CPA, Revshare, hybrid…? What is it all about?
If you’re thinking about starting forex affiliate marketing or already taking the plunge into the business, chances are you have heard about these terms before or come across them before.
Even though you have come across the terms there is the likelihood you don’t know how to choose the best affiliate business for you. Or do you?
Well, if you don’t, you’re in for luck as you’re about to find out how to make the best choice of your affiliate marketing commission structure now.
Without a doubt, commissions from affiliate marketing are worth the time and it can be very profitable especially if you start off the right way and make the best choice of commission structure that best fits your needs and situations. But not all, you need expertise and the right information to get started, which is something you’re going to get from this piece today.
So all you need now is to take a seat, get a cup of coffee, and read through this piece to get all the information you’ll ever need to succeed in making the best decision for your affiliate marketing business.
CPA
CPA is an acronym for Cost Per Acquisition. In a simple explanation, CPA is a type of affiliate marketing commission structure in which you (an affiliate marketer) get paid a one-time fee from your chosen affiliate marketing partner. How this works is that whenever one of your leads carries out a required action like signing up for a newsletter, filling out a subscription form, and more, you receive a commission.
Basically, most affiliate programs have stringent conditions your leads have to meet to become one of their qualifying clients, and they also have specific terms they use for distinguishing a qualifying client from a non-qualifying one. Therefore, you’re eligible for their commission only when you generate a qualifying client who meets the program’s criteria.
Different affiliate partners adopt different criteria such as in form of a minimum requirement that a lead must meet to become a qualifying client. For some partners, they require your leads to make a minimum deposit into their accounts when opening an account, while some require that such a deposit be made within a specified timeframe, etc.
Every affiliate marketer and affiliate marketing program within a given industry will have its own payment methods, qualifying criteria, rate, and commission structures, which slightly vary from one affiliate partner to the other.
So before you choose a CPA plan, you must endeavor to understand everything there is to know or what requirements you need to meet to qualify for a commission. It’s important to make sure you understand all of your affiliate partner’s requirements and terms of service before going ahead to start to generate leads, which later might not be eligible to earn you a reward because they aren’t qualifying clients.
Example
You sign up as an affiliate marketer with OctaFX to help them promote their products and the commission structure you chose is CPA.
By this arrangement, you’re to be paid $500 whenever your lead becomes an FTD (First-time Depositor). The payment is scalable and, in that, you can get paid up to $600 per FTD depending on the number of qualified leads you’re able to refer to the network each month. But there is one important condition given: for a lead to qualify, the client must be a first-time user of IG and must make a minimum deposit of a certain amount when signing up an account with IG.
Now, it’s month seven and you refer 10 leads to the network. Seven of these leads successfully sign up accounts with IG markets, with two making a deposit less than the required minimum amount, while one of the leads is already a past member of IG thereby leaving you with four qualified members for the month.
Given the above scenario, you qualify for the $500 per leads bracket and your payment for the month will be $2,000 (i.e. $500 x 4).
Revenue Share
Revenue Share is another affiliate marketing commission structure commonly referred to as ‘Revshare’. Under this commission structure, affiliate marketers are paid based on the percentage of profits, losses, or sales generated from their eligible referrals for the lifetime of that client. Although the earning potential in this type of commission structure is high it all depends on how active your leads are – whether they have a high tendency to carry out specified actions like gambling, trading in forex, or buying on impulse.
Most Revshare plans allow their participants to earn a commission on their clients for the lifetime of the clients but some will only let you earn a commission for a period of time like 6 or 12 months. So make sure you understand the difference between their limited life Revshare plan and the lifetime Revshare plan so you wouldn’t just jump into a conclusion unknowingly.
Also, you want to consider what percentage Revshare uses for calculating their commission. This is especially important if you’re trading in financial markets. Depending on the program, some programs use the broker’s revenue generated from your trader as their basis, which can be either the gross or net amount. The bottom line is you should try to understand the terms of service involved in a program before choosing a commission structure.
One way by which you can identify a Revshare is by considering what a broker is ready to offer per lot traded. If a broker is offering a given dollar value per lot traded, this is a good sign that its Revshare. Instead of receiving a percentage of revenues, Revshare will pay you a specified dollar amount (like $10-$15) per lot traded by your eligible referral.
Example
Alvexo is a good example of Revshare in that they offer their affiliate marketers a Revshare option. With this structure, you can earn 20% of your qualified referral for the lifetime of the client, plus you can scale up to 30% depending on the number of eligible FTDs you’re able to refer each month.
Assume by the end of month seven you’re able to send to them 10 qualified leads and they succeeded in generating $900 revenue for Alvexo in that month. Given the number of leads you sent each month, you’re in the 20% bracket with a $180 commission for that month seven.
It means you’ll continue to receive $180 every month for as long as your referrals continue to trade like this because it’s a lifelong plan.
Hybrid
This is simply a blend of both CPA and Revenue Share. It’s a type of commission structure that shares both features of CPA and Revshare.
Example
Unlike a CPA or Revshare where you receive 20% of your referral, Alvexo pays their hybrid plan $200 CPA + 10% Revshare. You’ll remember in our earlier examples under CPA and Revshare, we mentioned about months seven and four qualified referrals and $900 in revenue generated for Alvexo from your referrals trading activities. A hybrid plan works in a different way. As with a Hybrid payment plan, instead of $200 CPA + 10% Revshare, you’d receive $800 CPA + $90 Revshare for this month’s payout.
How to choose the right one
For most online marketers, understanding the type of commission structure in affiliate marketing is the first step. But that’s never all as there is still one most difficult question you need to answer, which is how you choose the right structure for your business or website. Fortunately, there is an easy way to go about choosing the right structure and that’s by figuring out what your end result is. The tip to determining your end result is to ask yourself these questions and see that you can proffer convincing answers to them. Here are the questions to ask yourself when trying to figure out your affiliate marketing goals:
- What defines your goal?
- What do you want to achieve?
- How long do you intend to stay in the business: short while or long term?
- Who is your target audience and how passionate are they about your product/service?
Generally speaking, if you’re looking for a short-term business that will only last for a short while, earn you profit upfront, and build referrals that wouldn’t stick around with you and become die-hard followers of your product/service for a long time, then CPA the perfect structure is the structure for you. CPA will allow you to get larger, one-time payments the very moment one of your leads becomes a qualified referral without having to worry about any changes afterward. This is so as you wouldn’t stop running a promotion or winning over new referrals to attract the most amount of leads through your affiliate links and once it’s successful it turns to a funnel-like business.
If your goal is to build a lifelong website or service that’ll allow you to increase your audience engagement with your product or service while you’re staying in the business for the long term, then Revenue Share is the right structure that will work best for you.
The profits may not be upfront or huge or take time to make something significant but every qualified client you refer will remain linked to your account for the long term and your earning potential will skyrocket over time.
The only thing about this business model is that it requires you to stay committed and focused on your goal, offer your leads values and helpful tips that provide answers or solutions to their questions/problems through the provision of top-quality content and information. Your major concern here should therefore not be seen as just getting leads but offering them values and solutions they’re searching for so they can continue to use your products or services.
The hybrid plan is the structure for affiliate marketers who don’t have clue as to what they want to achieve, what their audience wants, or how active their audience will be or remain in the business. You should contact your affiliate party to find out about their terms of service and the possibility of switching structures afterward. If your affiliate partner allows switching between structures, you can start with a hybrid plan for the next 6 to 12 months to test the water and then switch to either CPA or Revenue Share to double your returns once you’re able to determine your audience will stick with your product or service.
Hybrid can also be a better option for you if you’re trying to balance your cash flow. Your strategy might be having a long-term business but you also need cash to invest in some aspects of your business like marketing and development. CPA component comes in handy as perfect cash injections for growing your customer base while growing your monthly Revshare amount.
You should know that not all affiliate partners offer a hybrid plan. In fact, some partners offer only one plan with no option for a hybrid at all and, in that case, it leaves you with no option other than to accept what’s available, which can impact negatively your endgame. But if you’re fortunate to have a partner that offers the exact structure you want, it makes things easy in terms of your set goals and the audience you can access.
Hopefully, we’ve been able to clear your doubts as to the different payment structures available and how you can make the best choice between them. We would be glad to hear your views. Please comment below on what your best structure is.
