In the affiliate industry, it takes three to tango. In a successful large-scale affiliate campaign, there is a separate role for publishers, affiliates, and advertisers.
A lot of times industry players try to merge those roles to capture the bigger chunk of the market and to maximize their profits, but even if a company fulfills all three roles, the communication between the departments should be efficient and well designed, otherwise, there is a risk that one loosey department will sink all others.
When it comes to operational management, the biggest difference in the way all market players collaborate with each other makes the model of cooperation. According to Affiliate Marketing | Affiliate Programs | CPA Offers | OfferVault in the USA, there is 58% of CPL offers and only 28% of CPS for the most popular verticals such as Dating, Gaming, Gambling, and Nutra.
CPL
CPL currently is a dominant model of cooperation. The fact that advertisers should pay not for the desired action, but for the one that precedes it changes everything. Like in a sports competition a minor change in the rules can change the whole game, strategy, and outcome — different payment model not only attracts different kind of people but also changes the way the affiliates optimize their traffic and subsequently what they deliver to advertisers.
First, it attracts an immense amount of fraud. Every new CPL program receives tons of requests to join the affiliate program every day. It is too early to get excited- most of those requests are from fraudsters that look to spread their leads among as many advertisers as possible in order to stay under the radar and to get paid. Advertisers understand this. They adopt the newest fraud detection software, manage traffic on a daily or hourly basis, and have a harsh compliance process. From the very beginning of your affiliate journey, you have to keep it in mind and act accordingly. Do not give advertisers the reason to think that you are one of these fraudsters. Arrange a video call, ask what you can do to increase the quality of the traffic. Be or at least look proactive and motivated.
In reality when the cooperation starts the payment model doesn’t matter. It only changes how much will affiliates be paid for the traffic they are prepared to send. The divergence will materialize during the optimization process when affiliates will be optimizing towards their goal which is “cheap leads” and advertisers will be optimizing towards their goal which is “sales”. The funny thing here is that at the end of the day it is always optimization towards the “sales” on both sides because the advertiser obviously can not buy traffic which is not converting for him. The only purpose of CPL — is easy onboarding for affiliates. I can not stress this enough, as it is a fundament on which the successful cooperation with affiliates is based. A long time ago it took a lot of time for advertisers to evaluate traffic. That was a golden time for affiliates. Nowadays the decisions are being made faster and faster because affiliates cheat, clone accounts, and try to resell their traffic over and over again.
The situation become even worse when publishers realized that buyers of their traffic are not the ones who convert the traffic into sales. The role of the traffic converter was shifted from the traffic buyer to the advertiser and this incentivized publishers to artificially boost the traffic activity( to generate fake leads) and drive the price of the mediocre traffic sky-high.
Among other funny things that started to happen in the CPL market is “end of the month” oscillations. ROI for the traffic bought one CPL model is very dynamic and varies depending on at which moment will you assess it. Today will be different compared to what you will see by the end of the month. The affiliate managers are often tied to the monthly metrics so they use their administrative power to activate their shaving razors and cut some of your well-earned leads.
CPL model is unhealthy. Providing that it incentives affiliates to cheat on advertisers I am surprised it lived so much time.
The best thing you can do as an affiliate is to ignore it and start working with advertisers to deliver what works for them. After all who are the affiliates, but the outsource media buying team?
You have to understand one thing here. So many affiliates miss the point and try to break even by selling crap and optimizing their traffic towards the cost of the lead. All this averages the street payout for everyone. This means that with quality traffic you can claim the payouts that are 3..4..5 times higher than what everyone is getting. The higher number of affiliates optimize towards CPL — the biggest is the opportunity for the ones who work on quality.
When an army of fraudsters populated the CPL space it become harder to operate for the rest. Sometimes good traffic false positively being identified as not converting and stopped based on only a few leads. The more fraud — the fewer leads and risk advertisers are ready to take by onboarding every new affiliate. Relationships and trust, always important, become an essential part of the business. You should act accordingly.
CPS
Another popular cooperation model is “cost per sale”. I wish I could say that finally, everyone is happy when using it, but I guess there will never be tranquility until affiliates are in business.
Normally under CPS, we understand the model when advertisers pay for the charge of the user’s credit card. If it is a trial — look at the previous passages. In this case, we face similar problems that we have with CPL, but at a lower scale. Some affiliates even organize networks with admin panels and support to attract fraud trial payments. They offer people half of what they receive from the advertiser for a trial. The payout is normally much bigger than what it costs to the user.
The story does not end even with the full sale, it only gets more complicated for everyone involved.
First, there is no incentive for a publisher or anyone else to somehow affect performance by buying the products that are being promoted on their websites for the full price. In contrast to creating simple bots who will be completing sign-ups, buying things is just too complicated and expensive. Even if the payout for a full sale is substantially bigger than what it costs to a user — it is not enough to risk it.
The problem with full sales lies in another dimension and that dimension is called the “chargeback rate”. You have to worry about it only when you start sending a noticeable amount of traffic. First, because an advertiser sets their eye on you now and watches the chargebacks constantly. Second, because you risk losing all the money that is frozen on their account, and if they get penalized by the bank or their merchant account is frozen for some reason — you might be the one to deal with it. There is no way to avoid it but to switch from monthly payments to weekly or daily ones, decrease your balance with them, and constantly be in contact with their representative regarding how your numbers look. Remember, just like when working on the CPL model, at the end of the day it is you who has to optimize your traffic based on advertiser’s sales or get paused — it is you who has to monitor your traffic for chargeback rates when working on CPS. Otherwise, you will be obliged to pause the traffic or lose money eventually, because you will be optimizing for “cheap sales” when the advertiser’s goal is “sales with no chargebacks”.
Remarkably, just as CPL offers have their monthly cycles because of shaving, CPS offers also have their cycles. Some say it happens because of when people receive salaries and how they spend it, but it does not look convincing to me. Payroll cycles are different in different countries, but the conversion drop normally affects all of them. And here we gradually slide towards another important fact- the ROI of advertisers in short term does not depend on how leads convert into sales. If for some reason their product converts worse — affiliates will eat the losses and the advertiser will try to fix the problem at their convenience with their pace. In contrast to the CPL model when any difference in conversion less into sales instantly changes their ROI. That means that when working on CPS it is your job to control, to make sure that.
REVENUE SHARE
This model does not sit well with me. Basically, it offers to send quality traffic to advertisers and have a cash flow for a prolonged amount of time afterwards. Taking into account that affiliate marketing is a shady business and the affiliate products are mostly crap that is being sold thanks to aggressive marketing, that would be rather irrational to trust advertisers that they will be paying you for years after your traffic stops. What incentive do they have? Sure, when traffic keeps going there is an incentive, but once you decide to slow down there is nothing but their will to honor their commitment because you will have no chance to verify that your traffic generated a sale after a year or so. Another reason why it became less popular is that the LTV (Lifetime value) of the users decreased substantially for affiliate products. I can not deny that it has gained some traction among affiliates.
Every single affiliate has a strategy that sometimes is a mix of all three cooperation models. It does not matter what you chose, but to survive, it has to be steady. 100 dollars a day for years is much better than 5k today with no continuation. You can find your own way, but remember that it can only work if it works for advertisers.
A lot of times industry players try to merge those roles to capture the bigger chunk of the market and to maximize their profits, but even if a company fulfills all three roles, the communication between the departments should be efficient and well designed, otherwise, there is a risk that one loosey department will sink all others.
When it comes to operational management, the biggest difference in the way all market players collaborate with each other makes the model of cooperation. According to Affiliate Marketing | Affiliate Programs | CPA Offers | OfferVault in the USA, there is 58% of CPL offers and only 28% of CPS for the most popular verticals such as Dating, Gaming, Gambling, and Nutra.
CPL
CPL currently is a dominant model of cooperation. The fact that advertisers should pay not for the desired action, but for the one that precedes it changes everything. Like in a sports competition a minor change in the rules can change the whole game, strategy, and outcome — different payment model not only attracts different kind of people but also changes the way the affiliates optimize their traffic and subsequently what they deliver to advertisers.
First, it attracts an immense amount of fraud. Every new CPL program receives tons of requests to join the affiliate program every day. It is too early to get excited- most of those requests are from fraudsters that look to spread their leads among as many advertisers as possible in order to stay under the radar and to get paid. Advertisers understand this. They adopt the newest fraud detection software, manage traffic on a daily or hourly basis, and have a harsh compliance process. From the very beginning of your affiliate journey, you have to keep it in mind and act accordingly. Do not give advertisers the reason to think that you are one of these fraudsters. Arrange a video call, ask what you can do to increase the quality of the traffic. Be or at least look proactive and motivated.
In reality when the cooperation starts the payment model doesn’t matter. It only changes how much will affiliates be paid for the traffic they are prepared to send. The divergence will materialize during the optimization process when affiliates will be optimizing towards their goal which is “cheap leads” and advertisers will be optimizing towards their goal which is “sales”. The funny thing here is that at the end of the day it is always optimization towards the “sales” on both sides because the advertiser obviously can not buy traffic which is not converting for him. The only purpose of CPL — is easy onboarding for affiliates. I can not stress this enough, as it is a fundament on which the successful cooperation with affiliates is based. A long time ago it took a lot of time for advertisers to evaluate traffic. That was a golden time for affiliates. Nowadays the decisions are being made faster and faster because affiliates cheat, clone accounts, and try to resell their traffic over and over again.
The situation become even worse when publishers realized that buyers of their traffic are not the ones who convert the traffic into sales. The role of the traffic converter was shifted from the traffic buyer to the advertiser and this incentivized publishers to artificially boost the traffic activity( to generate fake leads) and drive the price of the mediocre traffic sky-high.
Among other funny things that started to happen in the CPL market is “end of the month” oscillations. ROI for the traffic bought one CPL model is very dynamic and varies depending on at which moment will you assess it. Today will be different compared to what you will see by the end of the month. The affiliate managers are often tied to the monthly metrics so they use their administrative power to activate their shaving razors and cut some of your well-earned leads.
CPL model is unhealthy. Providing that it incentives affiliates to cheat on advertisers I am surprised it lived so much time.
The best thing you can do as an affiliate is to ignore it and start working with advertisers to deliver what works for them. After all who are the affiliates, but the outsource media buying team?
You have to understand one thing here. So many affiliates miss the point and try to break even by selling crap and optimizing their traffic towards the cost of the lead. All this averages the street payout for everyone. This means that with quality traffic you can claim the payouts that are 3..4..5 times higher than what everyone is getting. The higher number of affiliates optimize towards CPL — the biggest is the opportunity for the ones who work on quality.
When an army of fraudsters populated the CPL space it become harder to operate for the rest. Sometimes good traffic false positively being identified as not converting and stopped based on only a few leads. The more fraud — the fewer leads and risk advertisers are ready to take by onboarding every new affiliate. Relationships and trust, always important, become an essential part of the business. You should act accordingly.
CPS
Another popular cooperation model is “cost per sale”. I wish I could say that finally, everyone is happy when using it, but I guess there will never be tranquility until affiliates are in business.
Normally under CPS, we understand the model when advertisers pay for the charge of the user’s credit card. If it is a trial — look at the previous passages. In this case, we face similar problems that we have with CPL, but at a lower scale. Some affiliates even organize networks with admin panels and support to attract fraud trial payments. They offer people half of what they receive from the advertiser for a trial. The payout is normally much bigger than what it costs to the user.
The story does not end even with the full sale, it only gets more complicated for everyone involved.
First, there is no incentive for a publisher or anyone else to somehow affect performance by buying the products that are being promoted on their websites for the full price. In contrast to creating simple bots who will be completing sign-ups, buying things is just too complicated and expensive. Even if the payout for a full sale is substantially bigger than what it costs to a user — it is not enough to risk it.
The problem with full sales lies in another dimension and that dimension is called the “chargeback rate”. You have to worry about it only when you start sending a noticeable amount of traffic. First, because an advertiser sets their eye on you now and watches the chargebacks constantly. Second, because you risk losing all the money that is frozen on their account, and if they get penalized by the bank or their merchant account is frozen for some reason — you might be the one to deal with it. There is no way to avoid it but to switch from monthly payments to weekly or daily ones, decrease your balance with them, and constantly be in contact with their representative regarding how your numbers look. Remember, just like when working on the CPL model, at the end of the day it is you who has to optimize your traffic based on advertiser’s sales or get paused — it is you who has to monitor your traffic for chargeback rates when working on CPS. Otherwise, you will be obliged to pause the traffic or lose money eventually, because you will be optimizing for “cheap sales” when the advertiser’s goal is “sales with no chargebacks”.
Remarkably, just as CPL offers have their monthly cycles because of shaving, CPS offers also have their cycles. Some say it happens because of when people receive salaries and how they spend it, but it does not look convincing to me. Payroll cycles are different in different countries, but the conversion drop normally affects all of them. And here we gradually slide towards another important fact- the ROI of advertisers in short term does not depend on how leads convert into sales. If for some reason their product converts worse — affiliates will eat the losses and the advertiser will try to fix the problem at their convenience with their pace. In contrast to the CPL model when any difference in conversion less into sales instantly changes their ROI. That means that when working on CPS it is your job to control, to make sure that.
REVENUE SHARE
This model does not sit well with me. Basically, it offers to send quality traffic to advertisers and have a cash flow for a prolonged amount of time afterwards. Taking into account that affiliate marketing is a shady business and the affiliate products are mostly crap that is being sold thanks to aggressive marketing, that would be rather irrational to trust advertisers that they will be paying you for years after your traffic stops. What incentive do they have? Sure, when traffic keeps going there is an incentive, but once you decide to slow down there is nothing but their will to honor their commitment because you will have no chance to verify that your traffic generated a sale after a year or so. Another reason why it became less popular is that the LTV (Lifetime value) of the users decreased substantially for affiliate products. I can not deny that it has gained some traction among affiliates.
Every single affiliate has a strategy that sometimes is a mix of all three cooperation models. It does not matter what you chose, but to survive, it has to be steady. 100 dollars a day for years is much better than 5k today with no continuation. You can find your own way, but remember that it can only work if it works for advertisers.
