Types of Affiliate Commission Explained

If you’ve recently heard or read the term “affiliate commission,” it’s likely because you’ve been exploring the affiliate marketing world.

As you might expect, an affiliate commission is a payment made by an advertiser to a publisher/affiliate for effectively promoting their items. However, affiliate commissions are not always calculated as a proportion of a sale. In this article, we’ll go over four main sorts of commissions that can be earned in affiliate marketing.

Keep in mind this is just a small sample based on experience and that there are many different applications available – most of which are very similar, but some definitely are better/worse than others.

What Is An Affiliate Program?

The affiliate marketing program can be thought of as a contract between a publisher and an advertiser. Advertisers build an affiliate program in which they define the commission structure and game rules, such as when the publisher is paid and when he or she reaches a particular level of commissions. Is it weekly or monthly? All of this is stated in the affiliate program’s terms and conditions.

Publishers who join these programs as affiliates and agree to the terms receive an affiliate link. This affiliate link is a one-of-a-kind URL that the advertiser uses to track successful operations and compensate the affiliate partner.

We’ve talked about Affiliate Marketing in depth in our blog, you can read it here.

The Purpose Of An Affiliate Link

The affiliate link that the advertiser sends to the publisher is usually placed within a call to action (CTA) button in the publisher’s content. A cookie is installed on the users’ browsers when they click on the link. This cookie is meant to last a lifetime.

There are cookies that last for 30 days, 90 days, and even longer. This is an important consideration when deciding what to advertise in order to get some passive money. What is the back window, not just who gives the larger commission rate.

Affiliate Commission Paying Models

Every job is deserving of compensation. Top affiliate marketers are a great example of this. To be able to earn commissions, they must devote time to researching products or services, creating landing pages, and creating engaging content that will entice consumers to take action.

Advertisers pay publishers based on their performance in affiliate marketing. This means they only pay if they produce measurable outcomes.

CPA (Cost Per Action)

A cost-per-action model is one in which the advertiser pays the publisher a commission when a visitor completes a certain action. It’s a little complicated because CPA encompasses a variety of models; for example, CPL is a type of CPA.

A qualified action can be anything from registration to a download to a sale, and the advertiser controls the action. Because action sits at the bottom of the conversion funnel, people who really take action have already been exposed to other marketing methods. If the publisher used a call to action like “learn more” or “contact us” in the CPL model, the CPA situation is different. Now is the time to buy, download, or register.

Pros:

Usually, there are no refunds.
Some deals pay commissions on leads rather than sales.

Cons:

Commissions are usually quite minimal (there are some exceptions)
Some offers are difficult to convert because they request a large amount of information from the visitor (annual income, education level, phone number, etc)
It’s possible that you’ll only be able to promote on a few platforms.

CPL (Cost Per Lead)

CPL stands for Cost Per Lead, whereas PPL is for Pay Per Lead. The advertiser pays the publisher every time they bring Leads in this strategy.

What exactly are leads? People that demonstrate an interest in a product or service are known as leads, and they are considered potential customers. Email addresses, phone numbers, and other personal details are examples of leads. The brand will employ various marketing methods to convert these prospects after finding them, but the affiliate is only compensated for the lead and is not liable for the rest of the conversion funnel.

COD

Affiliates get compensated once a customer has physically paid for their merchandise on the doorstep using the cash on the delivery concept. It appears to be a lot more time-consuming than other models, and it can take longer to get paid, but it has its advantages.

Cash on delivery can appear entirely regular or completely foreign depending on where you are in the globe.

COD has the additional advantage of being more secure. Many consumers are put off by having to enter their credit card information online. COD circumvents this problem by allowing buyers to pay with cash for a product that they can see. For many people, the reduced risk factor is a welcome plus.

The biggest disadvantage of COD is that it does not finalize the transaction until the goods are delivered and paid for.

RevShare

For most affiliates, RevShare is a step up, and it’s best to first master CPA offerings before moving on to RevShare.

RevShare is a revenue-sharing model utilized mostly by casinos, in which you share a part of the revenue generated by the paying visitors you bring to the site.

When you bring big fish to a casino, you can expect them to win and lose a lot of money. In the long run, this may mean a lot of money. However, casinos generally make up for losses with victories, so if your visitor has a winning streak, you’re unlikely to make much of a profit.

Another thing to keep in mind with RevShare is that you have no way of knowing how well your customers are performing once they’ve converted, except the fact that you’ll occasionally receive money.

Many affiliates would prefer to be able to follow their visitors at every stage of the funnel, thus this lack of transparency can be a danger.

RevShare is a highly profitable commission scheme that pays out over time because you can earn from a single visitor for months or even years. It is a riskier strategy due to the lack of transparency with large fish abruptly disappearing or being switched for smaller ones. Revshare, on the other hand, can be a terrific route to go if you’ve been in the sector for a while and want a long-term income choice.

There are a variety of ways to earn commissions, and it’s up to you to figure out which one is best for you. The most important thing is to understand how and for what you are being compensated since this will allow you to better align your funnel with your objectives.

Types of Affiliate Commission Explained