How is the commission for coupon sites determined
These are the commission models in affiliate marketing
In our already published series of articles “Tracking Methods in Affiliate Marketing”, we addressed some typical compensation models in affiliate marketing and discussed, among other things, how the cookie tracking principle and other tracking methods work in online marketing and how they are used.
In this article we would like to give you a more detailed overview of the various compensation models in affiliate marketing and use an infographic to show you what types of commission there are for partners.
In fact, there are numerous methods that the merchant can regulate the remuneration of his affiliates. As a beginner, you do not always have an overview of which type of commission fits the respective partner program.
A distinction is made in affiliate marketing between several commission models.
The following are the most common methods:
- Pay per click (payment per click)
- Pay per lead (payment per successfully arranged customer contact)
- Pay per sale (payment per sale)
- Lifetime remuneration (payment of first and follow-up sales)
- First Cookie Wins (payment when the first cookie is set at the customer)
- Last Cookie Wins (payment when the last cookie was set by the customer)
The best-known compensation models in affiliate marketing
Pay per click
With the remuneration model Pay per click (PPC) the affiliates receive a fixed amount as soon as the user (potential customer) clicks on the advertising material and then arrives at the merchant's website.
Today, however, the commission model is receiving less and less attention, as the commission is only linked to the click and does not promise a conclusion.
The remuneration for the PPC model is in the cent range.
The aim of this remuneration is to increase the number of visitors and to arouse the interest of the affiliate partners.
Pay per lead
A popular commission model is Pay per lead (PPL). The affiliate is remunerated for each contact made by the customer after one click of the advertising material.
The main aim here is to forward prospective customers to the merchant's website, for example to obtain the customer's contact details. In this case, other lead actions would be subscribing to the newsletter, registering on a homepage, participating in a competition or Arranging a consultation appointment.
Therefore, PPL is widely used in insurance and finance. The advantage here is that the remuneration is linked to an action by the customer.
Pay per sale
The payment method Pay per sale (PPS) is most common in affiliate marketing.
The basis for this is an advertising medium (banner, text link, etc.) that is placed on the affiliate partner's website and linked to the merchant's product. As soon as the users click on the advertising material, go to the merchant's page and ideally buy something, the affiliate earns a commission.
In most cases, PPS pays a percentage of the purchase price or a fixed amount.
With this remuneration model, the merchant in particular benefits, as he only has to pay when a purchase is actually made.
The lifetime remuneration is a remuneration model in which repeated commissions arise. As soon as a customer has been successfully referred by the affiliate, the partner is not only remunerated for the customer's first purchase, but also automatically for each subsequent purchase. This gives the opportunity to earn a “passive” income as long as the customer is active.
As the name suggests, “lifelong” compensation is possible, but not always given.
The income can be limited by, for example, only remunerating the purchases in the first year.
This model is rarely found in the online shop. The lifetime remuneration is mainly used for online tools / services, for example for SEO tools. This type of remuneration mainly benefits the affiliate partner.
Pay per view (payment when advertising is displayed)
This is another form of remuneration Pay per view-Model.
The affiliate is remunerated for each display of an advertisement. However, since it is difficult to understand how many users actually see this advertisement, the number of website visits is counted here.
A disadvantage of this model is the merchant's ignorance as to whether his advertising was actually noticed.
Accordingly, it can happen that the advertising is not seen on the affiliate's side, but the merchant continues to pay a commission. This remuneration model is therefore rather unusual today.
Pay per Install (payment upon installation)
In the remuneration method Pay per install A commission arises as soon as the customer installs software (e.g. browser, scanner, toolbar, etc.) that he has purchased on the computer.
The remuneration goes to the affiliate partner who made the installation file available for download.
Fixed commissions of € 0.10 to € 1.50 are common. Occasionally, this payment method is also assigned to the PPL model in affiliate marketing.
Cost per mille (payment for 1,000 advertising media contacts)
Cost per mille refers to the amount that one receives for 1,000 clicks on an advertising medium.
This remuneration model can be found in connection with the pay per view remuneration, in which a commission is paid out for the display of an advertising medium.
This is why CPM is also known as the thousand contact price (CPM) and is often found in display advertising.
The CPM thus indicates the remuneration that is paid, for example, for 1,000 banner displays.
Average shopping cart in the online shop
The average shopping cart is used to calculate the average customer spend in an online shop. When the conversion rate and the shopping cart are published by the merchant, the average earnings paid to the affiliate can easily be calculated.
An example in the fashion sector:
- 3% conversion rate
- 110 € average shopping cart (net)
- 10% remuneration from the net shopping cart per sale
= € 330 earnings per 1,000 clicks on the advertising material for the affiliate.
An affiliate sends 1,000 visitors to a shop via their advertising material. At 3% conversion rate, 30 sales are generated. 30 sales with a shopping cart of € 110 each result in net sales of € 3,300 per thousand clicks. If the affiliate is paid a sale commission of 10%, he will receive 330 euros. In this realistic example, the affiliate can earn € 330 with 1,000 visitors.
It is important here that the conversion rate is very much dependent on the degree to which the right target group is narrowed down. In other words: If the target group is already interested in young fashion, e.g. on the affiliate's website, the conversion rate for a fashion shop such as zara.de or tomtailor.de increases significantly.
Cookie tracking in affiliate marketing
The cookie switch for the technical commission allocation
If several marketing channels are used and customers come into contact with the content of several merchants before the deal, the cookie switch is recommended to avoid multiple commission. The cookie switch ensures that only one affiliate partner receives a commission per referral.
First cookie wins vs. last cookie wins
The First Cookie Wins and Last Cookie Wins methods are helpful for a better allocation of the conversions:
Last Cookie Wins Compensation:
Compared to the First Cookie Wins remuneration, the affiliate partner who is the last to reach the customer through an advertising medium, i.e. who sets the last cookie, receives a commission.
The last cookie wins method is used more frequently in affiliate marketing than the first cookie wins method.
The principle of the customer journey is also increasingly being taken into account in online marketing. As far as possible, all points of contact that the customer passes through on his journey before buying a product are taken into account.
There are tons of affiliate programs that you can promote to monetize your website. To keep track of things, webmasters use the partner program search engine on 100partnerprogramme.de. It determines the right one for your own website from over 8,300 partner programs with the respective remuneration and individual product data.
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