7 Affiliate Payment Models – Which one do you prefer?
18 Mar 2018
Today, affiliate marketing is a big revenue driver for most businesses around the world. Whether you are a newbie in the affiliate marketing world or a pro, chances are that you have heard the ‘Cost per’ term a lot.
Cost per Action, Cost per Click, Cost per Sale, Cost per Lead, Cost per View, Cost per Install etc.
What led to the steady rise and popularity of affiliate marketing platforms is that unlike social media and search engine optimization, most of the affiliate program types can get you instant results and commission. You don’t have to wait for weeks or months on end. Whether you are an advertiser or a publisher, you can take advantage of this marketing/revenue medium by joining an affiliate marketing platform. Those of you, who have already tried your hands at affiliate marketing will easily vouch that out of all the advertising payment models, CPA is by far one of the most popular!
Generally considered as one of the best ways to monetize website and blogs, affiliates prefer CPA because it can produce quick and thrilling results. But that doesn’t mean that all the rest of the affiliate payment models cannot make you good money. The choice can vary from person to person. It also depends on the industry or niche an affiliate works with and the target market they are reaching out to. So what are some of the most common affiliate payment models that you will come across on an affiliate marketing platform? Here are 7 performance-based payment models we believe really work:
1. COST PER ACQUISITION
CPA, short for Cost per Acquisition is a considerably simple model and the most established affiliate payment model in which a publisher or an affiliate gets paid when someone clicks on their affiliate link and completes a goal. The ‘goal’ here can range from making a purchase to getting a membership, getting a free quote, filling out a form or signing up for a free trial etc. – whatever the advertiser defines. The level of commission here also largely depends on the business or brand who owns the offer.
2. COST PER SALE
CPS, known as Cost per Sale is comparatively a low risk and high profit affiliate payment model. In this the affiliate or publisher makes commission only if the lead results in a purchase. Pro marketers, specifically working on the travel and fashion websites prefer CPS because for them this model is designed to pay for itself. It eliminates the unnecessary costs to drive growth and savvy CPS affiliates rarely have to spend more than a few cents per lead.
3. COST PER CLICK
For CPC or Cost per Click, the advertiser pays the publisher each time one of their ads is clicked. Most of us can relate this affiliate payment model to AdWords, Bing and so on. CPC has dynamic pricing which means that the pay largely depends on how competitive the keywords are. Therefore it does not offer a predictable revenue. While your CPC ads are displayed to your target audience, there is no guarantee if the ads will resonate with them and there are greater chances of generating low traffic if your website call-to-action doesn’t engage the users.
4. COST PER INSTALL
The CPI or Cost per Install commission model is generally more specific to mobile applications. The publisher is usually a mobile app marketer who gets paid when an app is installed on a smartphone and tablet. The value of CPI may fluctuate depending on the market season, time, geography, ad platform, OS and mobile app inventory of the performance marketing platform you are working on.
5. COST PER LEAD
CPL or Cost per Lead affiliate payment model is basically employed by brands and direct response related marketers who are more focused on building strong email lists, newsletter lists, customer acquisition or reward program. The publisher gets paid for every new lead that has come in and completed the goal as a consequence of the marketing campaign. Many marketers and businesses prefer CPL payment models because it allows them to collect relevant data by connecting with their target audience and giving them more control of their brand.
6. COST PER MILLE
CPM, Cost per Impression or Cost per Thousand advertising model is also called the direct ad sales and have commonly been used for branding campaigns. CPM is also known as one of the oldest and traditional forms of advertising pricing models with its base in print. It is also one of the riskiest because while a potential customer might see your ad, there is no guarantee that it will get clicked. For the CPM offers advertisers agree to pay publishers a predetermined amount for every 1,000 impressions served. Meaning that for every thousand times an ad is displayed to a user on a mobile platform.
7. COST PER VISITOR
Comparatively new in respect to other more common affiliate payment models, Cost per Visitor or Cost per View (CPV) is another preferred choice of retailers and brands with online stores. This affiliate payment model guarantees online store visitation. The CPV publishers are expected to bring in a predetermined number of visitors for a specified payout.
Why CPA is one of the most popular Affiliate Payment Model?
Choosing the best affiliate payment model is vital for consistent revenue generation. CPA gives instant gratification because the conversion happens almost immediately. Most affiliates, especially newbies prefer the CPA campaigns. It also works well for high volume and low cost products or services. On the other hand, the CPL and CPS commission models enable affiliates to build a stronger relationship with their potential customers and leads which leads to long term value. Deciding which affiliate payment model you should choose really comes down to you and your industry choice. For certain industries like mobile and games, CPI and CPS affiliate payment models are preferred while for others like finance and dating, the CPA model works well.
While we cannot side with a single affiliate payment model, because we believe that every model has its own pros & cons, we can certainly ask for your preferences and reasons. So tell us which type do you prefer and why? We’d love to hear back from you.