Applied Compensation Methods
PPS (Pay per sale) and CPA (Cost per action) are some of the most used compensation methods. CPC (Cost Per Click) and CPM (Cost Per Mile, cost calculated at 1000 views) are used more rarely.
Over the years, since affiliate marketing arose, a few methods diminished and became less popular. These are cost per click and cost per mile.
Less than one per cent of the marketers use this type of ad program. Cost per click is rewarded only under certain circumstances. The visitor should be informed of the advertisement, although it is mandatory that he or she clicks the website and visits the site of the advertiser.
This method was very popular with the inception of the Internet advertising program, but it lost terrain as many click fraud problems were reported.
To date, click fraud is a problem which most of the search engines have to deal with. The order display of the websites is imposed by the popularity of that particular website.
Some companies find it easy to fraud the click rate on their website, in order to appear higher in the search engine ranking.
An interesting trend is observed in the nascent industries. For example, in China, CPC or CPM are amongst the most used type of affiliate marketing. This situation arose because the Internet advertisement industry in China is at its inception, and it has to pass all the steps before it becomes aligned with the West model.
CPA or CPS (Cost Per Action or Cost Per Sale) is a more honest way of advertising. The visitor has to pass many more steps before his or her actions convert into profits for the advertiser. This has developed a whole science behind the ad industry.
Each ad is placed strategically, according to the traffic of the client and his choices registered by the search engine.
The advertisers are also paid in incentives from the sale, which rise in compensation as certain limits are surpassed.