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Affiliate Marketing can be very lucrative and as with every business model, each one has its own concept, advantages and disadvantages. We explore the dynamics of each one, so not only is each affiliate marketing model clear and makes sense, but you are able to identify which aligns with your goals and which you believe would make most value for your business.
Once you begin to compare one model with another, you’re entering the realms of strategy, with which the affiliate marketing models are often confused..
By way of recapping, affiliate marketing simply means when you sign up to a company to sell their products or services. You are paid a commission for every sale you generate, and this income can be designated under a specific commission model. It is always important to review and think about how you can strengthen your business, from how you setup your tracking to which commission model will work best for you.
Before we proceed, it’s important to ensure you have some kind of special deals which you can share with your audiences – this is a method which is likely to attract audiences and therefore sales. This will make your campaign a better profit making machine.
Some of the ways you can scale your business are:
This is perhaps the most simplest way of making sales via affiliate marketing. As an example, this person has ran a successful paid campaign, this pay bump was their only real profit margin. Because they have the extra budget to work with, they have an advantage to scale their efforts over other affiliates who do not have a pay bump.
Target high converting keywords
Whilst it’s important to optimise your website for search results. It’s important to ensure you are attracting quality leads which are converting in the process. Therefore, look for keywords that show that the user has a high transactional intent such as “TAG Heur watch sale” or “trending hiking boots”.
Find the Offers with the Best EPCs
Find out which Affiliate offers have the best Earnings Per Click (EPC). This is an estimation of money earned from 100 clicks to the affiliate offer. It’s always good practice to compare which offers have the best EPC.
Before we go any further, when choosing an Affiliate Program to join, it is important to look into commission rate as well as other factors such as likely demand, any special offers, and value for money. You also need to consider will the overall percentage of your commission be enough to cover the cost, resource, time and energy to promote the affiliate product or service?
You should also have an in depth understanding of your audience in relation to the affiliate niche you commit to. Which channels do they spend time on and how do they spend time there i.e. Are they interested in fashion and look for trends on Pinterest and Instagram? What kind of campaigns resonates with them? Storytelling, cinematic imagery. For ideas on how to promote your Affiliate products visit this link. And lastly, how are your competitors in the same space performing and what are their tactics?
The different revenue models for Affiliates.
Now let’s dive into the different revenue models and pay-out types for Affiliates, so you can decide which works best for you.
When it comes to pay-outs, many brands offer a percentage of the purchase, however flat rates are also popular. Here are some of the terms to familiarise yourself with:
Pay Per Click (PPC) or Cost Per Click (CPC)
This is when you are paid for generating traffic rather than purchases. So you will be paid each time a user clicks through to your website even if they don’t purchase. However, earnings, with this model are generally lower depending on the bidding competition. This is great for those with high volume of web traffic and are looking to make the most of their ad revenue.
As a formula it is:
PPC = Total ad spent/ total clicks.
Some great PPC or CPC ad networks are Facebook Audience Network (this is the best ad network in the social media space, one important thing you’ll find is that it hosts other similar models such as Cost per Impression). Google Adsense allows publishers to choose from the many types of ads, such as display and search.
Pay Per Lead (PPL) or Cost Per Lead (CPL)
This is when you are paid for generating leads. So each time a visitor exchanges information such as name and email, then you are paid an amount. This is typical for when they have to sign up or register to something. This can be very profitable with the right type of niche combined with the type of presence you have online.
Pay Per Sale (PPS) or Cost Per Sale (CPS)
This is focused on purchases made. For every user converted, you will be paid an amount. However, the challenges lie within attribution and cookie lifetime. A user may have been influenced by other campaigns and decided to convert on your website. It is necessary to understand which attribution models allows you to be entitled to the commission.
For more information on attribution models visit this blog.
Although the income tends to be higher from this type of pay out, it is important that the niche relates to yours, it fits your brand and the audience has an interest in it.
Cost Per Action (CPA)
This is when the affiliate pays for the desired or specified action a user takes. This could be a great tool for increasing your income because there is less resistance here.
So, if you are going for a flat payment model, work out which is best for you. Perhaps try a couple from different sources so you can understand and analyse your target audiences journey and behaviour. Which of these models are best for gaining high-quality leads? The only way to find the answers to this, is to analyse the keywords, the traffic and the type of affiliate niche i.e. product, coupon, comparison site?
The RevGlue data gives you invaluable insights into the commissions and complimented with analytical tools such as Google Analytics and SEMRush you are able to see which type of campaign is performing well and which is not.
Let’s move onto other models;
This is popular with Amazon’s Affiliate Program and other monopolies such as Clickbank. This is where they offer sitewide commission, which means it doesn’t matter what the product is, you will get a commission no matter what people buy on the site. However, for some programs when a returning customers buy again using the same affiliate link, you won’t receive another payment.
Quick note: It’s always important to look at the cookie lifeline, which is usually between 30-90 days. This is the amount of time after people someone clicks your affiliate link and buys from your website.
This is typical of subscription services such as SEMRush. So you will receive ongoing commissions for every person signed up. This is a great way of making recurring revenue due to the nature of repeat purchases. This is very popular for niches in supplements, courses, health and fitness and marketing platforms.
As an example Monday.Com offers 25% recurring commission, so users who pay monthly or annually or wish to upgrade, the affiliate will be paid a commission each time.
Other good subscription commerce examples are within the fashion market. The Gentleman’s Box (Impact Affiliate Network) offers a commission rate of $10 with a cookie duration of 30 days. It offers monthly and quarterly themes boxes to help consumers stay stylish.
Another is Ipsy, where it’s designed to give subscribers a glam bag every month, all tailored to their needs and preferences. The Affiliate receives a recurring commission rate of £10 however, the cookie duration is only 7 days.
One thing to be wary of is, is that for many programs, the first month commission is usually higher than the rest. Also, with subscription services, it usually takes a longer time for consumers to make that decision of whether they wish to continually use its services. This is why the cookie lifetime should be taken into account. You should also consider the reputation and strength your affiliate business or campaign carries.
Generally most people promote affiliate programs by hyperlinking relevant keywords in their website. Our free RevLinks technology automates and manages this for you. However, link placement can also be placed on images, which can easily be done with RevImage or display ads, explore our other automated tool called RevAds which does the hard work for you. What all these technologies have in common, is they can mass produce a range of Affiliate Product Links/Services across networks and programs, and automatically embed within the channels you wish to promote in. For further information, contact our team.
And finally, yes we’ve heard it is the one-time commission. This is self-explanatory, when a referral completes the desired action i.e. sign up, download or purchasing, then the affiliate gets paid.
For example, Shopify will offer a one-time commission of 200% for every use who signs up. This is a platform where people can create their own online businesses and sell. This is very high percentage and on average Affiliates earn around £55 per user.
It is geared towards Affiliates or publishers with a positive track record and presence online. To be eligible you must meet a certain criteria.
There are increasing incentives for Affiliate Programs. For example, some brands offer an iterative increase in commission with increasing referrals. Also, some programs are willing to pay higher than frequently sold items.
Our suggestion: Diversify your affiliate models
This is a wise thing to do, you could have spent many hours on a campaign, however your commission reduces significantly, you try to understand is this the affiliate program or is it Google? By not relying on a single source of income, you avoid any issues externally, you are likely to increase your chances of generating an income and you have a better understanding of what works best for you through trial and error.
Also, it’s wise to stick to a combination of programs from ClickBank to Awin and Impact. Sometimes, one of these programs can change their program which can significantly impact your business. This is why you should always stay current and work on a range of efforts. And finally, combining a number of affiliate marketing payout models can reduce the risk of failure.