How Affiliate Commission Models Work
There are many different ways to earn money from Affiliate marketing, and Affiliate programs may offer some or all of the commission structures below.
Earnings are typically paid on a 30 day cycle, but this can vary from program to program or niche to niche.
This is when you get a percentage of each sale, typically on a sliding scale.
For example with casino affiliate programs, you might earn 25% on all revenue generated up to $15,000, and 30% up to $30,000 and 35% for anything over $30,000.
The revenue is typically calculated after expenses. (credit card fees etc)
Cost Per Acquisition or Cost Per Action means you get a fixed fee based on each sale you refer to the Affiliate Program, or when a specific action is taken by the visitor. This may also work on a sliding scale where you get $200 per sale for the first 10 sales, $250 for 11 to 20 and $300 for each sale over 21 total sales.
Cost per Click as the name suggests pays you for the traffic you send to the affiliate program.
This is for unique visitors and not total traffic.
For example you are only going to get paid once when the visitor enters the site, not again for each time when they return. Again there may be a sliding scale in play where you earn more money based on total traffic referred in a month.
Pay per Lead means exactly that. You get paid a fee for each lead generated, regardless of wether or not it converts to a sale. This makes sense in many cases as the sale conversion is up to the Affiliate Program sales team, and you need not be penalised for their inability to convert your traffic.
In fairness though I have never used this platform as I would no send traffic to an Affiliate Program that cannot convert it at the ratios I deem satisfactory.
Fixed Fee Placements
This is essentially selling ad space on your site and for the most part is based on your total monthly visitors, what geo location they are from and the niche you are targeting.
For example you may be paid more if the majority of your traffic is from a first world country rather than a third world country.
The best of both worlds is typically reserved for Super Affiliates.
In this case you can charge an Affiliate program a minimum fee based on the total number of customers you refer, with a revenue share over and above in the even more earnings are generated than the guaranteed fee covers.
This is especially common with casino affiliate programs and forex trading programs.
Tip for Affiliate Programs
Instead of rewarding Affiliates on a revenue share basis based on their earnings, I introduced a new method back in 2004 which rewarded based on number of customers they sent.
The challenge with rewarding based on earnings is the affiliate doesn't always have control over the value of the traffic they send, and if they send a whale they minimise promotion to your brand and increase exposure to others to offset risk or double dip.
We found rewarding based on number of players referred to be a better model and incentive to consistently push our brands.