An affiliate network acts as an intermediary between publishers (affiliate marketers) who sell products and services and the merchants who create those products and services and their affiliate programs.
For merchants, affiliate network services provided often include reporting, tracking, payment and refund processing, affiliate management, and most importantly – access to a large base of publishers (affiliate marketers).
For affiliate marketers, network services include a central database of available affiliate programs organized by category and popularity to choose from, a simple registration platform for those programs, reporting tools, analytics, and payment processing.
While affiliate marketers are generally able to join affiliate networks for free, merchants usually have to pay a fee to participate in the network. Affiliate networks usually charge an initial setup fee for each merchant and often a recurring membership fee. It’s also common practice for affiliate networks to charge merchants a percentage of the commissions paid to affiliates. This percentage is known as an ‘over-ride’ and is payable on top of the affiliates commissions. But make no mistake about it, despite these fees, the benefits to the merchant for joining these networks is well worth the price. Here’s why…
There are several payout models used by affiliate networks including the two primary models: CPS and CPA.
CPS, also referred to as PPS (Pay Per Sale), is a low-risk, high-profit, revenue-sharing model used by marketers to lure an unlimited number of new customers to their product or service.
Cost-Per-Sale pays a set commission to the affiliate marketer who refers to a lead that results in a purchase.
Marketers love the CPS model since they only pay a commission after they get paid first by the purchasing customer. It’s in essence free marketing and advertising since the affiliate is the one who produces the lead without any up-front cost to them.
This is also why CPS payout commission percentages are so high. Incidentally, the CPS model is primarily what we focus on here at highpayingaffiliateprograms.com.
CPA marketing programs pay affiliates when a specific action is taken by the referral or lead. Common actions include clicks, impressions, form submits, sign-ups, registrations, or opt-ins. Since Cost-Per-Action models don’t necessarily involve a direct sale (and involve more risk taking) the payout percentages are far smaller than they are in Cost-Per-Sale.