Whether you are an affiliate yourself, or you run your own affiliate program, being as well-informed as possible is always one of the best things you can do if you want real results!
This includes understanding the words and phrases you encounter on a regular basis in the affiliate marketing scene, in articles, affiliate agreements and materials, affiliate platforms, and more.
In this post, we break down some of the most common affiliate marketing terms in simple language to help bring clarity to your affiliate marketing journey.
Something done by the visitor or customer, such as signing up for a newsletter, clicking a link, or completing a purchase.
Action life cycle
The complete sequence of events (or the path that customers follow) that results in an action (such as a sale).
Action referral period
The period of time during which cookies are active and affiliates can receive credit for referrals.
Active affiliate rate
The percentage of affiliates within an affiliate program that are “active”, as defined by traffic, sales conversions, or other metrics.
A person or company that pays affiliates to promote their products and services – also known as a merchant.
A person or company that promotes the products or services of another person or company – also referred to as a partner or publisher.
A document that explicitly defines the relationship between the advertiser and the affiliate, the type(s) of actions that the affiliate is paid for, and any other expectations, rules, or guidelines on things like:
- Affiliate application rejection
- Affiliate program details and policies
- Affiliate registration
- Commissions and payouts
- Direct link tracking
- Promotional methods allowed
Affiliate area or dashboard
A designated area on an advertiser / affiliate program owner’s website where affiliates can log in and do things like view their referral stats and earnings, generate affiliate links, and update their personal information, for example.
An online database where affiliates can browse, select, and apply for different affiliate programs – also known as an affiliate network; A “middle man” between advertisers and affiliates.
A web address / URL containing identifying information for an affiliate that is used to track and assign the affiliate appropriate credit for referral traffic or certain actions – also known as a tracking link.
A person who is responsible for managing affiliate program elements like:
- Recruiting, reviewing, and approving affiliates
- Communicating with affiliates
- Deciding on promotional methods and offers
- Managing creatives and marketing materials
- Overseeing and improving the performance of affiliates and the program as a whole
The performance-based marketing model where a person or company rewards affiliates for new website traffic, leads, customers, and/or sales or other actions that result from the affiliate’s own marketing efforts.
A program that is run by a person or company who wants to acquire new customers and/or increase sales through partnering with other people (affiliates) who promote their products or services in exchange for a reward.
Average order value (AOV)
The average value generated by each affiliate conversion, or the average revenue from each successful transaction.
Average order value (AOV) = Total affiliate revenue ÷ number of orders
Brand-specific resources (and accompanying guidelines) given to affiliates by the advertiser, such as:
- Brand colors
- Brand-specific copy, slogans, or tag lines
- Mascots, photos, and other imagery
When a customer returns a product, requests a refund, or a sale is otherwise unsuccessful. Usually, any affiliate commissions earned on the sale are withdrawn when this happens.
When the user clicks an affiliate link or banner and is taken to the advertiser’s website.
Click-through rate (CTR)
The average rate that people are clicking on advertising (links, banners, etc.) when they see it.
CTR = Clicks ÷ impressions
The amount of money that an affiliate gets paid for each sale (or each conversion of the desired action).
The completion of the advertiser’s desired action, such as a subscription or purchase.
Conversion rate (CR)
The percentage of affiliate traffic resulting in conversions (usually sales).
CR = Total number of conversions ÷ total number of clicks
A piece of data that is stored in the user’s web browser when they access the advertiser’s website via affiliate links or ads. Cookies are used to track affiliate referrals.
The length of time a cookie will remain stored in the user’s browser – also known as cookie duration. 30 days is common.
Cookie expiration date
The date a cookie will be automatically deleted from the user’s browser.
Cost per action (CPA)
The average cost that an advertiser pays an affiliate for a specific user action.
CPA = Total affiliate commissions paid for an action ÷ total number of actions
Cost per click / lead / sale (CPC / CPL / CPS)
The average cost that an advertiser pays an affiliate for each click, lead, or sale.
CPA / CPL / CPS = Total affiliate commissions paid ÷ total number of clicks / leads / sales
A code – specific to a given affiliate – that customers can use to receive a discount on the advertiser’s products or services.
A type of marketing material, asset, or media that can be used by affiliates to promote the advertiser’s products or services, such as text links, banners, and widgets, for example.
The number of times a particular affiliate ad is being seen by users.
Incremental sales / revenue
The increase in an advertiser’s sales / revenue from new customers that have been referred by affiliates.
A web page that users arrive on when they click on affiliate links and banners – often co-branded, customized to the affiliate, or identical to the advertiser’s sales page, but with a custom affiliate-specific URL.
A person who has completed some kind of action (such as signing up to a mailing list or registering an account on the site) and has the potential to become a paying customer.
The percentage of leads that come from the total number of unique clicks on affiliate ads.
LR = Total number of leads ÷ total number of unique clicks
A specific deal with certain parameters, such as a special limited-time price or discount for specific affiliate audiences.
Pay per click (PPC)
An affiliate marketing model where advertisers pay for each click on an affiliate ad.
Referral / referred customer
A new person that an affiliate refers to the advertiser’s brand – often someone who has successfully completed an action such as making a purchase.
In AffiliateWP, a Referral is the conversion and commission data recorded for an affiliate when a conversion / purchase is successful. A “referral” is generated when a visitor successfully purchases a product or completes a form submission, after visiting your website via the affiliate’s referral link.
The percentage of affiliate transactions that are cancelled after the purchase is completed.
Return on ad spend (ROAS)
The total affiliate revenue vs. the cost of running an affiliate program, including affiliate commissions.
ROAS = Total affiliate revenue ÷ total affiliate program costs
Search engine marketing (SEM)
A type of marketing that is focused on increasing a website’s search engine results visibility through things like search engine optimization and paid advertising.
Search engine optimization (SEO)
Optimizing a website or web page to increase the quality and quantity of organic traffic coming to the site from search engine results pages.
Search engine results page (SERP)
Web pages that display relevant results when users search for something online using a search engine, such as Google.
A clickable link that is usually plain text and/or woven into written content, and takes the user to an affiliate landing page or the advertiser’s website.
When a third party (not the advertiser and not the affiliate) tracks user visits to an affiliate landing page or the advertiser’s website – often in order to notify affiliates in real time.
Tiered commission rates
A commission rate structure that rewards affiliates with higher commissions depending on how much they earn or how many successful referrals they generate.
If you’ve been confused about affiliate marketing terminology, hopefully this information has been helpful.