September 13, 2023

Welcome to the Multifaceted World of Affiliate Marketing: A Comprehensive Glossary

Affiliate marketing, in its ever-evolving landscape, is steadily growing more intricate as it harmonizes with other facets of the marketing realm, striving for a comprehensive marketing strategy. Amid this complexity, newcomers to the affiliate marketing journey find themselves navigating a labyrinth of jargon, terminology, and acronyms, often experiencing bewilderment due to the interchangeability of certain terms.

The Affiliate Marketing Dictionary

With these principal actors in place, let us delve deeper into the rich tapestry of affiliate marketing terminology, shedding light on the terminology that often appears in reports and industry discussions, while offering a more nuanced perspective on each term.

  • AdROAS (Ad Return on Advertising Spend): AdROAS is a specialized metric that evaluates the revenue generated from Cost Per Mille (CPM) advertising campaigns. It measures the effectiveness of your ad spending in relation to CPMs.

  • Affiliate Agreement (also can be Insertion Order aka an IO): An Affiliate Agreement or IO stands as the binding pact forged between an advertiser and an affiliate, delineating the rules and regulations that govern their collaborative partnership. These agreements are designed to be approachable rather than intimidating legal documents. For example, Be Kept Up opts for user-friendly guidelines, expressed in plain language, to clarify permissible and prohibited activities within the programs under its supervision.

  • Affiliate fraud: This insidious activity encompasses deceitful actions undertaken by affiliates with the intent of generating unearned revenue through illegitimate means. Such fraudulent practices cast a shadow over the integrity of the affiliate marketing ecosystem. There are many forms, of which can be click fraud, location fraud, pixel fraud, bot networks, spoofing, etc.

  • Affiliate link: An affiliate link is a distinctive identifier intricately woven into a hyperlink. When activated by a user's click, it sends a signal to an affiliate network or tracking platform, serving as a notification that a publisher is deserving of recognition and compensation for channeling sales or leads to the advertiser's website.

  • Affiliate recruiting: The process of actively seeking and enlisting individuals, companies, or organizations to become sales partners within an advertiser's program. Esteemed affiliates, who are in high demand, often find themselves inundated with a barrage of recruitment pitches on a daily basis.

  • Arbitrage: This strategic maneuver finds certain web publishers, including second-tier search engines, directories, and vertical search engines, engaging in the purchase and subsequent resale of web traffic to profit from disparities in pricing.

  • ARPDAU (Average Revenue Per Daily Active User): ARPDAU serves as a crucial Key Performance Indicator (KPI) that assesses the daily performance of your monetization strategies. It quantifies the income generated by each active user on a daily basis.

    To calculate ARPDAU, divide the revenue earned from your app in a given 24-hour period by the number of active users during that day.

  • ARPPU (Average Revenue Per Paying User): ARPPU is a metric used to determine the average revenue generated by paying users over a specific time frame.

    Calculate ARPPU by dividing the total revenue generated within a particular time period by the total number of paying users during that same time frame.

  • ASO (App Store Optimization): ASO refers to the strategic process of optimizing your app's visibility and appeal on various app stores. It involves various techniques, including enhancing visual elements, crafting keyword-rich descriptions, using appropriate tags, and adapting content for different regions.

  • ATT (App Tracking Transparency): ATT is a framework introduced by Apple with iOS 14.5, which requires apps to seek user consent before sharing tracking or advertising-related data with third parties, making the Identifier for Advertisers (IDFA) unavailable unless the user actively agrees.

  • Average Order Value (AOV): This metric represents the calculated value of total revenue generated over a specified timeframe, divided by the total number of orders. AOV is commonly expressed as an average figure, providing valuable insights into customer purchasing behavior and spending patterns.

  • CAC (Customer Acquisition Cost): CAC is an essential metric that helps businesses understand the total cost involved in acquiring a new customer. It encompasses both sales and marketing expenses associated with acquiring customers, aiding in budgeting decisions.

  • Chargeback: A chargeback occurs when a sales transaction is rendered incomplete, voided, or reversed, leading to the deduction or reversal of affiliate commissions. This situation may arise when a customer purchases a product through an affiliate link but subsequently returns the item, resulting in a chargeback for the affiliate. Additionally, it can refer to fees that advertisers incur when fraud-related chargebacks transpire.

  • Click fraud: Click fraud is an unscrupulous practice where affiliates masquerade as pay-per-click traffic to artificially inflate revenue, effectively deceiving advertisers. In the context of PPC advertising, click fraud generates click charges without genuine interest in the content linked to the ad just to drive up commissions or costs.

  • Click-Through Attribution (CTA): CTA is a performance indicator based on conversions that occur when a user clicks on an advertisement. Generally it’s driven with a Call To Action, also a CTA, which drives a user to take action. Example: “Install now!” “Join now!” “Play today!”

  • Click-Through Rate (CTR): CTR quantifies the number of clicks an ad or affiliate link receives in comparison to the total count of times the ad or link is displayed or served. For instance, if an ad garners 100 impressions and accumulates nine clicks, the resulting CTR stands at 9 percent.

  • Cloaking: Cloaking is a discreet technique that directs search engine spiders to alternative pages hidden from human end-users. This strategy allows search engines to index content associated with a different URL than what visitors perceive, aiming to secure more favorable search rankings.

  • Commission: Also referred to as a referral fee, finder's fee, or bounty, a commission is the compensation an affiliate receives for facilitating a sale, lead, install, in app event, or click-through to an advertiser's website.

  • Connected Television (CTV): A TV that streams entertainment via apps, like Smart TVs. Also a burgeoning way to advertise to users.

  • Conversion: Conversion signifies the pinnacle of success in affiliate marketing, transpiring when a visitor takes the desired action—such as making a purchase or registering for a service—on the advertiser's website.

  • Conversion rate (CVR): The conversion rate is the metric that signifies the proportion of visitors who, following the click-through on an ad or affiliate link, successfully complete the desired action, be it a sale or registration. It serves as a potent indicator of campaign effectiveness.

  • Cookieless tracking: Cookieless tracking employs server-side scripts to capture and transmit information when a user visits a web page. These insights are conveyed to an analytic server for storage, bypassing the conventional practice of storing data in browser cookies.

  • Cost Per Action (CPA): CPA is an advertising measurement and pricing model frequently used in mobile user acquisition campaigns. Advertisers calculate CPA by considering specific user actions within their app, such as newsletter sign-ups or reaching new levels in a game, and pay only for users who perform these actions.

    CPA formula = advertising costs / actions

  • Cost Per Engagement (CPE): CPE serves as a metric for measuring specific user interactions with an ad, often observed on social media platforms, or with deeper funnel events such as completing a certain level in a game, or moving past the application stage with a bank and actually getting an approval or depositing money into the account.

  • Cost Per Install (CPI): CPI represents the cost incurred by app advertisers for each user installation resulting from their ad campaigns. It allows advertisers to create targeted campaigns and pay only when their app is successfully installed.

  • Cost Per Lead (CPL): Advertisers compensate publishers based on the average cost per qualified lead generated. CPL programs often offer moderate commissions and moderate-to-high conversion ratios, reflecting the expenditure associated with lead generation efforts.

  • Cost Per Mille (CPM) & Effective Cost Per Mille (eCPM): CPM is a common online advertising payment model that charges advertisers for every 1,000 ad impressions delivered within a mobile app. eCPM, on the other hand, calculates the revenue earned by publishers per 1,000 impressions. These metrics are vital for assessing ad inventory and campaign effectiveness.

  • Cost Per View (CPV): CPV is typically associated with video advertising and indicates the cost incurred when a user watches an ad.

  • Coupon affiliate: These affiliates specialize in making coupons readily available to the consumer base, serving as a vital link between discounts and purchases. They play a pivotal role in promoting special offers and deals.

  • CTA (Click-Through Attribution OR Call-to-Action): A call-to-action is a persuasive phrase or link within an ad, prompting users to take a specific action, such as downloading an app.

  • Data feed: Data feeds assume the form of plain text files containing essential information required to populate a website with product details. These feeds may be provided by advertisers but are more commonly accessed through affiliate networks, offering a convenient source of up-to-date product information.

  • DAU (Daily Active Users): DAU, short for Daily Active Users, represents the count of distinct users who engage with an app by logging in and initiating a session within a 24-hour timeframe. This encompasses both newly acquired users who have just installed the app and existing users who have reengaged by logging in.

    DAU plays a pivotal role in assessing an app's daily user engagement, serving as a fundamental metric for calculating crucial performance indicators such as retention rate, Lifetime Value (LTV), and ARPDAU (Average Revenue Per Daily Active User).

  • Deep linking: Deep linking entails the practice of directing affiliate links to content residing deep within an advertiser's website. This strategy often leads visitors directly to specific product pages or category sections, enhancing user engagement and relevance.

  • Demand-Side Platform (DSP): A Demand-Side Platform (DSP) serves as a centralized hub that efficiently manages multiple ad exchanges, facilitating the buying and selling of digital ad inventory through a unified interface. Unlike conventional ad networks, DSPs introduce automation to the process of acquiring mobile ads, typically delivering superior outcomes for advertisers. In the realm of mobile marketing, this ad inventory predominantly resides within mobile apps, making it an integral component of programmatic ad buying.

    DSPs employ real-time bidding (RTB) as their mechanism for securing ad space. App developers, on the other hand, make their ad inventory accessible on ad exchanges via platforms known as Supply-Side Platforms (SSPs).

    Within the RTB framework, DSPs promptly establish pricing strategies and compete in real-time auctions to secure available ad space. These intricate processes unfold in mere milliseconds, as DSPs swiftly evaluate requests for ad space, identify the most suitable opportunities, place competitive bids, and subsequently serve the ad content within the designated mobile app.

  • Earnings Per Hundred Clicks (EPC): EPC, or Earnings Per Click (EPC), quantifies the earnings or average payout an affiliate receives for every hundred clicks they generate. It offers a concise snapshot of an affiliate's revenue generation efficiency, allowing for performance assessment.

  • Earning per Thousand Impressions (EPM): EPM, relevant primarily in the context of images or videos, signifies earnings or average payouts per one thousand impressions. This metric aids in evaluating the profitability of media formats that rely on impressions rather than clicks.

  • Effective Commission Rate: The Effective Commission Rate encapsulates the actual payout received by affiliates in the preceding month, distinct from the program's default rate. This metric reflects the real earnings of affiliates and can vary based on their specific promotional strategies.

  • Escalating commission (also known as sliding scale or tiered commissions): Escalating commissions constitute a dynamic compensation structure that rewards affiliates based on achieving specific performance goals. These commissions increase as affiliates attain predetermined benchmarks, such as reaching a specified number of transactions or generating a certain revenue threshold.

  • Google Advertiser Identifier (GAID): GAID is a unique identifier for advertisers on Android devices, enabling them to track user ad activity while preserving user privacy.

  • Identifier for Advertisers (IDFA): IDFA, short for Identifier for Advertisers, is a distinctive identification assigned by Apple to an individual user's device. IDFA plays a pivotal role in allowing advertisers to gain insights into the activities of iPhone users, encompassing actions like app installations and ad interactions. Notably, in April 2021, Apple introduced iOS 14.5, marking a significant shift in IDFA's functionality. Under this new paradigm, user consent through App Tracking Transparency (ATT) becomes imperative, signifying that users must actively opt in to share their IDFA data with advertisers.

  • Impressions Per Daily Active User (IMPDAU): IMPDAU, which stands for Impressions Per Daily Active User, serves as a valuable metric to gauge the efficiency of a monetization strategy concerning daily ad impressions. This metric reflects the average count of advertisements delivered to each of your engaged users within a single day. IMPDAU finds diverse applications, including evaluating the performance of new bidding app partners, scrutinizing conversion rates and ARPDAU, and assessing the impact of novel game features.

    You can calculate IMPDAU using the following formula: IMPDAU = Number of daily impressions / Number of daily active users.

  • In-App Purchases (IAP): In-app purchases occur when users buy items within an app using real money, often seen in mobile games for enhancing gameplay or acquiring cosmetic items. Other times, apps can utilize an offer wall partner which allows a user to complete set offers for an IAP instead of forking money over from their wallets. Partners like Revenue Universe, & Unity are larger players in this space.

  • Influencer marketing: Influencer marketing is a prominent subset of social media marketing that leverages endorsements and product mentions from individuals who boast a dedicated following on social platforms. These influencers wield their credibility and reach to promote products or services.

  • In-house: In-house affiliate marketing entails the construction of an affiliate program infrastructure—comprising management, tracking, or both—within a company's own operations, without relying on external affiliate solution providers. This approach can provide greater control and customization of the affiliate program.

  • Installs Per Mille (IPM): IPM quantifies the number of app installations per 1,000 ad impressions, aiding in assessing user acquisition performance.

  • Key Performance Indicators (KPI): KPIs are essential metrics used to quantify objectives that reflect the strategic performance of an online marketing campaign. These metrics provide valuable business and marketing insights, allowing for the assessment of measurable objectives and their trajectory.

  • Landing page: A landing page is the specific webpage that a visitor encounters immediately after clicking on a search engine listing, pay-per-click ad, banner ad, or text link. It serves as the initial point of engagement between the user and the advertiser's content.

  • Lead, lead generation: Lead generation websites are platforms that generate leads on behalf of another company. Visitors typically complete contact forms on these sites to obtain more information about a product or service, with each submitted contact form considered a lead.

  • Lifetime Value (LTV): LTV predicts the profit generated by an average user over their entire app usage period. It helps estimate revenue potential and informs user acquisition strategies.

  • Limit Ad Tracking (LAT): LAT is a privacy feature that allows iOS users to restrict the sharing of their Identifier for Advertisers (IDFA) with third parties. It is now being replaced by App Tracking Transparency (ATT) in iOS 14.5 and later.

  • Lock date: The lock date serves as a critical threshold beyond which an affiliate transaction becomes irrevocable, non-reversible, and unmodifiable. This date marks the point at which the transaction is deemed final.

  • Loyalty or Incentive affiliates: Loyalty or incentive affiliates employ enticing incentives, such as cashback offers or other perks and rewards, to motivate their audience to make purchases or engage through their websites. These affiliates often offer unique value to their audience in the form of rewards and discounts which can be used to drive scale for advertisers because users arguably have more to gain than just the regular value proposition provided by the advertiser.

  • MAU (Monthly Active Users): MAU measures the number of unique users who engage with an app within a month or a 30-day period.

  • Mobile Measurement Partner (MMP): MMPs assist app and game developers in tracking campaign performance across various advertising channels, providing insights for optimization and growth.

    Examples can be Adjust, Kochava, Branch, Appsflyer, Singular, etc.

  • Paid placement: Paid placement involves advertisers paying a fee to publishers to secure a guaranteed position on the publisher's page or inclusion within specially curated content, such as newsletters or gift guides. This practice ensures prominent visibility for the advertiser's offerings.

  • Pay Per Call: Pay Per Call is similar to pay-per-click, with advertisers compensating publishers for each incoming phone call generated through their promotional efforts. Unlike traditional PPC, Pay Per Call does not always require the use of affiliate links but instead relies on unique call tracking codes.

  • Pay Per Click (PPC, also Paid Search): Affiliates engaged in PPC advertising purchase ads on platforms like Google and other search engines to promote products or services. These ads can either redirect traffic to the affiliate's own website or directly link to the advertiser's domain.

  • Rate card: A rate card is a comprehensive document that outlines the various advertising placement options available to affiliates. It provides transparency regarding pricing and available advertising opportunities.

  • Real-Time Bidding (RTB): RTB is an automated process where demand-side platforms (DSPs) bid on ad inventory in real-time auctions conducted by supply-side platforms (SSPs).

  • Return on Ad Spend (ROAS): ROAS indicates the revenue generated for every dollar spent on advertising, offering insight into advertising effectiveness.

  • SKAdNetwork (SKAN): SKAN is Apple's attribution framework for mobile ad campaigns on iOS, designed to measure the effectiveness of ad campaigns.

  • Super affiliates: Super affiliates represent an elite group within an affiliate program, comprising the top one percent of performers. These affiliates play a pivotal role in generating the majority of the program's revenue due to their exceptional performance and earnings.

  • Supply Path Optimization (SPO): SPO involves optimizing the path to ad supply by eliminating redundant intermediaries, reducing costs, and enhancing inventory quality.

  • Supply-Side Platform (SSP): SSPs are platforms that allow app developers to manage and sell their ad inventory to advertisers. They facilitate the automated buying of ad space.

  • Tracking method: While affiliate links are the most common tracking mechanism, various other methods can prove effective. Some advertisers use shopping cart software capable of tracking coupon codes linked to specific publishers, while others establish co-branded pages on their websites. In certain instances, third-party analytics platforms are employed to analyze traffic and compensate publishers based on predefined criteria.

  • Trademark poaching: Trademark poaching is a controversial practice where affiliates utilize PPC ads without authorization to directly link to an advertiser's website, exploiting trademarked names or branding. Search engines typically restrict each domain to a single link, occasionally undermining internal paid search efforts and attributing sales to the affiliate without proper authorization.

  • User Acquisition (UA): UA refers to the process of acquiring users through marketing efforts, often involving mobile ad networks and cross-promotion.

  • View-Through Attribution (VTA): VTA is a performance metric based on conversions occurring when users are exposed to an ad, even if they don't click on it.

This comprehensive glossary serves as a valuable resource for both newcomers and seasoned veterans in the intricate world of affiliate marketing, offering an in-depth exploration of the terminology and concepts that shape this dynamic industry.

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