Commission: In online advertising, a commission is a fee that is paid to an affiliate or partner that helps bring traffic to a business's website. Much like sales commissions in other industries, an advertising commission can be based on a flat fee or it can be paid out as a percentage of a sale. In these cases, the business doing the advertising is the one who pays the affiliate.
Commissions are most commonly earned through pay per click (PPC) advertising methods. These types of ads are displayed either in text or graphics on a partner website; when internet users click one of these ads, they are directed to a business's website. For every click that a PPC ad receives, the affiliate who displays the ad earns money. These commissions may be paid out as a percentage of a sale, as is the case in a pay per action (PPA) or cost per action (CPA) pricing model. Other commission payment methods may be on a one-time-only or recurring basis.
While sales are the ultimate goal of any PPC campaign, other costs associated with commissions may include costs per impression, lead, acquisition, call, or download. Cost per impression, for instance, can be as simple as a fee for any unique visitors to a page, regardless of whether or not they click on an advertisement. These charges are often applied for every 1,000 visitors, depending upon the popularity of the affiliate.
A good example of a popular pay per click advertiser is Google, which offers text-based advertising within its search engine results. Search engine marketing usually charges by the click, but plans vary between affiliates. This type of advertising is sometimes referred to as affiliate marketing or contextual advertising.