The document provides an overview of performance marketing and affiliate marketing. It defines affiliate marketing as a marketing channel where outside individuals or companies (affiliates) advertise products or services on a merchant's behalf in exchange for payment. Affiliates get paid through various offer models including revenue sharing, lead generation, and cost-per-action. Affiliate networks track affiliate sales and commissions using pixels. While networks make the process easier, merchants can also track affiliates in-house. The affiliate marketing industry is large and growing, projected to be a $4.1 billion industry in 2014. The document outlines different types of affiliates and considerations for returns and fraud.

1. The Performance Marketing Primer
Dipping your toe into the affiliate marketing pool
Jon Levine
Director of eCommerce
All Inclusive Marketing

2. Today You Will Learn
• What Performance Marketing is
• Who the affiliates are and how they get paid
• What an affiliate network is and what it can, and cannot do
for you
• The different types of offers that can incentivize affiliates
• An introduction to the entire performance
marketing industry

3. • Jon Levine, Director of eCommerce for
All Inclusive Marketing
• Director of Marketing for several industry leading
companies over the last 14 years
• Launched and managed affiliate marketing programs
for different companies in
multiple categories
• Founded and launched three successful
online startups
• Featured speaker and panelist at ShareASale
ThinkTank!, SFIMA, and Affiliate Management Days
conferences and events
About Me

4. Agenda
Getting started with performance marketing
• Definitions
• What is an affiliate program?
• Offer Models
• Sales offers
• Lead offers
• CPA/CPM
• How do affiliates get paid?
• What is a network?
• Other types of tracking
• What is a pixel and how does it work?
• The industry as a whole
• How big is the affiliate marketing industry?
• Where is it expected to go in the future?
• Defining affiliates
• Types of affiliates
• Returns, reversals and fraud

5. What is an affiliate marketing program?
AFFILIATES
Simply put, an affiliate marketing program is a marketing channel in which
outside individuals or companies (affiliates) advertise products or services
to potential customers on your (merchant) behalf.
CUSTOMERS

6. Why would affiliates do this for you? They get paid.
There’s different ways that affiliates get paid and it mainly depends on
what kind of offer is made available by the merchant.
SALES
The most common arrangement between an affiliate and a merchant is that
of a revenue share. When an affiliate drives a customer to the merchant’s
website and a sale takes place, the affiliate gets a percentage of that sale.
LEADS
Another offer that is commonly used in performance marketing is that of lead
generation. Instead of a monetary transaction, the affiliate drives traffic to a
website with the aim of generating sales opportunities for the merchant.
Normally, the affiliate is paid a flat fee for this action.
COST PER ACTION (CPA) / COST PER IMPRESSIONS (CPM)
The third most common type of offer is Cost Per Action or Cost Per (one
thousand) impressions. The M in CPM refers to the Roman numeral for 1,000,
M. In a CPA model, the affiliate is tasked with getting the user to complete an
action. This could be filling out a form or joining a subscription program. CPM
pays affiliates for showing advertisements to viewers in blocks of 1,000.

7. How do you know who to pay? You track it.
Affiliate networks, such as ShareaSale, has offers, and Commission Junction offer the
ability to not only find and recruit affiliates, but to track their sales as well.
The networks do this through the use of a tracking pixel. This pixel not only knows which
affiliate sent which click to the merchant’s website, but it also collects the necessary
data to record the details of the sale. Everything from the order number, to the type of
item, to the sale price gets loaded into this pixel and transmitted back to the network
where it is recorded. All of this happens invisibly and instantaneously once the sale is
confirmed.
product idadvertisement ID

8. Do I have to use an affiliate network? Nope.
While affiliate networks make the recruiting, tracking and paying of affiliates easier,
they do cost money. If you’re willing to make the investment in an in-house tracking
method, you can run your entire program from within.
One way to do this could be through your website analytics. By setting up unique tracking
links and campaigns within your analytics, you could do your own affiliate tracking.
Depending on the size of your program, this could be beneficial in the long run.

9. So, how big is the affiliate marketing industry? Huge.
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$1
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2007 2008 2009 2010 2011 2012 2013 2014
$1.6B$1.8B$1.9B$2.1B
$2.5B
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$4.1B
SpendinBillions
According to Forester Research, the annual spend on affiliate marketing has grown
from $1.6 billion dollars in 2007 to a projected $4.1 billion in 2014.
Additionally, company budgets for affiliate marketing are the third-largest behind Pay-
Per-Click and email marketing. (Forester Research 2011)

10. Are all of affiliates the same? Hardly.
Content Affiliates Coupon Affiliates Price Comparison AffiliatesLoyalty Affiliates
CONTENT AFFILIATES
Content affiliates drive traffic to merchants websites by using, you guessed it, content. The most common type of
content affiliate is a blogger who writes about a specific subject. By creating unique content, they attract visitors
to their site that they’re then able to advertise to.
COUPON AFFILIATES
Unlike content affiliates, coupon affiliates usually have very little content on their site. They’re more about the
deal. Promoting bargains and discounts is the way they attract visitors who then use the coupons they advertise
in a merchant’s store.
LOYALTY AFFILIATES
Loyalty affiliates offer their users cash back to shop through their site. Effectively, they’re sharing the commission
that the merchant pays them with the customer. Everyone wins.
PRICE COMPARISON AFFILIATES
Price comparison affiliates give users the ability to compare two or more different items to see which one is more
suitable. Regardless of which one the consumer chooses, the price comparison affiliate usually wins because
they’ll get a share of the revenue from either sale.

11. Do I have to pay if the customer returns the item? Is there the
possibility of fraud? Don’t worry, it’s been covered.
FULL TRANSPARENCY
When it comes to affiliate marketing and tracking, everything is transparent. You see when all of the sales come
in, who they came from and how much commission will be paid. This information, plus your own internal sales
numbers, will help you keep everything inline.
LOCKING PERIOD
Commissions on transactions are not paid out instantaneously. There is a grace period that must pass before any
monies are doled out. This gives you the opportunity to review each transaction, if you choose, and make any
adjustments that you deem necessary.
REVERSALS AND RETURNS
Returns happen, especially in the ecommerce space. Affiliate networks and tracking mechanisms are fully setup
to allow for commission reversals in the event that an item is returned or something unexpected has happened
with the transaction.

12. Move The Needle

13. Move The Needle
• Based on the type of business you are, determine what
type of offer you’ll use in your affiliate program (revenue
share, lead gen, CPA)
• Determine if you want to use a network to track your
affiliate sales (recommended) or do your own,
in-house tracking
• Look at your key competitors and, if they have an affiliate
program, take note of what they offer
• Determine the type of affiliates that would be right for your
program and create a plan to recruit them
First Steps

14. • There are several types of offers that can be made in
an affiliate program. Find the one that’s right for you.
• Affiliate networks can be an extremely helpful place to
start, especially for new programs
• There are many different types of affiliate marketers
and choosing the right ones for your program depends
on your goals
• The affiliate marketing industry is growing fast and will
only continue to get bigger
Key Takeaways

15. www.onlinemarketinginstitute.org
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