Brands should create a strong commission structure to get the best publishers to promote their products on their platforms. According to various marketing experts, the commission paid to the publisher ranges from 5%-15%. And what a brand will pay the publisher depends solely on the industry, price, margin on the product, and the partner’s capability. So, although creating a solid commission framework will push the publishers to go the extra mile to promote your products on their websites, brands should also be mindful of what they can afford to pay based on their objective from the affiliate marketing activity. This blog will discuss the most popular payout methods to compensate publishers and affiliates that will put your affiliate marketing campaign on the right track.
Pay Per Sale
Pay per sale is the standard payout model in affiliate marketing. The affiliate is paid a commission or a percentage of the product’s sale price by the merchant if their affiliate marketing efforts lead to the consumer buying the goods. It is up to the brands and affiliates to determine the fair commission percentage. Top retail companies and e-commerce brands use the pay-per-sale method to compensate their publishers. This payout method does not require any upfront investment on the merchants’ part; they only pay their partners once the purchase is completed. The pay-per-sale process is also immune to affiliate frauds like false online traffic and wrong customer leads or leads that do not convert.
Pay Per Lead
Pay per lead is a bit more complicated than the more popular pay per sale model as it compensates the publishers based on the conversion of leads generated by them. Under this payout arrangement, the affiliate must divert the potential target to the merchant’s website so that they can take the desired action like filling out a survey form, downloading files or documents, subscribing to newsletters, or signing up for free products, and effectively generating first-party data for the brands. So, while in pay per sales method, affiliates are paid after the sale, in this method, publishers generate revenue for themselves each time they refer a potential customer to the merchant. This payout method is effective as it relies on generating leads for revenue, and many brands incorporate it alongside other techniques to create an effective affiliate payout method.
Pay Per Click
Pay per click is one of the most popular affiliate payout methods where the publisher is paid when a visitor clicks on specific ads or links on their website, directing the traffic to the merchant’s marketing platform. In this method, the affiliate is paid primarily to divert the interested customers onto the merchant’s website, hoping that the user will take the desired action. There are two concepts that brands and publishers usually engage in while determining the compensation in this payout method.
Cost per acquisition: The publisher is paid a commission whenever a customer clicks a link or advertisements on their website and gets diverted to the merchant’s marketing platform. The payout can be decided based on actions taken by the user on the brand’s website.
Earnings per click: In this arrangement, brands measure the average revenue they earn per 100 clicks from the affiliates and make the payout accordingly.
Pay Per Install
As the name suggests, in this payout method, the affiliate or the publisher is paid by the brands based on the number of installs they can drive through their affiliate marketing programs. This would generally apply to the number of mobile app installations the affiliates can manage and earn a commission for each install.
Besides the payout methods we have already discussed, brands should also identify their top-performing publishers and devise strategies to retain them. One of the ways is by rewarding them for their hard work in generating revenues for your brands through their network. Brands should give them exclusive discount offers for their audience through coupons to motivate the affiliates. They should be pampered with top-performance bonuses and high commission rates to get the best results out of their network. This strategy will also push other publishers to drive more sales for your brand.