It’s important to understand the different affiliate marketing payment models in order to make an informed decision as to what kind of ads to display on your websites.
Cost Per Sale (CPS) or Pay Per Sale (PPS)
The pay-per-sale or PPS, also referred to as, cost-per-sale or CPS payment model pays affiliates a set commission for each sale they refer to the merchant’s products or services.
The commission can be a percentage of the sale or sometimes it’s a flat rate.
Various creatives are provided by the affiliate program, including, banners and text links.
Some programs, like, eBay and Amazon offer unique creatives in the form of sliders and customized widgets to target relevant products as pictured below.
Examples of Commission Based Payouts
Here are some just a few examples of the commission payment model and how it works.
- Amazon affiliate writes a review of the Kindle Fire tablet on his or her website, and includes affiliate links that takes site visitors to Amazon, when those visitors buy a Kindle Fire, the affiliates makes a commission.
- eBay affiliate places live auction listings of relevant products on their website, and each time their site visitors clicks on one of those listings and make a purchase one eBay the affiliate earns a commission.
- Affiliate builds a website about photography and regularly posts various tips and guides about the topic. In the sidebar of his site they place banner ads promoting Canon cameras as a Best Buy affiliate, each time someone clicks on that banner and makes a purchase on Best Buy, they earn a commission.
- Tech blogger writes a review of the latest Apple MacBook, and places an affiliate link to Apple’s website within the review. Each time someone clicks on that link and buys a MacBook, or anything else at Apple’s store, the affiliate earns a commission.
- Email marketer sends an offer to their list of bloggers for a new premium WordPress theme, each subscriber that clicks on the offer link and purchases the theme earns the affiliate a commission.
Cost Per Action (CPA)
CPA stands for cost-per-action and in this affiliate marketing payment model, affiliates are paid for particular actions completed by traffic they refer to the merchant site.
CPA is different from CPS models because the traffic need not make an actual purchase, but, they only need to perform the action that is prescribed by the merchant company.
For example, giving an email address, filling out a credit card application or signing up for a free trial.
Another example, an advertiser, such as Netflix, pays $25 for the action of signing up for a free trial at their site.
CPA is one of the more lucrative affiliate marketing models because the earnings can be substantial from various high paying programs.
Cost Per Lead (CPL)
Cost-per-lead pays affiliates for sending viable leads to their site that they can then engage with their marketing goals. This affiliate marketing payment model is also known as online lead generation. Affiliates get paid when a visitor signs up for the qualified action. That could be filling out a contact form that asks for an email address or other information that is required on the sign-up form. ShareASale is an affiliate program that has CPL programs that you can promote.
Cost Per Click (CPC)
The cost-per-click model pays affiliates for ads clicked by traffic on their sites. A form of contextual advertising that comes in both text and image ads that are placed on the affiliate site.
Typically, the ads served are highly relevant and personalized to the individual site visitor and so tend to convert quite well.
Google Adsense and Chitika are two of the most popular and well known CPC affiliate programs.