Affiliate Payout Types
The average route of an affiliate marketer generally revolves around a single commission model but this has its own risks and drawbacks which will be explained within this post. The reality is that there are multiple types of revenue sources available to affiliate marketers; each with their own benefits worth exploring and implementing within your business.
In this article, you’ll be learning about the various types of affiliate payout methods and how each can add diversity and additional opportunities for revenue.
Why Diversity Matters
Let’s answer an all important question before we explore the various options of affiliate marketing payouts: why diversify your income.
Here’s a scenario: You go through hundreds of hours creating the perfect affiliate business model, launching the website, creating incredible content, drawing a community, and generate sales. Low-and-behold, not a few months later and your commissions drop off the map because you’ve been banned from an affiliate network. Your business is dead.
What’s the problem here? A lack of diversity in income sources for the affiliate business.
Diversity provides you with these benefits:
- You aren’t susceptible to business crushing events (like banning)
- You increase your chance for income because of additional offers
- You have a new baseline for testing and optimization
- You open the opportunity to explore and learn from your work
Diversity, in your affiliate business, means that you won’t be “putting your eggs in one basket”; you’ll have many different options for earning an income while offering great offers to your visitors that may not be covered by a single affiliate program.
The Affiliate Payout Breakdown
Chances are, you’re most likely using a few combinations of affiliate income such as Amazon Associates, Adsense, and Clickbank; they are, after all, some of the largest networks.
However, these affiliate models are limited and can go through radical changes in terms of service which could make your affiliate business obsolete without proper updates. Likewise, each of these is based on the same model of Cost-Per-Lead (direct sales of a product or service) and Cost-Per-Click – there are many other options out there that can give you greater earnings through diversity.
The following are a few different methods of affiliate income you may want to explore:
- Cost-Per-Sale – The very basic in affiliate income. In this affiliate model, your main income comes from when you produce a sale for the product or service you’re promoting. Income is generally higher depending on the product you’re selling and its commission amount but you’re limited in your revenue if the product doesn’t match your marketing or if your visitors have no interest in buying said product.
- Cost-Per-Click – The most commonly used type of website income. Google Adsense, Chitika, and Kontera are great examples of CPC networks that you often find employed on affiliate blogs and websites. In this model, earnings come from when visitors click the ads displayed on the website regardless of whether a sale is generated. Earnings, with these networks, are generally lower depending on how much advertisers are bidding for keywords on the ad network but they create a great alternative, entry-level source of income in affiliate marketing.
- Cost-Per-Lead – This form of affiliate revenue comes from the ability of your business sending others legitimate leads (potential customers). Big businesses that can offer a CPL model often pay high prices for their leads such as lawyer offices, doctors, accounting services, and more. This model does not fit on every type of website but can be incredibly profitable when mixed with the right type of content and niche selection in your affiliate business.
- Cost-Per-Action – The model behind CPA is that advertisers pay for each action an individual takes after you’ve sent them to a landing page such as filling in their zip code, applying for a credit card, filling out survey information, and more. A CPA model for your affiliate business can be a great tool for increasing revenue because it’s low resistance in conversions; people are very likely to fill out basic information, such as their zip code, that could pay you upward of $1 – $2 per action.
These are just the basic models that you’ll find when operating your affiliate marketing business but the payout breakdown goes even further when you begin to explore the additional options provided by the various affiliate programs in your niche.
How so? Well, here are some of the other options that coincide with each affiliate model:
- Flat Rate Programs – These pay on a flat-rate for each action, lead, sale, click you generate for a company. An example would be selling a Clickbank product for a flat commission (or percentage); if you sold a $100 affiliate product that gave 50% commissions than your take away is $50 – simple.
- Performance-Based Programs – Some affiliate programs offer a scale for your performance; one example would be Amazon Associates. The better you perform for the network, the better you’ll earn. With Amazon Associates, for example, you’ll begin to earn a greater percentage for the higher volume of items you sell within their affiliate program.
- Single-Tiered Programs – This type of payout is one-to-one which means that you are an affiliate that earns from direct sales to the company.
- Two-Tiered Programs – In this model, you can begin to recruit affiliates under your own affiliate account and earn a percentage of their income for each affiliate sale they produce. With enough two-tiered affiliates, you can essentially set back from your promotions and allow your own affiliates to do the majority of work.
- Multi-Tiered Programs – A multi-tiered program is often referenced as Multi-Level Marketing; this type of program allows your affiliates to recruit affiliates – there are multiple tiers that can go onward depending on the program. However, this model has been abused in the past but it’s still a viable option for your affiliate business.
- Revenue Share – Although it’s uncommon to land one of these deals, your ability to perform in your affiliate business may open the opportunity to gain revenue share with said business. On this level, it’s very much personal; you could contact the business you promote and setup a system where you earn an overall part of the revenue of the company vs. only making money from the sales you generate. In many ways, you’re becoming a business partner.
Each of the programs and methods to earn with your affiliate business can cross; it creates hybrid systems where you could promote a product while also providing two-tiered support for sub-affiliates.
The Hybrid Affiliate Business
The two items mentioned, diversity and payouts, go hand-in-hand with creating a robust affiliate business. As noted, one of the major drawbacks of using a single affiliate payout method is that you’re putting your business at risk of failure if the program tanks. A combination of these programs creates a hybrid approach to your affiliate business that removes the glass floor that could break at any moment.
Here is an example of approaching your affiliate business with a hybrid mindset:
- Source a multiple products, services, and affiliate programs/networks within your niche.
- Get in contact with your affiliate manager for any additional options that aren’t readily available to the general affiliate program members.
- Begin implementing a variety of affiliate offers based on the different models in the general areas where users interact with your website and business.
- Test and optimize each campaign; run split tests to discover which affiliate model works best on each of your web pages. You may find a CPA offer performs greater than others on certain pages. Likewise, you may find the opposite. It’s important to mix it up.
- Tap into two and multi-tiered programs and begin recruiting your best community members. Create a backend support system to educate these members on how to get started with their own affiliate marketing (which, in turn, improves your own income).
Through this approach to affiliate marketing, you’re creating a stronger foundation that will limit the impact of negative events such as being banned from a network or a product falling out of favor.
Diverse Affiliate Programs worth Exploring
Finally, before you go, I’m sure you’re interested in some of the programs that offer each of these types of affiliate payouts.
The following are a few suggested networks and affiliate program resources that will help you diversity your affiliate payout methods:
- Our list of Affiliate Marketing programs (a great start for new affiliates)
- ShareASale (great for Cost-Per-Sale affiliates)
- MaxBounty (great for Cost-Per-Action affiliates)
- RevShare (great for Cost-Per-Action for TV affiliates)
- Clickbank (an excellent marketplace for Cost-Per-Sale affiliates)
You could also browse some of our other blog posts such as this guide to finding affiliate offers; a great start for new and old affiliates that want to diversify their income. Likewise, you could also dig through Zac Johnson’s guide to earning your first $500 online with affiliate marketing that shares how to get started with multiple affiliate networks.
All-in-all, your overall success with affiliate marketing comes down to your ability to stay flexible and implement new strategies. The landscape for affiliate marketing is ever changing; failure to evolve and test new offers (and payout models) will leave you empty handed.
Begin implementing your own hybrid system for your affiliate business; diversify your affiliate payout sources through some of the items mentioned within this post which can be found on the various affiliate programs and marketplaces noted.