Affiliation income

The different revenue models in affiliate marketing

12
July
2023

Affiliate marketing consists of receiving remuneration for sending an Internet user to a partner site where he or she will perform an action: purchase on a merchant site, sign up for a newsletter, subscribe to a membership, etc.

The principle is simple: an affiliate site displays advertisements or links to an advertiser's site, and when a user clicks on one of these elements and performs an action on the site in question, the latter pays a commission to the affiliate.

It's a win-win deal for everyone.

The different affiliate revenue models: overview

There are various affiliate revenue models: cost-per-action (CPA), cost-per-lead (CPL), cost-per-click (CPC), opt-in (SOI or DOI) or cost-per-install (CPI). Each of these models entitles you to different types of remuneration, with their own validation procedures.

Cost-per-action (CPA ): the affiliate receives a commission when the user performs the desired action, generally a sale on a merchant site. Remuneration often consists of a variable commission, i.e. a percentage of the sale made. In some cases, for subscription-based products, the advertiser may decide to pay a commission for each monthly subscription payment.

Here are some examples of remuneration:

  • For high-tech products, commission percentages are generally low, between 1% and 5%.
  • For animal products, percentages can be higher, ranging from 8% to 12%.
  • In the case of dematerialized products, some advertisers offer commissions of up to 75%.
Cdiscount Affiliate Program
The Cdiscount affiliate recruitment page

Cost-per-lead (CPL) is a model where the affiliate receives a fixed commission when the user provides their details, such as by filling in a form. For a bank account opening, for example, commissions can range from a few dozen euros to over €50 for investor leads, or even over €100 for B2B leads.

Cost-per-click (CPC) is a model in which the affiliate receives a fixed commission, usually a few cents, each time a surfer clicks on a link to the advertiser's site. This model is widespread among price comparison sites, but less common in affiliation because of the risk for the advertiser of paying before being able to assess the quality of the traffic. It's better suited to SEM campaigns, and requires intensive monitoring on the part of the advertiser who, after buying click samples, must analyze them to determine whether to reinvest. Depending on the product category, the price per click can vary widely, from €0.05 to €0.30 for the most profitable categories.

Optins (SOI or single opt-in and DOI or double opt-in) and cost-per-installation (CPI) are two models where the commission is fixed:

  • In the case of SOI, users register by leaving their e-mail address or filling in a form.
  • For the DOI, the advertiser wants to verify that the subscriber is who he or she claims to be: after registering, the person must validate the process, usually by clicking on a link received by e-mail. This model is widely used for newsletter subscriptions and browser games.
  • Cost-per-installation (CPI) is a model derived from opt-in. To validate commissions, the user must not only install the software or app, but also launch it (double opt-in mechanism).

On average, the templates can earn you between €0.10 and €5 for double opt-in registrations.

💡 It's important to consider geographical zones for opt-in and CPI, as remuneration varies by country, but known borders aren't applied as they are on the Internet. For example, for France, overseas listings are often paid less, and some countries are simply not paid at all.

There are also hybrid models, which advertisers offer to motivate affiliates. For example, for an online role-playing game, an advertiser may offer both opt-in and cost-per-action (CPA). This means you'll earn a fixed amount when a player registers, as well as when the player purchases paid game content.

Lastly, you should know that remuneration models are chosen by advertisers and most often correspond to a specific sector of activity:

  • cost-per-action (CPA) and cost-per-click (CPC) in e-commerce
  • cost-per-lead (CPL) in banking, insurance and B2B
  • opt-in for newsletters and online games
  • cost per installation (CPI) for software and applications installation

In most cases, models cannot be discussed with advertisers, unless you are a major affiliate (see our article on the commercial strategy to implement when starting out in affiliation).

Why these different remuneration models?

Remuneration models are based on the prospect's progress through the advertiser's conversion tunnel:

  1. When the advertiser pays on a cost-per-click (CPC) basis, the visitor is at the beginning of the conversion tunnel, and you are paid to open a page on the advertiser's site.
  2. At cost-per-lead (CPL), the user performs an action on the advertiser's site. However, nothing is done yet, as the advertiser needs to contact the prospect again to convert the sale.
  3. With opt-in, too, there's an action on the part of the visitor who registers (whether single opt-in or double opt-in), but this is already partly acquired for the advertiser.
  4. With cost-per-action (CPA), finally, the visitor has bought, and the advertiser has nothing more to do: he's made a sale thanks to you, and potentially acquired a new customer. All that's left now is to build loyalty.
💡 Most advertisers working on cost-per-click (CPC), cost-per-lead (CPL), cost-per-install (CPI) and opt-in are exercising increased traffic monitoring. Unlike cost-per-action (CPA), they've already paid, even though they haven't yet collected any money from the visitor. They pay you in return for a promise of customers, and if the quality of the traffic isn't there, advertisers won't hesitate to end the partnership.
Conversion tunnel
Positioning of remuneration models according to the prospect's progress through the conversion tunnel.

Advantages & disadvantages of each revenue model

The various affiliate marketing revenue models each have their advantages and disadvantages.

At the CPA :

👍 You don't need to generate a lot of traffic to earn commissions
👍 With volume, cookie placement generates additional sales

👎 You need to generate quality traffic to convert
👎 You're dependent on the advertiser's conversion tunnel

CPL :

👍 Fixed commission higher than CPA
👍 You don't need to generate much traffic to earn commissions

👎 You need to generate quality traffic to convert
👎 If the person converts, you've already earned a commission

CPC :

👍 You don't need to convert to earn commissions

👎 You need to generate a lot of traffic
👎 The quality of the traffic is important to maintain the relationship with the advertiser
👎 You'll only get a few cents no matter how much you buy

Opt-in and CPI:

👍 Requested actions are often non-committal for the user

👎 You need to generate quality traffic to convert
👎 You need volume to generate higher revenues

📌
Key points to remember
  • Each remuneration model has its own advantages and disadvantages.
  • Different remuneration models are often linked to a particular business sector.
  • Advertisers pay you according to the risk they take.
  • Conclusion

    The remuneration model depends on the theme of your content. In the case of volume-based models, you may need to make a greater human investment, unless you find a booming theme. Depending on the size of your team, it may therefore be advantageous to move towards less demanding themes.

    About the author
    Vincent Alzieu
    General Manager

    After successfully managing several companies in the tech world (Les Numériques, Doctissimo, Au Féminin...), Vincent Alzieu joined Affilizz as late co-founder in 2022 to bring his experience of media and affiliation.‍

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