5 Affiliate Marketing Terms You Need to Know

When you run an affiliate program, it’s important to understand the basic terminology involved. The world of affiliate marketing can be a bit complex, and without knowing the ins and outs, you may end up at a disadvantage.

To help you avoid that scenario, we’ve put together a short guide to some of the most commonly-used and confused affiliate marketing terms. For example, it’s crucial to know that a chargeback comes with hefty fees attached, while a refund often does not. By understanding distinctions like these, you can protect yourself against mistakes.

Let's look at five of the key terms you'll want to know as a new affiliate marketer!

1. Chargeback

First up, this is one of the commonly-confused terms we mentioned above. A chargeback is a refund initiated by the customer. Instead of receiving a refund from the seller, however, the customer opens a disputed charge with their credit card.

Chargebacks often come with hefty fees. Credit card companies may charge the merchant as much as $20 for incurring a disputed charge. This means that in addition to not receiving the original money for the affiliate item, you may actually have to pay out of your own pocket.

It's important to note the distinction between chargeback fees and more traditional refunds. We’ll explain the difference, as well as how to avoid chargeback fees, in the next section.

2. Refund

One way to avoid chargeback fees is by issuing a refund. While a chargeback is initiated by the consumer and incurs fees, a refund is initiated by the merchant and typically does not carry any new charges.

When running an affiliate business, it’s important to draft a clear refund policy. Your policy should make it clear to customers what kind of refund they are entitled to. This can be an excellent way to avoid confusion later, and avoid chargebacks and similar issues.

To keep things simple, you can process refunds using the sales menu in Easy Affiliate. This way, you don’t have to pay commissions on refunded transactions, and can handle all your affiliate program's refunds in a single place.

3. Pay Per Click (PPC) Advertising

Pay Per Click (PPC) advertising is a type of monetization where clicks on a specific link or ad are tracked. In PPC advertising, you only pay when a user actually interacts with your ad. This can help you avoid paying for ineffective campaigns, and keep costs down.

PPC is a very popular method of affiliate marketing. The affiliate agrees to place an ad on their website or social media, and is paid when users click on it and make a resulting purchase. This can also be an excellent way to bring more traffic to your affiliate website.

However, it’s important to ensure that all of your clicks are valid.

While PPC advertising offers a promising avenue for driving traffic, it also opens the door to potential frauds like price inflation and hijacking organic traffic.

Unscrupulous affiliates may engage in bidding wars using branded keywords not only to inflate your advertising costs but also to divert traffic meant for your site, claiming it as their own.

To combat these issues, you can use Easy Affiliate to set up UTM parameters and do the following in Google Analytics (GA4):

• monitor traffic origins,
• detect abnormal bidding activities,
• identify discrepancies between traffic sources and actual conversions.

This level of monitoring ensures that you are paying for legitimate clicks and safeguarding your marketing investments from fraudulent activities.

That brings us to our next affiliate marketing term.

4. Click Fraud

When using PPC ads, you'll want to watch out for click fraud. This is a method of generating fraudulent or invalid clicks. Generally, ‘valid' clicks are ones performed by real website visitors without any prompting. Invalid clicks are those generated by any other means, such as bots or paid deals.

Some affiliate sites will artificially increase click activity through these fraudulent methods. However, there are also other methods that you may not realize are considered click fraud. For example, you can't click on your own affiliate ads, or ask your friends or website visitors to do the same.

Fortunately, you can prevent click fraud by implementing Google Analytics to keep tabs on traffic sources and user behavior on your pages. If you notice a huge increase in visitors who click onto a page and immediately bounce away, that may be a red flag for click fraud.

You can also use a link tracker such as Pretty Links to monitor your affiliates. If you see an uptick in spammy traffic coming from one site, you can remove the suspicious affiliate from your program.

5. Affiliate Software

Last but not least, affiliate software helps you manage your own affiliate program, as opposed to joining up with an existing affiliate network. An affiliate network is a service that manages affiliate accounts for you.

The difference between using self-hosted affiliate software and a third-party affiliate network is the resulting level of autonomy. With affiliate software, you have complete control over how your program is set up. However, you may have to take on additional responsibility in finding affiliates to work with.

On the other hand, with an affiliate network, you have a built-in team and less responsibility. However, networks typically come with increased fees, and less control over your offerings and pricing. This means you're unable to craft your own customized program.

If you choose to set up your own program, Easy Affiliate's software makes your job easy. You have complete control over how your affiliate program will be run, and it operates on the simple-to-use WordPress platform.

Conclusion

Whether you run an affiliate marketing site or use affiliates to promote your brand, it’s important to understand all of the terminology involved. For example, it’s crucial to know the difference between self-hosted affiliate software like Easy Affiliate, and third-party affiliate networks.

To recap, five of the most important affiliate marketing terms to know include:

1. Chargeback: A refund initiated by the customer, which typically comes with hefty fees.
2. Refund: A seller-initiated way of returning money if the customer made an accidental purchase, is unhappy with your product, or otherwise falls within your refund policy.
3. Pay Per Click (PPC) advertising: Ads that are charged based on how often they are actually clicked on.
4. Click Fraud: A method of generating invalid clicks, such as by writing bots that auto-click on PPC ads.
5. Affiliate Software: A way of running self-hosted affiliate marketing programs, offering more control than typical affiliate networks.

Are there any other affiliate marketing terms you’d like to know more about? Let us know in the comments section below!

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