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What is it?
Think of an advertising agency... You create a product, deliver it to your customers, and your customers pay you directly. An advertising agency gets the word out so people come to you and buy.
You pay the ad agency a fee - it might be a fixed fee, a percent of sales, or a combination. The agency is like an affiliate, but with affiliate marketing all the buying and selling occurs online.
If you are the affiliate, you get paid every time someone buys due to your advertising efforts.
Below are simple definitions for many of the words used with internet marketing. The list is certainly not complete, but hopefully will provide you with a basic context and working vocabulary.
KEY PARTIES INVOLVED
• "distributors," have rights to the product, so do the actually selling
• "affiliates" a.k.a. "publishers," do the marketing
• "vendor," may mean the distributor, but can also be manufacturers, shippers, or other companies that provides services to the distributor or publisher (web hosting, email auto-responders, etc.)
• "affiliate networks," places where distributors and publishers can meet and agree to do business together
OTHER COMMON PARTIES INVOLVED
• "manufacturers," make the products; they may or may not be the distributors
• "drop shippers," middle-men for physical products; 3rd party vendors who stock inventory, receive orders, and ship products
Miscellaneous Vocabulary
• internet protocol, how computers talk to each other (http, ftp, telnet, etc)
• domain*, the name used to point traffic to space on a server (http://xxx.com)
• URL, unique internet address of a web page (protocol://www.domain/details)
"Domain" is an overloaded term. It refers to the http://xxx.com name itself AND to a domain of space on a server. When you "buy a domain" you are really buying the domain name. It becomes "a domain" when the name and server get linked together.
• search engine optimization (SEO), trying to be #1 in search engine query results
• landing pages, affiliate/publisher-owned web pages that warm a potential customer up to the product (pre-selling) before sending the customer to the distributor's web site to close the sale
• pay per click (PPC), the affiliate pays every time a potential customer clicks an add
Example 3rd-Party Products
• web hosters, companies that sell domain names; affiliates use web hosting companies
.. to buy domain names for linking directly to a distributors site
.. to buy domain names and server space for web pages that advertise
.. to host web sites
• web builders, people or software that design and build websites
• auto responders, software that handles delivery of routine email messages, and that can auto-respond to emails from customers
• virtual smart agents, interactive software on a website that is pre-programmed to communicate with customers - often used to try and talk a customer into staying on a site long enough to decide to buy
• traffic and conversion tracking tools, monitor marketing efforts and success
• site validation, optimization, and statistic-gathering tools, fine-tune marketing efforts for cost-efficiency and exposure
• auction sites, where products can be bought and sold
• search engines and directories, control ranking and strategies for improving search results
• online shopping malls and listing services, where products can be listed and advertised
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