Why do you need a higher budget for higher payout offers? (30)
Everywhere i read i see you have to start with a "low payout offer" because how higher the payout the more money you need to test the offer.
Doesnt it all has to do with the kind of offers there are? And probably the low payout offers are offers that people will more likely click on? And low payout offers are from countries where you can buy traffic cheap?
Or am i sounding totaly "newbie" now. (I am so i dont care! 
).
Focus for me is: mobile sweepstake with POP.
@caurmen you have always been great in helping me? Can you answer my quistion?
If your payout is $20 , and considering you are starting off at -50% ROI during testing, you'll pay $40 for one conversion.
If your payout is $0.50 , starting off at -50% ROI again, you'll only pay $1 for one conversions.
Conclusion: You'll be able to buy 40 times as many conversions with the lower payout offer here
= you'll have to spend much less to get statistical significant data for optimization and to learn from.
Thanks @kept95. I dont know for sure if i understand. Can you tell me where i can find more of this information?
^^Kept95 is saying that you'll get a lot more data with a lower payout, with the same budget. With more data you can make better decisions as to what changes in the campaign to make to make it more profitable.
But i dont understand what the payout has to do with de costs of the data?
you are getting 'data' by each conversion you track with your tracking software. so if you can spend $50 on traffic and you get 1 conversion, that's 1 data point. if you get 50 conversions for the same $50 in spending, that's 50x the data points to help you optimize the campaign much better.
Why do i have to pay for a conversion? If there is a conversion i get payed i thought?
^^ 1 conversion = 1 data point. you are correct if you get a conversion you are getting paid, but you are also getting information to help optimize. and you have to pay for ads/banners somewhere so people will do what needs to be done to lead to conversions. For each conversion you get (and paid for) that gives you more information to work with. hopefully this make sense.
Coincidentally I just explained this in the 6WAMC course forums a few weeks back - here's an excerpt:
Let’s say you have 2 scenarios: Offer #1 with payout of $25, Offer #2 with payout of $2.50.
Say you’re testing 2 landers for each of these offers. Say the ROIs of the landers are -30% and -60% (these are of course long-term average ROIs; keep in mind you wouldn’t know what these ROIs are or which one to cut until data reaches statistical significance!)
For Offer #1, it will take $1000 in ad spend before the -30%ROI lander will emerge the winner. For this round of lander testing you’ll have made 22 conversions -> revenue = $25 x 22 = $550, which will net you -$450 in loss as the price you pay to find a better lander.
For Offer #2, it will take $100 in ad spend before the -30%ROI lander will emerge the winner. For this round of lander testing you’ll have made the same number of 22 conversions -> revenue = $2.50 x 22 = $55, which will only net you -$45 in loss.
(Please don’t pay attention to the number of trials I put into the split-test calculator - just please trust me that the approximation here is good enough for illustration purposes.)
Now, if we remind ourselves of how many offers, landers etc. we’ll probably need to test before finding a profitable campaign - it’s obvious how these differences will quickly become exponentially MORE different!
So, my suggestion would be to stick with low payout offers when learning the ropes. Then once you’re confident that you can optimize a campaign with efficiency in a way that you can limit losses, proceed to higher payout offers (or not!).
Amy
But if i have a payout of 20,- and i have after 10,- buying of data a conversion. I earn 10,-
and if i have payout of 2,- and i have after 10,- buying of data a conversion. I lose 8,-.
??
In layman's terms, generally it's harder to get a higher payout offer to convert. Therefore you need to test more data since you could spend 19$ and get no covnersions and think it's pretty bad campaign, then you get a conversion at $19.50 which gives you a $0.50 profit if the payout is $20.00. However if you were spend $20.00 on a offer payout worth $2.50 and you get a conversion after spending $19.00 you lose $16.50. Simply put it means that it takes longer to get decent data to see if your campaign works or not.
Amy(vortex) pretty much nailed it!
Hope that helps(sort of)!
Jack
@jack_k... thats is what i wanna hear: "In layman's terms, generally it's harder to get a higher payout offer to convert.". I think so too offcourse but sometimes i see for example a offer thats open for (for example) Holland and the landing page (LP) is in english... Offcourse it will convert not so good i think. So sometimes it has to do with that also right? And if you are smart you figure this out also because if you have the possibility to change this you can have a very good offer that nobody else is doing... Or is this not a smart move here?
Originally Posted by spartanen
Amy
Originally Posted by spartanen
You're assuming conversion rates will be the same for high and low payout offers.
In reality, every offer's conversion rates will be different and is also largely dependent on traffic source, creatives, and many other factors.
However, GENERALLY SPEAKING, small payout offers will have higher conversion rates than large payout offers. Otherwise, nobody in their right mind would ever even run small payout offers.
You can see a trend where CPS (cost-per-sale) offers have lower conversion rates but higher payouts, compared to CPL/CPA (cost-per-lead/cost-per-action) offers which have higher conversion rates but lower payouts.
Same trend with DOI vs. SOI offers (double opt-in vs. single opt-in offers). DOI will always have a lower conversion rate but higher payout than SOI, which will always have a higher conversion rate but lower payout.
There's always a reason why a certain offer is priced the way it is...
Amy
The missing piece here is that there's a range of ROI that we expect most campaigns to be within. ROI - Return On Investment - is a function of your CVR and your payout (and your traffic cost). Generally, we expect campaigns to have an ROI between -100% and +200%. Higher is possible but it's very uncommon particularly with an unoptimised campaign.
So that means that the expected CVR of a high-payout campaign is much lower than the expected CVR of a low-payout campaign. After all, if you spend $20 on traffic you need 20 conversions on a $1 payout to break even, but only 1 conversion on a $20 payout. So the conversion rate on the $20 payout break-even campaign is 1/20 the conversion rate of the $1 campaign.
The lower the conversion rate we need in order to achieve positive ROI, the more traffic we need to run in order to accurately predict whether we will achieve positive ROI with this campaign.
Of course, if the campaign's going to be hugely profitable - 500% or more - we'll see that fairly quickly, and we'll also end up in profit. But most campaigns aren't like that. We're assuming most of the campaigns we launch will be negative ROI, and thus cost us money.
And that's why high-payout offers cost more to test. Because we're expecting to have to run a bunch of unprofitable campaigns to find a good one, and if the payout is high, we have to run a lot more traffic to each of those campaigns to tell if the campaign won't be profitable.
(Or we have to run more expensive traffic, alternatively. That works out the same.)
We could run a lot less traffic and just look for very high ROI campaigns - 500% ROI or more - but they're so uncommon that we'd have to test a lot more campaigns to find one that fit that criterion, and again, that means that it'd be more expensive.
It's all about buying data + statistical significance tolerance level.
The answer that i was looking for wasnt in the math... I was looking for the easy answer and everybody (thanks offcourse) was giving the hard answer.
This is what i was looking for:
Landing pages doesnt convert well because of design.
Or people rather leave there email adress then a mobile phone number.
SOI is easier to convert then DOI.
Low payout offers can be offers from countries where you can buy cheap ad's.
Etcetera....
Thanks anyone and more reasons like this are welcome! 
@spartanen - Gotcha! OK, here's a few:
- Long form submits often have high payouts. But people are much more reluctant to fill in long forms rather than short forms: hence low CVR.
- Pay Per Call lead-gen often has high-ish payouts. But people are less keen to talk on the phone and give out their phone number than just do everything over email, hence low CVR.
- Cash Per Sale offers often have high payouts - sometimes very high. But people are less keen to pay money than get something free, hence low CVR.
- As you say, SOI converts more than DOI, because there are less steps involved. Even high-intent mailing lists often lose 30% or more of initial optins if they go to DOI.
Hope that helps!
Hi @thuglife... what is statistical significance tolerance level? This has all to do with math and testing right?
Is this a good source to read more about it? And do you use tools for this?
https://www.optimizely.com/optimizat...-significance/
Ehm... maybe this one is better:
http://charlesngo.com/statisticalsignificance/
Caurmen has a great thread about this. http://stmforum.com/forum/showthread...e-Often-Better
Originally Posted by spartanen
Play around with this Bayesian calculator and get a feel for it.
Just focus on launching as many campaigns as possible and see how the results play out compared to your initial hypothesis.
All the best.
Sorry，a little confused for me, there is something understanding wrong for me.
I can't understand that why there is connection between payout and budget？
Payout is the money we would get after converting successfully from affiliate Internets，but the money on ads is we cost on different platform to promote products, isn't this one only connects to the different kinds ads we choose? ( Such as the cost among Facebook, SEO, Pop are different)
I really can't find out the connection between payout and cost on testing( ads, landing page, traffic and so on).........
Originally Posted by dienmykieugro
You CAN get a $100 conversion on a $0.40 click. I do it quite often. But that doesn't happen every click. It happens every 200 clicks if I'm lucky.
And if it did: the ad networks would be charging more.
That's all you need to know.
Often you can calculate the amount by something like XX times the offer payout.
Here is a simple example.
Let´s say you have to spend 10 times the offer payout to see if a campaign has potential or not.
For an offer with $0.20 payout the cost would be $2.00.
For an offer with $500 payout the cost would be $5k.
The higher the payout the higher the cost to get enough data for a meaningful result.
Thank you very much，sometimes there is obstacle of language，English is not my mother language and I try my best to get used to it.
- - - Updated - - -
Originally Posted by jaybot
Originally Posted by twinaxe
Don't forget about the traffic cost - quality, that is an important point as well. You should find the optimized price for traffic that will convert well (for you and for the product owner), and yes, of course it is related to the landing pages, it is also necessary to choose the optimal, to do all that you should spend some money. So in the end, its better to start with low cost traffic and and low payout offers/geo.
BTW, what vertical are you working with?
You might also want to read this article to understand why it might be actually a better idea to focus on low payout offers: https://stmforum.com/forum/showthrea...you-more-money
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