associate program

Quick Reference

An agreement between one Web-based company and another, whereby one company pays the other for every visitor to its site who has come from the other company's site. For example, the first company may sell CDs and the other may run a guru site for some category of music. Associate programs enable targeted sets of Web users to flow into a commercial Web site which directly addresses its interests. The pioneers of associate programs have been bookshops such as Amazon and CD shops such as CD Paradise. The payment to a Web site which has delivered customers can be based on a pay-by-click model or a pay-by-purchase model. The former is based on paying a small amount, usually a few cents or pence, when a visitor visits a Web site; the latter is based on an actual sale made. Being an associate usually entails placing hyperlinks prominently on Web pages or adding a customized interface supplied by the associated Web trader. A company which has a large number of associates can be overwhelmed with the process of tracking clicks. This has led to a new type of company, the click intermediary, which manages the accounting process. Much higher amounts can be earned by using a pay-by-purchase model. Here, revenue is based on a percentage of the purchase made by a customer directed by one Web site to another. Typically a commission would be around 5 to 10 per cent of the purchase price. As with pay-by-click, the organization of pay-by-commission may require a large amount of investment of time, and so specialized purchase intermediary companies have sprung up to administer such schemes.

Subjects: Computing.

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