Common Types of Affiliate Program Payment Arrangements
Affiliate programs are a lucrative arrangement for both merchants and affiliate marketers. The merchants save thousands of dollars from their advertising budget by relying on affiliates to generate sales and promote their products. The affiliate marketers earn thousands of dollars from home by adding the link to the product on their website or sending it through emails.
The benefits of the affiliate program are countless and have resulted in the exponential growth of the affiliate market in the United States.
However, as rewarding as it sounds, there are certain things that you need to keep in mind to ensure a successful and profitable affiliate program. Each affiliate program offers a different payment method for the marketer. Choosing the right payment method is essential and requires careful consideration.
Here are some basic types of affiliate payment arrangements:
Pay-Per-Click
Bloggers, who already have a huge following and have high traffic websites can benefit from the pay-per-click payment method. The website owner earns a commission every time someone visits their website and clicks on the link that brings them to the merchant’s page. The affiliate is simply being paid for the added traffic that might lead to sales. No actual sales have to be made for the affiliate marketer to be paid.
Pay-Per-Lead
Under the pay-per-lead agreement, the affiliate is paid when someone visits the merchant’s website through the affiliate link and signs up as a lead. Again, no actual purchase must be made for the affiliate to get paid. However, if the visitor doesn’t sign up, the affiliate doesn’t get paid.
Pay-Per-Sale
Pay-per-sale is the simplest payment agreement for an affiliate program. Any sale that occurs through the affiliates page results in a commission for the marketer. The commission can be anywhere from 5% to 20% of the actual sale value and can differ from merchant to merchant. For products that are likely to result in a large number of sales, it’s acceptable for the affiliate to agree to a smaller commission. However, products that are not so easy to sell should have a higher commission rate.
Fixed Cost
Some merchants agree to a fixed cost to drive a certain amount of traffic to their website. This model is rarely used as it is not feasible for the affiliate marketer in a fluctuating economy. Merchants often prefer this method as it allows them to save more money by not having to pay commissions on traffic that converts to sales.
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