Affiliate commission – Choosing the right revenue model
When choosing an affiliate program, the commission offered is – obviously – very important. So is the commission type. Should you choose a program that pays you for every visitor you send their way, so called PPC? Or should you go with the option of sharing the revenue for that particular visitor? Fixed commission or a percentage?
The options are many, there is no general answer to what is best. It’s up to you to decide where to send your visitors, to experiment, evaluate and finally choose one or a few affiliate programs best suited for your needs.
PPC – Paid Per Click
Many affiliate programs offer you a – fixed or varied – commission for every visitor you send their way. Often these programs are similar to Google’s Adsense program, namely contextual advertising. The advantages of this are many, but so are the limitations.
The main advantage is just the contextual bit, the task of placing relevant ads on every page is gone, and all you need to do is choose what program to join. Another great advantage is – because of the flexible nature of these programs, you will only need to join one program, making it easier to reach the payout threshold.
The downside of it all is the revenue. If you can target your visitors, and subsequently what they are looking for, you can make a much larger profit with other types of affiliate programs. But, it WILL require far more work.
PPM – Paid Per Mille
This is roughly the same as PPC, the difference being you get paid for every visitor viewing the ad, they do not have to click it. Many companies, offering contextual advertising, have this option included in their program. The good part about it is the possibility to get paid while visitors stay on your site, instead of referring them to someone else.
This option is most suitable for high traffic web sites. With small quantities of visitors, this rarely adds up to a good profit. It can, however, be a good way of targeting often viewed pages on your site.
PPS – Paid Per Sale
This type of commission is based on the activities of the visitors you refer to the affiliate website. If you send active visitors, who shop a lot, this can be a goldmine compared to PPC and PPM. The type of commission varies as well. It can be a percentage of the sale, a fixed amount per sale/signup or a combination of both.
What to choose is very dependant on your audience, and what category of program you are looking for. In some cases, often with a recurring commission, the option of sharing the revenue, thus getting a percentage of the total order, rake or what have you, will be far better than choosing a fixed amount per sale. The dynamics of percentage vs. revenue sharing will be looked at more deeply later on.
PPL – Paid per lead
This is roughly the same as PPS, but you get paid for leads instead of sales. This is a fairly uncommon commission method, but it often applies to specific categories of affiliate programs; Insurance companies, financial institutes and other companies with high priced products in competitive markets. If you have a site targeting visitors looking for these kinds of products, this can be a highly interesting revenue model for you.
There are other, less common, alternatives. Many of them are individual, and are mainly for very specific niches, or for experienced affiliates.