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There are different types or classes of affiliate marketing, and the number of types will depend on how one classify them. However, the most basic affiliate marketing programs, falls under pay-per-performance (PPP).

' Pay Per Performance (PPP)

PPP affiliate marketing is the most popular among merchant and is also the most lucrative type for the affiliates. In this type of affiliate program, the merchant only pays the affiliate whenever his referral translates into an action - that is whenever the visitor he has referred actually purchase something from the merchant's site or when the visitor becomes a lead. This means a lot of savings for the merchant as compared to paid advertising. On the other hand, it becomes the most lucrative type for the dedicated affiliate, for the commissions offered by the merchant in PPP affiliate marketing usually comes in the range of 20% to 75% of the actual product sales.

Pay-per-performance affiliate marketing can be further classified into two popular types: pay-per-sales (PPS) and pay-per-lead (PPL).

o Pay Per Sale (PPS)

In a pay-per-sale type of affiliate marketing, the merchants pay the affiliate a certain fee whenever the visitor he has referred to the merchant's site actually buys something from the merchant's site. Affiliates are often paid on commission basis, although other merchants would opt to pay a fixed fee. But no matter what the basis of the fee is, it is almost always a higher percentage commission and a higher fixed fee that would motivate and attract more affiliate to work harder for the merchant. This is a win-win situation, the affiliate earns more while the merchant gets more sales for doing nothing.

o Pay Per Lead (PPL)

The PPL type of affiliate marketing is a slight variation of the PPS type and is often used by companies who rely on leads for their company to grow. In this type of affiliate marketing, the affiliate is paid whenever the visitor he referred to the merchant's site fills up an application form or any similar form related to the business of the company. Compensation for this type of affiliate marketing is based on a fixed fee whose rates approximate that of the fixed fee in the PPS type.

Aside from these two main types of affiliate marketing, a lot of other affiliate marketing types exist. If the classification is based on the depth of the affiliate network, it can be classified as single-tier, two-tier, and multi-tier affiliate marketing. There is residual income affiliate marketing that pays the affiliate each time the same customer he has referred purchases the same product again or some other product from the merchant's site.

' Single-Tier, Two-Tier, and Multi-Tier Affiliate Marketing

These types of affiliate marketing are based on the different levels or tiers in the affiliate network by which payments are made. These structures offer more incentive and further motivate the affiliates to work harder and very quickly build a fleet of affliates under the merchant.

In a single-tier affiliate marketing program, the affiliates are only paid based on the direct sales or traffic he has referred to the merchant. PPS and PPL affiliate marketing types) fall under the single-tier classification.

In two-tier affiliate marketing programs, the affiliate is not only paid for the direct lead or sales that he refers to the merchant's site, but also on every lead or sales referred by various other affiliates who joined the affiliate program through his recommendation.

Multi-tier affiliate marketing works the same way, that the affiliate gets additional commission for a wider number of affiliates in different tiers in the affiliate network.

' Residual Income Affiliate Marketing

In residual income affiliate marketing, the affiliate gets paid not only once for the customer he has referred to the merchant's site. Rather, the affiliate is also paid whenever the customer he has referred returns to the site and purchase the same product or another product. Compensation for such type of affiliate marketing is based on either sales percentage commission or fixed fee basis.

The different affiliate marketing types would virtually work differently for merchants and affiliates alike, and each would generally have their own list of benefits. Which type of affiliate marketing will work best for a merchant? Rather, it is to choose which type of affiliate marketing program will suit the merchant's needs and characteristics best.