A Brief Introduction to Affiliate Offers
Welcome back! Get ready for Part 2 of the Affiliate Marketing for Your Business series, where we’re covering the basics of affiliate programs. In case you missed the first post, please feel free to read Part 1 here, where we covered the benefits of affiliate programs, how to minimize risk and establish rules for your program, the potential revenue upside, the minimal tools needed, and who the key players are. Finally, we examined the details of online affiliate marketing and went over an example of how affiliate programs work.
Now that we have a few of the basics of affiliate programs behind us, it’s time to learn optimizing your offers for affiliates to promote. In this post we will focus on the different types of offers, how to determine the right affiliate payout, what the different payouts and payout structures are, how to optimize your offer and checkout/landing page, and lastly, additional services you can provide your affiliates.
What are the different types of offers?
There are a countless number of different types of offers, but they typically fall within two different categories: Lead Generation and Product/Service Sales.
Lead Generation Offers collect personal information of potential customers and qualify where they fall within the purchase process. This data is handed over to the advertiser’s sales team to start generating customers. Lead Gen information might be collected through email list signups, lead generation forms, newsletter signups, ebook downloads, survey completions, and several other methods.
Product/Service Offers typically drive users to e-commerce sites, shopping cart experiences, or service sign-up flows, where users can purchase products/services with a credit card, PayPal, or some other electronic payment. Service offers allow visitors to request information about services to be provided at a future date; electronically or physically. These offers can include paying in advance on a website or at the time of service. Again, the defining characteristic of a product/service offer is that the user must provide a form of payment. Learn more about detecting affiliates using stolen credit cards and purchase fraud.
How do I determine my affiliate payout?
First of all, you need to know that affiliates almost always work with several different affiliate programs, and even with your competitors. Affiliates promote offers based on their expected return, the highest ROI for them – not you. Ensuring your payout is competitive is a key component to successful online affiliate marketing. Affiliate programs need to research the market price and find a competitive payout or your program won’t grow. Talk with trusted affiliates and affiliate networks, read blogs (oDigger.com lists offers and enables search), browse directories like OfferVault.com, and dig through forums to get insights into the market payout for similar offers. There’s no perfect science to this.
Another major piece to determining your payout amount is your own margin of profit. Though you may have additional budget for marketing channels, affiliate marketing is different. In order to scale your affiliate program, it will need to be a profitable program. For example, if you sell widgets for $5 and it costs you $1 to make them, you cannot pay affiliates $4. You need to determine the amount you’re willing to give up for affiliates that are making the sales. This can actually be a pretty complicated balance, and we recommend spending time with your accountant to determine a structure that works well with your business model. Don’t forget to factor in your own time in managing your affiliate program.
What are the different ways to payout?
There are five main types of payouts to affiliates. Finding the right one that fits your business model may take some testing and tweaking, but sticking to one of these five should get you there:
- Cost per Conversion (CPA): means that the affiliate program will payout the affiliate with a flat dollar amount for each conversion recorded.
- Cost per Sale (CPS): offer means the affiliate program will be awarding a percentage of the sale amount to the affiliate. This is common for offers where multiple products can be added to a shopping cart, and thus compensating an affiliate for all of the items purchased by the user.
- Cost per Conversion plus Cost per Sale (CPC+S): is a hybrid payout method in which affiliates will be compensated a flat dollar amount per sale plus a percentage of the total sale amount. This type of offer encourages affiliates to generate large sale amounts while still giving them a base payout per each sale.
- Cost per Click: (CPC): means that you are going to pay affiliates on a cost per click basis. For each click affiliates send to your offer, they will be paid a flat amount for each click.
- Cost per Thousand Impressions (CPM): means that affiliate programs pay affiliates for every thousand impressions. Impressions are recorded when the impression pixel is “fired” from the creative displaying on the affiliates site.
There are several other ways you can payout for your offer, but many get abstract and complicated. Before you agree to a payout method different than the ones above, have a thorough understanding of online affiliate marketing and know exactly how your offer performs. For more information, check out the HasOffers help article on offer payouts.
What are the different affiliate payout structures?
Categorized Tier Payouts basically puts affiliates into different buckets, sometimes depending on traffic volume, content quality, type and quality of traffic, conversion rate, etc. For example, Affiliate X drives high quality traffic and converts well for your offer; he’s categorized as a Gold affiliate and gets 30% commission. Affiliate Y sends low quality visitors but high volume traffic, resulting in mediocre sales each month; he’s a Silver affiliate and only receives 20% commissions. Affiliate Z sends millions of spam emails resulting in tons of traffic to your site and almost no sales; he is your Bronze affiliate, and only gets 10% commission. In this structure, you’re able to reward high quality/volume affiliates with competitive payouts, while low quality affiliates receive lower payouts.
Two-Tier Programs encourage your affiliates to refer other affiliates to join your affiliate program. For example, Affiliate X is promoting your offer for a 10% commission per sale and refers his friend, Affiliate Y, to join your affiliate program. To reward him for promoting your affiliate program, you offer a percentage of Affiliate Y’s commissions. In the future, Affiliate X will receive 5% commission on the payouts Affiliate Y receives for the referral. This is a phenomenal way to increase your affiliates, and to reward current affiliates for promoting your affiliate program.
Scaling Payouts is designed to reward affiliates to drive more traffic to your offer. You pay your affiliates more when they exceed monthly thresholds. For example, if an affiliate drives 50 sales per month, they receive 10% commission; if they drive between 51 and 100 sales per month, they receive 15%; and so on. This is a self-selecting reward system, as you pay top producing affiliates more and encourage them to continue driving high quality traffic to your offers. Additionally, it encourages your low volume affiliates to drive more sales in exchange for higher payouts. Along these lines, it is common for advertisers to require a minimum monthly payout (such as $100) in order to actually make a payment to an affiliate.
How do I optimize my offer for affiliates?
Affiliates like to promote offers that run specials, discounts, promotions, etc. This gives their users a reason and sense of urgency to click on your offer. Think about promoting a “24 Hour Special” or “Deal of the Week.” These are time-sensitive promotions that expire and are always being refreshed.
Your affiliates often have repeat visitors or members of their site. Affiliates need to remain trustworthy and credible, or they can lose these users and members. So help them out: offer a guarantee with your product/service, put customer testimonials on your page, or have a no-hassle return policy. These are basic elements that will instill confidence and increase sales.
How can I optimize my checkout/landing page for affiliates?
Until 100% of your visitors make a purchase, your checkout/landing page is not fully optimized. There are so many elements to test and optimize, that we will save the details for another blog post. Optimizing pages is an art and never ending process, but let’s touch on a few best practices for optimizing your checkout/landing pages.
- Remove advertising banners, distracting links or useless objects users can click on and distract from making the purchase.
- Minimize the use of pop-up windows (another distraction from your desired action).
- Make sure users know exactly what to do when they land on your checkout or sign up page, provide clear and to-the-point copy that makes it easy to sign up or purchase.
How can I stand out to affiliates?
Affiliates are driven by data, so make sure that your affiliate tracking software provides reports for your affiliates or that your program manager sends reports frequently. Providing as much data as possible enables your affiliates to optimize their campaigns and generate more sales, more effectively.
Provide your affiliates product information and content they can include on their site. Think of affiliates as your sales people. You wouldn’t send a new hire on the sales floor without any training, right? So educate them. Great affiliate programs will even provide their affiliates with products so they are familiar with what they are promoting. Educate them with the benefits, and why potential customers need your product/service.
Here are some resources on affiliate offers and management: this has great information from the Affiliate Marketing Council on best practices for affiliate programs. Check this one out if you’re interested in optimizing and researching your affiliate offer, and lastly, here are some great resources for affiliate management.
OK, now what?
By now, you should be feeling pretty good about getting your affiliate program set up and how to successfully promote your offer. If you have any questions about your offer or how to get traction, feel free to leave a comment or email us. If you’re ready to move on, head to Part 3 for the next bit in our series!
- Part 1: Basic concepts for your affiliate marketing program.
- Part 2: A brief introduction to affiliate offers.
- Part 3: Understanding affiliate marketers.
- Part 4: Setting up your affiliate offers.
- Part 5: Variables and parameters for your tracking URLs.
- Part 6: Affiliate planning, research, targeting and traffic.
- Part 7: What can my program offer to attract affiliates?
- Part 8: Ways to recruit affiliates.
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Judy is the Director of Demand Generation at TUNE. Specialties range from marketing automation and operations, display advertising, and PPC, to content syndication and email marketing campaigns.