First post: February 10, 2016. Last updated: June 6, 2019
Here's a question it's fair to say that gets asked pretty frequently at our network:
Hey CrakRevenue, what's the best payout type?
Of course, there’s no universal answer to this question.
Indeed, if there really was one clear winning payout type or formula that far exceeded the rest, we would probably only be offering that one then… and using it ourselves!
In reality, each and every affiliate should first determine...
- Which affiliate program payout type best suits your specific situation?
- Which pay model best aligns with your short & long term goals?
- And which program pay model makes the most sense based on the spending habits of your traffic? (Have you ever promoted a Revshare program before and have you ever noticed if your traffic spends?)
By simply starting with these 3 simple questions, choosing the perfect payout type for your long term and short term objectives should then be a no brainer!
Also … Why’d you get into affiliate marketing, anyway?
Was it for that supplemental income source so you could treat yourself to the occasional six pack on the weekend?
Or was it something grander... like to actually make a living out of it?
One good way of figuring this out is to imagine these payout types as a competition, a race, per se.
Case Study - Race Against the Machine
Let’s pretend City Hall has a 42 kilometer charity race planned for your town… and you’re the beneficiary.
Now, since this race was planned in your sole honor, the local officer in charge of the event lets you choose the type of payout you want.
He can either:
- Pay you $1 for each runner who starts the race this year. (PPL)
- Pay you $50 for each runner who finishes the 42 kilometer race this year. (PPS)
- Pay you 20% of the total amount of kilometers ran by every returning runner every year. (Revshare)
And since you’re such a dedicated & committed citizen, you decide to handpick the runners yourself, just to relieve the local administration of this daunting task.
Therefore, your payout choice will obviously depend on the type of recruiting campaign you’re planning…
A Large Broadcast on Mainstream Stations - Pay Per Lead
OK, so it's safe to assume you'll attract a huge crowd for the marathon, but what you don't yet know, is how many people will actually participate. Moreover, in this case, there’s no way to assess the overall shape and age of the runners before the actual event takes place.
If you’re planning this kind of campaign, it’s probably better to bet on the first payout type you were provided (Option A — Pay-Per-Lead /PPL) so you get the most out of it.
However, this type of payout comes with one caveat: ever since news first broke, and the event started gaining traction with all major media... all major stations began covering this race with a birds eye view broadcast straight from the finish line.
And because the event has your name written all over it, it would look a hell of a lot better for your reputation if a decent amount of runners actually finished the race. Otherwise, if not, public opinion, and of course, City Hall might nip hosting another marathon straight in the bud — and there goes all money and all future fundraising in your honor!
A Targeted Campaign in the Country’s Running Clubs - Pay Per Sale
To attract more amateur / professional runners, you gotta turn this local event into a national competition. In doing so, you know that even if fewer people (statistically) were less likely to participate in the first edition of the race... you could still count on a larger number of people making it past the finish line of the race.
Obviously, if you’re going with this type of promotion, your best option is to choose the second payment type presented to you above (Option B — Pay-Per-Sale / PPS) since your participants are well targeted and are the most likely to run at their best - and ultimately, most likely to hit that finish line.
An Annual Campaign in the State's Running Clubs - Revshare
To double down on the regional pride, you’re planning to turn this race into an unavoidable annual sporting competition tradition between all the state's competing running clubs. With a good promotional strategy, this might even support the recruitment campaigns of these clubs among the local population.
In this case, the third payment option presented to you in the beginning makes the most sense (Option C — Revshare). OK, you might see less participants during the first year of the event, but you’re pretty sure that the ones who do participate are a sure bet to come back the following year, and the year after.
In 10 years time, you probably won't even have to advertise anymore.
Between word-of-mouth and the yearly marathon (like clockwork), you'll get to enjoy the race from the comfort of your own home while still getting a chance to earn that sweet, sweet cash.
A Run Against the Clock
In the race / marathon example above, we’re comparing the affiliate marketing payout type with a race for a reason: you need to plan your payout type with a strategy in mind, just as a professional athlete (or web marketer, for instance) would do.
However, a promotional strategy is not the only thing one ought to take care of…
You should calculate the Revenue Per Action (RPA) of each payout type based on the overall results you’ve been seeing.
In other words: compare the data & the revenue you’ve gathered for each product per payout type to see which one looks the best according to your plan moving forward.
You'll see some examples below of the kind of calculations you can make (for additional clarity):
|Example of RPA Calculation for 1 product|
|Timelapse||1 MONTH||1 YEAR||10 YEARS|
1 to 3 sales
12 to 36 sales
120 to 360 sales
|Earnings - PPL $1||$60||$720||$7,200|
|Earnings - PPS $50||$50 ~ $150||$600 ~ $1,800||$6,000 ~ $18,000|
|Earnings - Revshare 20%||$0||$1,440||$14,400|
What does it mean?
As you can see, a PPL pay model may be more likely to generate you money more quickly... but this payout type tends to be way less profitable than PPS and Revshare pay models in the long run.
- Sure, PPL programs provide that fast cash... but you also may be selling your leads for pennies on the dollar. When measured with the passive income streams of today that Revshare can provide, the PPL pay model doesn’t make sense for everyone.
On the other hand, we concede that it can be tricky determining which payout type is the most profitable in the long game. One main difference is, Revshare allows you to earn a lifetime of earnings with traditionally way less effort on your part in the end.
While other models like PPL and PPS—these you can’t generate new sources of revenue without continuously sending new customers/sales.
Numbers will always vary depending on the conversion results you’re witnessing and the payout amount offered. That’s why you always need to make these calculations & projections yourself before deciding on a payout that makes the most sense for you.
What’s Your Bet?
As we’ve just conveyed, each payout type needs its own tailored approach.
It's all dependent upon one’s forecasted plan and outlook!
Because remember, if you're promoting our offers as a supplemental income source to pay for your next trip to Cancun... or promoting our offers to make rent, then perhaps PPL IS the horse you should bet on!
However, if you're in this to win it... and it's become something of a serious endeavor or profession.. then you can’t go wrong betting on PPS or Revshare (or better yet, both models! … with some PPL mixed in!).
We look forward to your comments on which model you're betting on - and hearing why you chose one over the other. Please comment!