Affiliate marketing is becoming more and more popular today, and this is bringing into the picture different pricing models for lead generation. If you’re an affiliate marketer or you’re running an affiliate program, you’ll need the right information regarding the different pricing models available. The best affiliate program uses pricing models that have the ability to create the best leads. If you’re able to generate the much-needed leads, you’ll be able to be successful in your program. Here are different pricing models that can be used in an affiliate program and how they differ from one another.
CPL stands for cost per lead. Essentially, affiliate companies use this pricing model with the intention of gathering user information. User information is of great value since it allows brands to reach out to their target audiences for marketing purposes. An advertiser works with a publisher to attract a user to click on an advert and become a qualified lead. If a user clicks an ad on a publisher’s website, the advertiser compensates the publisher. In this case, becoming a qualified lead means signing up for the following: a newsletter, website membership, or a rewards program. In other words, CPL is a pricing model that concentrates on the generation of qualified leads.
Here are the different ways through which this model varies from others:
- It’s much easier to get a sale through CPL compared to the other models. Generally, if a pricing model helps to capture more sales, it’s a viable one use in an affiliate program.
- Publishers find it less predictable but advertisers suffer zero risks if they fail to get qualified leads
- For the affiliate program to be successful, publishers have to invest more time in it. It’s not an easy task to attract users to click on an ad and go on to generate a lead. Thus, publishers have to input more for CPL to be successful
- There is a dependable relationship between the publisher and advertiser because of the amount of time invested in the program. This has to happen for the program to bear significant fruits
- It brings genuine leads since a user has to perform a required action
CPA stands for cost per acquisition or action. For this particular pricing model, an advertiser pays a publisher for a specific action or acquisition. For this reason, if you’re a publisher, you’ll have to set a particular goal, which you’ll view as a conversion prior to starting your campaign using this pricing structure. The goal might be something like a purchase, navigating to a certain area of a website, or a sign up.
For example, an insurance company can pay a marketer for attracting a user to go to their website and trigger them to fill an insurance form. In this example, a marketer helps to capture a lead by facilitating the action of a user filling an insurance quote form. In this case, CPA creates an avenue where one can earn without having to make a sale. Therefore, if a user is able to do any of the previously determined actions or acquire a desired goal, the advertiser pays the publisher for that effort.
Here are fundamental ways through which CPA differs from other pricing models:
- It’s the same as CPL but differs from CPC (cost per click) in that the difference between the offer and lead is minimal
- For a publisher and an advertiser to have the best affiliate program, they have to invest a lot of time and resources if they choose to use CPA. This means that their relationship has to be long-term for them to have a successful program
- For both advertisers and publishers, pricing is predictable but it’s the advertiser who bears the highest risk
CPM stands for cost per thousand. Basically, this is the cost of your ad per a thousand impressions. Usually, an impression will occur if the ad gets loaded successfully on an application or viewed site. In most cases, you will find this pricing model used with advertisements that garner a lot of impressions for example banners and native ads.
Here are the differences between CPM and other pricing models:
- CPM is a predictable pricing model because publishers are able to see average views through statistics
- Advertisers are able to reach many people, which is a great model for affiliate programs that want to make instant sales
Revenue Share (RevShare)
This particular pricing model is based on the percentage payouts off the revenue from offers. If for example, you’re using Ad networks, the publisher and network share the income. Here are the differences between revenue share and other pricing models:
- In revenue share, the publisher usually has a narrow focus and that is why one would opt to use other pricing models instead. If you’re to have the most rewarding outcomes from the best affiliate program, you have to rely on a pricing model that gives you a broader focus
- Since both the publisher and advertiser want to get the highest revenue possible, they will try as much as they can to attain their goal
- The potential of earning a large commission is a huge motivation
- Once the goal is attained, the revenue has to be divided. This calls for transparency and an investment in time for accounting and reporting purposes
Also Read: High Paying Forex Affiliate Programs
From the above discussion, it’s evident that there are different pricing models that an affiliate program can use for optimal outcomes. If you are to have the best affiliate program, you have to know the model that suits you the best. Different brands opt for different models, depending on what they want to achieve. Thus, the best thing that affiliate marketers can do is to check what works best for them and then make a decision on the pricing model to settle for. The bottom-line is that every pricing model has its benefits, so it’s up to affiliates to see what will give them optimal outcomes.