The benefits of affiliate marketing is more pronounced today than before. This is one of the main reason for the immense popularity of affiliate marketing programs among so many thousands of internet marketers.

Latest web technology has enabled the affiliate marketers to get their statistics and income figures the moment they make an affiliate sale. It is now possible to use companies like PayPal for payment and receipt processing. This has highly curtailed the time that an affiliate marketer needs to wait for his payments to be collected from the merchants.

Both the affiliates and the merchants have now realised that affiliate marketing is effective for both of them. The merchants perceive affiliate marketing as an opportunity to advertise their products at a much lesser cost. On the other hand, the affiliates see affiliate marketing as a uncomplicated way of earning profits online by doing something which they like most, and that is web publishing.

Just as the reputation of affiliate marketing has gone up, similarly the attitude of people has enhanced with respect to affiliate marketing. Affiliate marketing is no more regarded as a inferior method of marketing by the merchants, or as an secondary source of income by an affiliate marketer. Both merchants and affiliates regard affiliate marketing as a main source of profits and revenues.

Now is the time to analyze what type of affiliate marketing will work best for you or any other person? What are the prominent technical differences in affiliate marketing programs? Are the paybacks from these programs the same? How to identify those affiliate marketing programs that work better than the others?

There are actually varieties of affiliate marketing, and the types will depend on how you are going to classify them. The primary classification of affiliate marketing programs falls under two categories: pay-per-click (PPC), and pay-per-performance (PPP).

1. Pay Per Click (PPC) - PPC is the most popular type of affiliate marketing for affiliates with no websites or one page websites, and probably the easiest way for them to start making money. In this type of affiliate marketing, the merchant pays his affiliate whenever a visitor visits the merchant's site through the affiliate's reference, that is whenever someone clicks through the merchant's banner or text ads that the affiliate has put up. PPC is basically used to just divert the traffic from the affiliate's site to the merchant's site and the affiliate gets paid for this effort. The visitor he referred need not purchase anything from the merchant's site. However, typical fees for PPC affiliate programs are very small, usually not exceeding a dollar for every click.

2. Pay Per Performance (PPP) - PPP affiliate marketing is well liked among merchants and is also the most rewarding type for the affiliates. In this type of affiliate program, the merchant pays the affiliate only when his referral converts into an action - that is whenever the visitor he has referred actually buys something from the merchant's site or when the visitor becomes a lead. This means that the merchant saves a lot on his own direct marketing efforts. On the other hand, this type of affiliate marketing becomes financially most rewarding for the dedicated affiliate, for commissions in PPP affiliate marketing usually comes in the range of 15% to 20% of the actual product sales. And, in the case of e-products or e-goods, the affiliate commission can go as high as 70 - 75% of the sale price.

A further classification of Pay-per-performance affiliate marketing can be done into two types: pay-per-sales (PPS) and pay-per-lead (PPL). Both these are very popular:

a) Pay Per Sale (PPS) - In a pay-per-sale type of affiliate marketing, the merchants pay the affiliate a certain fee whenever the visitor he has referred to the merchant's site actually buys something from the merchant's site. Affiliates are often paid on commission basis, although other merchants would opt to pay a fixed fee. But no matter what the basis of the fee is, it is generally higher than the fee paid to affiliates in a pay-per-click affiliate program.

b) Pay Per Lead (PPL) - The pay-per-lead type of affiliate marketing is a slight variation of the PPS type and is often used by insurance and finance companies and other companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant's site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type. Generally, the sales conversion rate is the highest in the case of PPL, because, the visitor is not required to purchase anything but only complete a non-financial transaction, like, filling up an application form, subscribing to a newsletter, etc.

Apart from these three types of affiliate marketing, several other types of affiliate marketing exist. If the classification is based on the depth of the affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing. There is another type of affiliate marketing that pays the affiliate every time the customer he has referred purchases an item from the merchant's site.

Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on various levels or tiers in the affiliate network for which different affiliate payment structures are devised.

A) Single Tier - In a single-tier affiliate marketing program, the affiliates are paid based on the direct sales or traffic he has referred to the merchant and nothing more. Affiliate marketing types mentioned earlier (i.e. PPS, PPL, and PPC) fall under the single-tier classification.

B) Two Tier - In two-tier affiliate marketing programs, the affiliates are not only paid for the direct traffic or sales that he refers to the merchant's site, but also on every traffic or sales referred by other affiliates who joined the affiliate program through his recommendation.

C) Multi Tier - Multi-tier affiliate marketing works the same way, although the affiliate gets additional commission for a wider number of affiliates in different tiers in the affiliate network.

D) Residual Income Affiliate Marketing - In this type, apart from the affiliate getting paid for every customer he has referred to the merchant's site, the affiliate is also paid whenever the customer he has referred goes back to the merchant's site and purchases another product. Commission for such type of affiliate marketing is based on either percentage of sales or based on fixed fee.

The challenge to the affiliate marketer is in finding the best affiliate marketing methods that would work for him. For instance, multi tier affiliate marketing, also called Multi-Level Marketing (MLM) is a highly difficult type of internet marketing and it does not work for everyone. Some of them even consider MLM as illegal or something which is undesirable.

An affiliate marketer has to try out different methods and decide which will work best for him or her. He/she should then concentrate on those affiliate marketing methods which are suitable for his/her style of internet marketing business.

About the Author

Move Today & Succeed. Read Rajagopalan's blog post, Benefiting From Two Tier Affiliate Programs to gain knowledge. Visit Top 100 Affiliate Marketing Programs.