe much of their growth and success to this marketing technique, although research has shown in general the increase to be approximately 15-20% of online revenue.

Some advertisers offer multi-tier affiliate programs that distribute commission into a hierarchical referral network of sign-ups and sub-affiliates. In practical terms: publisher “A” signs up the affiliate program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher “A” attracts other publishers (“B”, “C”, etc.) to sign up for the same affiliate program using her sign-up code all future activities by the joining publishers “B” and “C” will result in additional, lower commission for publisher “A”.

Snowballing, this system rewards a chain of hierarchical publishers who may or may not know of each others’ existence, yet generate income for the higher level signup. Most affiliate programs are simply one-tier.

Merchants who are considering adding an affiliate strategy to their online sales channel should research the different technological solutions available to them. Some types of affiliate management solutions include: standalone software, hosted services, shopping carts with affiliate features, and third party affiliate networks.

In its early days many internet users held negative opinions of affiliate marketing due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing has matured many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.

Currently there is much debate around the affiliate practice of Spamdexing and many affiliates have converted from sending email spam to creating large volumes of autogenerated webpages each devoted to different niche keywords as a way of SEOing their sites with the search engines. This is sometimes referred to as spamming the search engine results. Spam is the biggest threat to organic Search Engines whose goal is to provide quality search results for keywords or phrases entered by their users. Google’s algorithm update dubbed “Big Daddy” in February 2006 which was the final stage of Google’s major update dubbed “Jagger” which started mid-summer 2005 specifically targeted this kind of spam with great success and enabled Google to remove a large amount of mostly computer generated duplicate content from its index.

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.