Livetime value (lv) deals vs one-off CPA (7)
Hello all, don't really know where to post this other than here. I have a general question about what you guys think about lifetime value / revshare deals.
I'm running a display campaign for an offer with a lifetime value revshare payout, for each month of subscription I get a commission for as long as the customer stays, well, customer.
However, and here's my question, I also have a similar offer I could run with a one-off CPA deal. In the short term the one-off CPA deal might be better to run since it will start paying out right away. On the other hand, the LV offer could bring in a lot more cash in the long run but in the first months I will probably be turning a loss.
What do you guys think about running LV deals and which kind of payout has your preference? All input is welcome!
I run a hybrid model with some. CPA + revshare, that works pretty well.
I've done a lot of business with both the flat CPA or revshare models - sometimes revshare worked better, sometimes I made more with flat rates. The deciding factor always was the retention rate, so how long the site/product could retain the customers. With majority of the offers I was promoting, I made pretty much the same $ with both revshare and flat rates - so it made more sense for me to take the flat payout straight away. However, there were some products that would retain like crazy and in that case, revshare was a clear winner.
The problem is, it takes quite a long time to figure out which model works better as you need to give the customers some time to renew/rebill.
The good thing is, I don't think I ever made less with revshare compared to flat rate payouts, it always at least evened out in the long run.
I'd say CPA can be good for a lot of offers. For certain offers it is specific - you may want to use CPA in the beginning to test it out and to get some budget back that allows you to scale.
Then when you see CPA is working you can switch to hybrid or go full revshare.
Also CPA is good if you don't trust the other party 100 % that they will stay in business and honor their deal (in that case you may also consider whether to do business with them at all).
A good hint is that if the advertiser has two models and offers you one of them by default you should be at least a bit curious about the other. 
Great answers @matuloo and @azureus, thanks so much!
Also important to check is the history of the company you are promoting, reviews and sustainability. You think the product/service will be strong for coming years or are they moving in a insecure market? If you think it won't be a long term thing, or could easily fail/bankrupt or whatsoever take the CPA to cash-in immediately. Otherwise you might lose the LV customers in future...
EDIT: azureus mentioned this a bit already, apologies.
Originally Posted by stickupkid
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