Cost per Action (CPA) and affiliate marketing are probably two of the most common terms in the vocabulary of every digital marketing agency. Here are some common terminologies and their explanations that are used in the digital marketing industry in Singapore.
What do we mean when we say affiliate marketing?
Affiliate marketing is the type of marketing based on the collaboration of two parties:
- Advertiser (merchant) – the one that has created the partnership program
- Affiliate (publisher) – the one that promotes the program
The advertiser is usually a company or a web site that sells a product or a service, receives the payments and fills the orders. From the advertiser’s point of view, an affiliate program is a way of reaching out to potential clients without investing into traditional marketing.
That is possible because the publisher covers the costs of getting potential clients. Of course, the publisher will be paid for all the services, and these costs are defined beforehand.
The publisher promotes the advertiser’s products or services and covers the marketing expenses. That is done in exchange for a percentage of earnings each time he brings a potential client to the advertiser.
Advertiser – Publisher relationship
The type of action a publisher has to provide for him to be paid by an advertiser will be pre arranged. If a publisher can get a potential buyer’s phone number, make him fill in a longer form, sign up for a product test, or convince him to buy a product, then he provides more value for the advertiser and therefore, he will be better paid.
The advertiser buys the contacts of people for whom he knows they are interested in his products. The price of leading a single potential client to perform the preferred action is called cost per action (CPA).
A publisher runs various campaigns to make users enter their email addresses or perform other activities. These campaigns may appear as ads on relevant web sites, blogs, social networks and platforms such as Google Ads, etc. The advertiser decides the ways to perform promotion. For example, some of them don’t allow email advertising; others stick to promotion on social networks and so on. It is not a rarity that an advertiser hires a digital marketing agency to define the most efficient ways of advertising.
Problems that may appear
In the end, it will be useful to mention some problems that tend to appear in this type of marketing. The most usual ones are bad leads (poor quality potential clients) and fraud leads (unexisting potential clients).
Bad leads refer to clients that were promised to get something in exchange for their email addresses, while fraud leads represent fake potential customers in cases when publishers knowingly deceive the advertisers.
Hence, if you are willing to dive into the waters of affiliate marketing, be informed about the reputation of the company you want to work with.