Payment models:
how much to pay publishers and what for?
how much to pay publishers and what for?
A payment model is a condition under which a publisher gets rewarded by a target action performed by a user who followed the publisher's affiliate link. The general model is called CPA (Cost per Action); models differ in the advertiser's segment and target action required.
1. CPS (Cost per Sale)
A target action here is a purchase made by a user. It includes them making an order, paying, receiving the goods, and not returning within the return period. If a reward is a purchase amount interest, the publisher gets the share of the cart amount (rather than of the cost of one product they promoted). For instance, the publisher promoted a new lash mascara, but a user also bought a powder on the advertiser's website. Therefore, the publisher will get a percentage of the overall purchase amount rather than of the mascara's cost. Works for online stores distributing tangible goods, travel agencies (flight tickets, hotel booking), and online services whose target actions is a one-time sale of a service or intangible product (e.g. event tickets, e-books, and other digital content).
2. CPL (Cost per Lead)
A lead may be called registration or request (though in some cases a lead is a purchase made). Under the CPL model, a user is required to provide personal details on the website. A registration must be qualified — i.e. a user needs to pay for the services or have an intent to do so. Most common among online services (e.g. language courses), finance programs (e.g. loan application, card issue), and subscription-based services (e.g. PC software, photo stocks, carriers).
3. CPI (Cost per Install)
Used in mobile programs: an advertiser pays for every user who installs the advertiser's app. The model implies every user is qualified. To verify user qualification, advertisers may use tracking systems to check how and how often the user interacted with the app after installation.
4. CPP (Cost per Player)
This model is used by online games: a reward is paid for every user having signed up to the game. An active player is a qualified player: the advertiser monitors how often the user enters the game after installation and what they do.
5. CPC (Cost per Click)
An advertiser pays for every visit. Data portals (e.g. online magazines) and marketplaces use it to boost website traffic. Rarely used in affiliate marketing.
6. CPM (Cost per Mille)
An advertiser pays for every thousand banner impressions (such a banner may lead to the advertiser's store or service). Rarely used in affiliate marketing.
The advertiser may pay a fixed amount for every order (e.g. $2 per loan application) or order amount interest (e.g. 10% of the purchase amount).
To determine how much to pay the publisher, the advertiser needs to evaluate their costs on attracting a customer across various channels and calculate the average value. It's required to realize how average bill affects profitability. In some cases, it's more profitable to pay a fixed amount for every target action performed. Also, the advertiser needs to compare the value against the rewards their rivals pay to publishers. The higher the reward you offer, the more publishers you will be able to involve. However, if you suppose you won't be able to compete giants in terms of lead cost, set the reward rate on — or slightly below — the market level and take advantage of other affiliate program terms.
In affiliate marketing, not just quantity of leads matters but also their quality. The advertiser's call is to offer appealing terms so the publishers lead traffic of higher quality. Usually, if these requirements and conditions are not fulfilled, the advertiser pays nothing to the publisher. Program rules are designed to protect the advertiser from publishers' fraud. What can the advertiser do to protect themselves?
In affiliate marketing, not just quantity of leads matters but also their quality. The advertiser's call is to offer appealing terms so the publishers lead traffic of higher quality. Usually, if these requirements and conditions are not fulfilled, the advertiser pays nothing to the publisher. Program rules are designed to protect the advertiser from publishers' fraud. What can the advertiser do to protect themselves?
Set the hold period
a period from order placement by the user to approval of the target action by the advertiser. During this period, the user needs to pay for a product or service, receive it, and not return it (not cancel the order). In this case, a target action is considered performed and the publisher can get a reward. The hold period depends on the advertiser's industry. In online micro loans, the hold period is very short and only takes one-two days. Flight tickets: Usually book them several months before their trip, and the hold period is the period after which a user can't return tickets without a 100-percent fine. The same happens to tangible-product stores. Shipment from China may take up to a month, while local stores can delivery a product within a couple of days. Evidently, the hold period will be by far longer in the first case.
Region, device, user age, and advertising legislation compliance terms
They can affect the physical and legal ability of buying and using advertiser's products and services. For instance, a ready-made food delivery or taxi service need to specify the city they operate in. That being said, iOS app developers need to indicate that their target audience is iOS users (and never Android device owners). An alcoholic beverage distributor can only render services to adults (in countries allowing advertising of alcoholic drinks). It may be forbidden to advertise anything related to smoking, but it doesn't rule out connection of programs distributing related accessories. And it should be described in which format they can promote their goods. Finance programs (e.g. loans) may indicate they are only ready to pay for applications from high-credit-rating users (otherwise, the latter won't pass the scoring procedure and won't be able to get a loan).
Setting out KPIs
This may be a percentage of users, complying with a specific requirement, of all actions made. Using KPIs allows assessing traffic generated by the publisher. For instance, an online game affiliate program may specify it will only cooperate with publishers if 50% of users they led will promote their character by at least one level within the first two weeks. Mobile apps may set a KPI in terms of how many users return to the app within the first week after installation. It's crucial that the KPI level and target level are attainable. With that, it's not required to specify the conditions in the programs (to avoid publisher's fraud).
The hold period finishes
After the hold period finishes, the advertiser needs to approve or decline orders. This process is called verification. During verification, the advertiser only approves the orders made in compliance with the affiliate program rules (led with the use of allowed traffic sources, bought out, not returned). The advertiser can only decline an order if the user canceled it or the publisher violated the program rules when leading the user (e.g. used prohibited traffic types or ad spaces not connected to the program). The faster the advertiser performs verification, the faster the publisher ramps up the ad program (allocating a share of space's incomes to advertising budgets).
The process when the advertiser declines qualified orders is called shaving. Shaving violates partner network rules and may lead to the disconnection of such an advertiser. The same concerns delaying verification and rewards to publishers for too long. As a result, relations with publishers will be spoiled and the program disconnected from the network due to non-fulfillment of obligations.
The process when the advertiser declines qualified orders is called shaving. Shaving violates partner network rules and may lead to the disconnection of such an advertiser. The same concerns delaying verification and rewards to publishers for too long. As a result, relations with publishers will be spoiled and the program disconnected from the network due to non-fulfillment of obligations.
Check yourself!
Find out if you have learned everything correctly
| Start |
Which model would best suit a children's apparel store?
Correct! If the advertiser pays an order amount interest, the publisher will be motivated to do their best to increase the average bill.
Incorrect. If the advertiser pays an order amount interest, the publisher will be motivated to do their best to increase the average bill.
Incorrect. If the advertiser pays an order amount interest, the publisher will be motivated to do their best to increase the average bill.
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| Results |
What is the best publisher reward option if the target action is granting a major loan?
Miss. The most optimal option is paying for a qualified loan application. Sometimes advertiser pay for a qualified application, regardless of whether the user decided to get a loan from a specific bank (as the bank gets a qualified lead that can be converted in sales of other products).
Miss. The most optimal option is paying for a qualified loan application. Sometimes advertiser pay for a qualified application, regardless of whether the user decided to get a loan from a specific bank (as the bank gets a qualified lead that can be converted in sales of other products).
Bingo! The most optimal option is paying for a qualified loan application. Sometimes advertiser pay for a qualified application, regardless of whether the user decided to get a loan from a specific bank (as the bank gets a qualified lead that can be converted in sales of other products).
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| Results |
What target action should be tracked in KPIs in a game program?
Right! A KPI-tracked action must be simple and effortlessly attainable as it should reflect the user's intent to continue playing.
Incorrect! A KPI-tracked action must be simple and effortlessly attainable as it should reflect the user's intent to continue playing.
Incorrect! A KPI-tracked action must be simple and effortlessly attainable as it should reflect the user's intent to continue playing.
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| Results |
What should be specified in a program that helps book a doctor appointment?
Incorrect. The user can find the full list of physicians and specialties on the advertiser's website. The average bill doesn't matter so much (as the reward is usually fixed and paid for an appointment). Meanwhile, cities of operation should be specified, otherwise, some users won't be able to get a service.
Right! The user can find the full list of physicians and specialties on the advertiser's website. The average bill doesn't matter so much (as the reward is usually fixed and paid for an appointment). Meanwhile, cities of operation should be specified, otherwise, some users won't be able to get a service.
Incorrect. The user can find the full list of physicians and specialties on the advertiser's website. The average bill doesn't matter so much (as the reward is usually fixed and paid for an appointment). Meanwhile, cities of operation should be specified, otherwise, some users won't be able to get a service.
| Next |
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| Results |
In which case publishers (and sometimes an affiliate network) can withdraw from cooperating with the advertiser?
Right! What traffic types to allow and how much integration will take are the advertiser's decisions which affect vaguely their performance in affiliate networks. On the other hand, approving qualified orders and paying publishers who led them, timely, are their obligation.
Incorrect. What traffic types to allow and how much integration will take are the advertiser's decisions which affect vaguely their performance in affiliate networks. On the other hand, approving qualified orders and paying publishers who led them, timely, are their obligation.
Incorrect. What traffic types to allow and how much integration will take are the advertiser's decisions which affect vaguely their performance in affiliate networks. On the other hand, approving qualified orders and paying publishers who led them, timely, are their obligation.
| Next |
| Next |
| Results |
You might have been distracted when reading the text. Brew some coffee, relax, dismiss everything unwanted from your mind, and try again.
| Go through again |
Fair take-off. Get back to those a where you made a mistake, and then proceed to the next lesson.
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Well done!
Lesson accomplished. Let's move further!
Lesson accomplished. Let's move further!
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Well done!
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