Payout Race: What Horse Are You Betting On?
What is the best payout type? Obviously, there’s no universal answer to this question. PPS, PPL or Revshare: Find out which payout type is best suited for you!
Here’s a question, it’s fair to say, that’s asked of us more than often: “What is the best payout type?”
Obviously, there’s no universal answer to this question. Indeed, if there was one clear winning payout type or formula, we would only be offering this one… and using it ourselves!
Therefore, each and every single one of us needs to figure out for ourselves what type of payout fits his or her own needs—and the spending habits of their visitors.
It’s also directly linked to the reason you got into affiliate marketing in the first place: 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 make a living out of it?
A good way of figuring this out is to imagine these payout types as a competition, a race…
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 has been 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
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 shape and the 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 caveat… since you announced the race and promoted the event on SO many media platforms, all the major stations are covering this race with a live broadcast at 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 be displeased and may end up deciding never to host another marathon — and there goes your money and any future fundraiser in your honor.
A Targeted Campaign in the Country’s Running Clubs
To attract more amateur / professional runners, you’re planning to turn this local event into a national competition. In doing this, you know for sure that even if less people are likely to participate in this first edition of the race, the ones that will are probably gonna do their best to finish 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
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 being held like clockwork, you’ll be enjoying the race from your home while still earning 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 you need to take care of…
You need to calculate the Revenue Per Action (RPA) of each payout type based on the 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.
You’ll see some examples below for 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|
As you can see, PPL is more likely to help you earn money quickly but is way less profitable than PPS and Revshare in the long run and this statement stays true whatever product you’re promoting.
On the other hand, we concede that it can be tricky to see which payout is more profitable in the long run at times. The main difference is, Revshare allows you to earn a lifetime of earnings with traditionally less efforts in the end.
While other models such as PPL or PPS—you can’t generate new sources of revenue without continuously sending new customers/sales.
However, keep in mind that the example above is just what it is: AN EXAMPLE.
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 showed you, each payout type needs its own tailored approach.
It’s all dependent upon your 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 becoming 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 from time to time).
We look forward to your comments on which model you’re betting on – and hearing why you chose one over the other. Please comment!