CPA marketing question (4)
Hi,
I'm pretty new to this forum, i'm from netherlands so not native english. If you see some grammer mistakes sorry for that.
I've been in the business since 2001 and did mostly revenue share of around 15-55% depending on the product, for fysical products
like 18+ toys the revenue was around 15-20% and online services like dating and webcams more around 35-55%
Since a year i tested a couple of CPA models with dating mostly and i was wondering, what is the difference that some can offer
100 usd per cpa and others only 5 usd per cpa.. Afcourse pricing etc.. is a big factor.. but i seen no that big differences that would explain the difference
in payment for cpa.
For example it's simple, that i can make 100 usd per cpa if people need to pay 200 usd per month for subcription and when i get only 5 usd if people need to pay 2 usd per month.
But i seen that similar companies offer a cpa of for example 25 usd and company A pays 40 usd per cpa and company B only 15 usd.
What is the reason behind these big differences ?
Are the big payment companies scammers and do they skim converions and the ones that pay less are honest ?
or do those big paying companies have a very complicated module to make money at all and needs a lot of tweaking etc.. ?
Hope to hear from other members here, of what they think why some sponsors pay 500% per cpa and others only 10-20%
Regards
Marcel
Hello Marcel!
First - welcome to STM,
Your English is just fine 
I know that the big gap between the CPA prices depends on how much the offer is direct.
$100 CPA is probably a direct offer from the product owner, and $5 CPA is a 10 hand offer probably.
Hope that I helped a bit
Welcome to the forum Marcel, nice to have you here!
There are several reasons for the different CPA rates.
The most common one is the actual conversion point. 3 (4) models are the most common :
- SOI : single optin, all the user has to do in order for the conversion to be counted is to enter their email and hit submit button
- DOI : user has to enter email, click submit, wait for the confirmation email and then confirm it.
- PPS or Revshare : these require an actual payment, it can be either a trial or a full month. PPS means a one time payment when the user subscribes either for a full month (or multiple) or takes at least a trial. Revshare is standard revenue share as you mentioned.
Now, SOIs pay the least ($0.5 - $5 or so per email), DOIs can go up to $20 in some GEOS, revshare depends on the % and PPS can go all the way up to $100 or more per conversion.
And obviously, the lower the payout, the easier it is to convert the members "usually". For example a SOI conversion is WAY easier to get than it is to get an actual paying member.
I'm not sure if you have been comparing payouts across these different conversion points (payout models), but I guess you were, so now you know why the differences can be so big.
But even in case of same conversion points, the payouts can be VERY different. There can be several reasons for this again, but the most common are the way the tours are optimized and how good the advertiser is at monetizing the members they get.
- design of the tour can presell the members better, for example by using longer tours, requiring more details etc ... this will lower the conversion rate but it will increase the value, so they can afford to pay more.
- monetization of the leads is way more important though : some advertisers are more aggressive with the billing (especially with trials) and charge members more, some dating sites have ads for additional revenue, some are sending promo emails to their members, some resell the leads to other operators ... there are many options here. And basically, the more they can squeeze out of a member, the higher payout they can offer.
And lastly, scrubbing/shaving also plays a role here. It's been a popular tactic for years ... get affiliates by offering the highest payouts out there, then scrub their leads to make up for it
PS: what ezmobcom mentioned does play a role too. There are many affiliate networks out there, some rebroker offers from others and the more "hands" the offer changes, the less there is left for the affiliate.
Hope I did help you, in case you have more questions just ask
Matej.
Hi Marcel,
Welcome to the forum!
Another factor that I want to add to the mix is that sometimes certain products or offers bring a higher overall return to the company compared to others.
For example, a company might offer a 30% commission for a $70 sale of product "A," when the same company is offering 50% for a $70 sale of product "B."
Why would they offer vastly different commissions for a product of the same price? Because the lifetime value of a customer is much higher on product "B" compared to product "A," and the company wants to incentivize affiliates to bring in more customers on product B.
At the end of the day, many affiliate commissions should (with a smart marketing department) be determined based upon the Lifetime Value of a customer. If there are more valuable customers, then you should go out and get them by offering bigger commissions!
Best of luck-
Galel
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