Home > General > Affiliate Marketing Forum

---

Payout- How & Who decides? (5)

---

Hi, how and who decides the payout value for different CPA offers?
Even if the flow might be same- SOI, DOI, one field, email/pin submit, DCB etc, but still the payout value may vary from 10 cents to $20-30. What factors are taken into consideration?
And sometimes higher payout offers might be easer to convert.
How accurate are the payout values generally?
Does the payout amount always represent the difficulty level of conversion?

---

Quite a few factors actually.

The #1 is how much a lead is worth to the advertiser.
A mortgage loan brings in more revenue than a SOI dating registration. It's rarely the same form.
Even then, a person interested in a mortgage is worth much more than someone interesting in dating.

So too, does a simple zip code entry cost much less to generate, and bring in much less revenue for the advertiser.

So: how much does the advertiser make per X (registration, form fill out, etc)?

From that they decide a CPA they give on to Affiliate Networks... who take a cut and show you a lower CPA then they are getting (of course). Affiliate networks are merely 'banks'. Since most advertisers pay on a net 30, and cash flow is very important, most affiliates start and continue working with networks. Besides other benefits you get.

If your quality is high, you can request a higher CPA. If you work directly with Advertisers, you usually get a higher CPA, even for the same offer.
What I mean, specifically, is that if you see an online gaming offer pay $2-$4 per lead. If your quality is SO GOOD, and you talk to the advertiser, you may
even be able to charge as much as $15+ for the same offer, simply because you're bringing in that much revenue.

On the flip side... if your quality is low, and bring in low retention rates, or not enough revenue so it doesn't back out for the advertiser, you may get cut from the offer.

The above example is from personal experience working for an online gaming company.

Cheers

---

Several factors come into play here.

The basic formula is pretty simple though... advertisers know the average revenue they can get from a lead and that's the max they are willing to pay, minus certain profit margin they want to keep. Leads that make them less than the average would be considered poor and the advertiser will likely ask for the traffic to stop, leads that are performing better than the average will make them profit and they will be likely to raise the payout on those.

Now, they pay this amount to the affiliate network, that wants their cut too and the payout is lowered by their margin. So what advertisers pays minus networks margin is what you get as an affiliate.

So much for the very basic mechanism. Let's move on to the specific factors, there are many so I will list just the most important.

1. Not all advertisers are alike... some know how to monetize their leads better, so those can afford to pay more. That's why you can see similar offers paying different rates.

For example: advertiser A collects leads to convert them into paying members of some site. Advertiser B does the same, but they also resell the leads to their partners, they run ads in the members area of their site, they do mailings and sell clicks from those. Obviously, advertiser B can afford to pay more per lead.

2. Offer specifics... same conversion flow SOI/DOI, different pricing or billing structure. You can promote 2 trial offers with the same $1.95 trial rate, but one rebills at $19.95 while the other at $39.95. Or another example, one rebills every week (pin submit) and the other rebills monthly (CC submit). The final lead value can be quite different based on this. Different billing methods and the overall setup of the offer can also influence the payout a lot.

3. GEO... this plays a large role, some countries are much easier to monetize than others. It's easier to sell something to a user from let's say UK than to a citizen of India.

4. Regulations of the market... this is connected to point 3. from a large part. The markets in less developed countries are much less regulated, which means the advertisers can go wild and walk on the edge. That's why it's generally easier to get a conversion in the less regulated markets.

5. New advertisers... new players do not have the data yet to set the value of the lead, since they are just starting out. This means they have to start somewhere... for example based on the recommendation of the affiliate network. Usually, they try to go lower, which results in lower paying leads. But in some cases they start pretty high, in order to get more interest from affiliates and later on, they optimize the rates to match their results.

I could go on, but this pretty much covers the most important parts.

From a large part, it does. But we should compare apples to apples. So for example a nutra product where an actual payment for a physical product is needed, shouldn't be compared with a pin submit or CC sweep offer, because these are very different.

Depends on the advertiser a lot. Some of them watch the data as hawks and adjust the payouts frequently, to match the actual performance on their backend. Some work with averages and only check the traffic every so often.

Yup, this also tells you something about a particular advertiser, they are probably better at optimizing their funnels or monetize the leads better. Or maybe they've set the rate unrealistically high and will pull it back soon.

I think I covered most of your questions, if you have more, just ask

Matej.

---

Matej just one upped me. That's fine. :P

---

Actually, you posted while I was typing my reply, so the lead is yours hehe

---

Home > General > Affiliate Marketing Forum