06 Aug 7 Commission Structures to Consider for your Affiliate Program
One of the biggest advantages of affiliate marketing is that it’s performance-based, meaning brands can pay on a conversion (lead, visit, sign-up, sale, etc.) basis. This is a huge relief to companies with limited budgets that want to maximize reach.
For advertisers considering affiliate marketing, there are a number of commission structures to consider, each with its own strengths and weaknesses. Together, these options make it possible to work with affiliates across different platforms and traffic channels.
Read on for ideas on how to build or expand your commission structure for optimal results.
A linear structure allows an advertiser to pay their affiliate in a simple, evenly distributed payout amount based on how far into the purchase process a consumer gets. The amount can be directly proportional to its gross profit, meaning the affiliate will make a pre-determined percentage of the sale. This set up is ideal for campaigns that generate a fixed revenue amount.
Time-decay payment structures give credit to the affiliate that influences a conversion closest to the event. In other words, one affiliate may have initially peaked a consumer’s interest, but a different affiliate will receive the full (or a larger portion) commission if they reach the buyer just before the point of purchase. This structure is especially beneficial for popular brands whose campaigns have grown saturated over time. It’s also beneficial for companies looking to advertise across multiple traffic channels and utilizing several affiliates to do so.
Position-based commission structures consider the psychological process that a consumer undergoes when making a buying decision. In some cases, a customer might visit a site or browse several products prior to converting. With position-based attribution, the affiliate that first reaches the consumer as well as the one that influences their purchase are rewarded.
Coupon codes are a widely use commission tool and allow brands to work with a larger pool of affiliates, including those that are offline. The affiliate is rewarded for any transaction that is accompanied by their unique code, regardless of how the consumer may have received the code.
Shopping Cart Disqualification
Brands want to know that their marketing budget is being allocated as efficiently as possible. With shopping cart disqualification, companies can decide to only pay affiliates that influence a buying decision rather than those who come into play after the customer has already decided. For example, a customer might put an item in their shopping cart then browse online or through their emails for a discount code. Traditionally, the coupon code would be associated with an affiliate and reward them for the purchase. With shopping cart disqualification, however, retailers can disqualify an affiliate from receiving commission if the coupon code is retrieved after the item was added into the cart and the buyer navigates pauses the transaction temporarily to find a discount before purchase.
Similar to the linear commission structure, fixed-margin payments base the affiliate’s payout on a set percentage, regardless of the sale amount. Fixed margin structures make things easy to track and leave little room for discrepancy. This commission style is very popular because of how methodical it is for both the advertiser and affiliate.
Cross-platform commission structures are becoming more prevalent given that consumer behavior has evolved. Customers are using multiple devices to review, research and purchase items. With cross-platform tracking, affiliates are rewarded for actions even if the buyer switches from one device to another before performing a payable action.
There are many more structures available, including custom payment tiers that can be adjusted to suit a specific industry, service or product. Networks tend to have the most options available because of the wide array of companies they work with and the need to accommodate the tracking requirements of many different business models.
Madrivo’s offer strategy experts can work with you to find the commission structure and payouts that will deliver the best value for your business. Contact us at 1-855-MADRIVO or firstname.lastname@example.org to learn more.
Business Manager and content writer for @MadrivoMedia – follow me on Twitter (@sdysthe) for the latest and greatest on Affiliate Marketing!