Are you new to affiliate marketing and digital marketing in general? Then you may be confused about all the jargon that you come across. That is why we made the following brief breakdown of the various commission models that you can apply.
These models may help you choose the one that best suits your campaign.
In affiliate marketing, there are different types of commission structures. As an advertiser, you can choose how to reward your publishers for getting visitors to complete a specific task.
The best commission model depends on your offering (products or services), business objectives, budget, and other factors. Some models will suit your company better than others.
Performance marketing is a marketing model in which advertisers pay their partners only when a specific action takes place. This happens when you reach a set goal. CPA (Cost per action), is a general term which encompasses all of the commission models detailed below.
The different commissions are as follows:
- CPA (Cost per action): A commission is paid for a specific action, such as a newsletter signup, click, contact request, or form submission. It is a broad term. It covers several different commission models.
- CPS (Cost per sale): This is one of the most popular commission models, in which the advertiser will pay a publisher commission when a visitor directed from the publisher’s website makes a purchase. Typically this is a percentage of the customer’s shopping cart, but it can also be a fixed amount in some cases.
- CPM (Cost per mille): Publishers are rewarded with a fixed fee for every 1000 impressions (views) that view an advertiser’s material on the publisher’s website.
- CPL (Cost per lead): In this model an advertiser will pay a publisher when they are able to generate a lead for them. A lead is a potential customer that expresses their interest in the advertiser’s offer. Their interest is measured by them completing a specific action such as filling in a form, subscribing to a newsletter, new memberships etc.
The amount paid is a fixed amount per lead, and it is generally based on the information
that the lead must provide. - CPC (Cost per click): A fixed amount that the advertiser pays for each click that takes place on their advertising. As opposed to CPM mentioned above, this model only rewards the publisher when clicks on the advertiser’s material.
- Fixed fees: Some publishers – typically large media or perhaps influencers – will request a fixed fee to publish an article, make a post or mention your brand. These fees depend on the size of the media and the content that needs to be created.
- App installs: If your company has a mobile application and you wish to increase the number of users, there is also the possibility to reward your publishers each time they are able to generate a download. In addition to this, Daisycon also allows advertisers to pay commissions based on in-app purchases.
- Revenue share:
If your offering is subscription-based or uses another fee model, your customers are billed monthly. You can pay your publishers for each customer payment. However, this model is more technical to set up. You will need support to implement it.
If you have any doubts and would like to discuss which model would best suit your campaign, please do not hesitate to reach out to one of our account managers.
How to determine the amount of your publisher commission?
Once you have set your campaign’s commission structure and publisher rewards, you can use a few other methods. These methods can help improve your campaign performance. As mentioned above, the commission is a key aspect of making your campaign attractive and will therefore determine its performance. To set the amount of your commission the following factors are some key considerations:
- Competitors: Look into your competitors, whether they have affiliate programmes, or industry averages to determine what will be suitable for you. Feel free to discuss this with your account manager as well, they would be happy to advise you.
- Costs & margins: It is important to understand where your costs are and what your budget is before setting your commission. Look at your margins and ask yourself what is the most you can afford to pay out to your publishers without reducing your profits too much or adjusting your price.
- Average shopping cart & targets: If you do not have specific targets set, think about what you hope to achieve through your campaign during a specified time period – think numbers – but try to be realistic and conservative in your estimates. Once your targets are set they will allow you to calculate how many customers you will need to reach them, and help determine how your publishers can help you reach these targets.
How to get affiliates to be more active
Once you have determined the commission structure for your campaign and the amount you want to reward your publishers with, there are a few other methods you can use. These methods can help improve your campaign performance. Keep in mind that these methods may not always be necessary. You can also implement them later, once your campaign is live. If your campaign is already live, you can discuss these options with your channel manager. Simply submit a ticket in Daisycon’s platform.
- CPA boost/increase
If you want your publishers to promote your campaign to their audience, you can offer a higher commission for a temporary period. We call this a CPA boost or CPA increase. It encourages publishers to be more proactive with your campaign. You can use it when you have strong sales on certain products during a specific period.
- Tiered commission
A tiered commission structure rewards publishers who perform well on your campaign. It lets you offer higher commissions to publishers that generate the most sales, leads, and other results. For example, you can set a tier 1 commission of 12% for publishers who drive more than 50 sales per month. Publishers below that level receive 10%.
You can also download our white paper to learn how to set the perfect commission for your affiliate campaign
More information?
If you have any more questions, need any more clarifications or advice, please reach out to me, I’m happy to help!
– Nathaniel Jones, Daisycon Account Manager France
