Terms you should be familiar with when launching an affiliate marketing program
Updated: May 27, 2020
Merchant: Also known as an advertiser or brand is a firm who sell their products or services through the affiliate marketing model. Affiliate, Publisher or Partner A website or app that promotes an advertisers’ products or services.
Affiliate Link: A unique link that is provided to the affiliate by the merchant. In this link there is a unique tracking code, so the advertiser can identify affiliates and the sales that they drive.
Affiliate Network: A third party which provides services to affiliates and advertisers, such as programme management, tracking, reporting and processing payments.
SaaS - Software as a Service platform: A company that offers affiliate tracking, reporting and payment solutions for advertise
Banner: Generally a graphical advert on a website or app used in affiliate marketing.
Average Order Value (AOV): A metric used to measure the average revenue per order. It is calculated as: total revenue / total number of orders
Click Through Rate (CTR): The frequency at which an advertisement (banner) is clicked on by a user. It is calculated as: clicks / views : shown as %
CR (Conversion Rate): The frequency at which sales are generated from a click on an advertisement. It is calculated as: sales / clicks : shown as %
Cost per Acquisition (CPA): used to measure the cost per sale of affiliate marketing activity. It is calculated as: total cost / total number of sales
Cost per Click (CPC): A metric in which to measure the cost per click generated. It is calculated as: total cost / total number of clicks
Cost per Lead (CPL): A metric in which to measure the cost per lead of affiliate marketing activity. It is calculated as: total cost / total number of leads
Commission: The compensation the advertiser pays an affiliate for generating a predefined desired outcome, such as a sale or a lead.
Cookie: A cookie is a small piece of data that works with web browsers to store information including, user preference, login or registration information and shopping basket information. A Cookie is used to remember the link or advert that the consumer clicked on, to ensure the affiliate gets rewarded for the transactions and/or actions they drive.
Deep link: A link used that connects the user to a specific page within a website, i.e. a product page.
EPC (Earnings per Click): A metric in which to measure the earnings from every click driven. It is calculated as: earnings / clicks
ROI (Return on Investment) and ROAS (Return on AdSpend): Are calculations used to assess how effective your affiliate marketing activities are by looking at spending versus revenue generated
Incremental Sales: term used to understand how many sales are driven by the affiliate channel that would not have been driven by another channel or marketing activity.