In our earlier article, we have informed that affiliate systems are internet-based sales systems in which a merchant or advertiser usually offers commissions to its affiliates or publishers. The product provider provides advertising material that the affiliate uses on its websites or can use via other channels such as keyword advertising or email marketing. With these below mentioned condition models the compensation is settled and credited.
Here, the commission is calculated per click on the advertising material. The billing of sponsored links, advertisements above and below the search results, such as Google AdWords or Yahoo! Search Marketing, is calculated according to this model. Various techniques, such as an IP ban, prevent multiple clicks by a single user.
A problem for the operator of the affiliate system with this form of remuneration is the fact that it is difficult to influence the quality of the forwarded visitor flows because, unlike the following remuneration models, there are no minimum requirements for certain actions of the visitors. Pay-per-click provisioning is therefore usually applied to short-term advertising campaigns to purely increase reach, which cannot be directly related to the purchase or sale of products.
The abbreviation EPC stands for “earnings per 100 clicks” and shows how much commission an advertiser pays out to his website operators (affiliates) on average for 100 clicks. The terms “pay per click” (PPC) and cost per click (CPC) are often used interchangeably, although PPC actually refers to the process as such and CPC stands for the price per single click. Alternative billing models include “cost per order” (CPO), “cost per action” (CPA), “cost per lead” (CPL) or “thousand-contact price” (CPM).
The commission is calculated per contact made by the customer, for example, when the customer requests advertising material. Pay per lead is particularly suitable for the online marketing of goods that require a lot of advice. Products that are complex in terms of content are rarely ordered by customers via the Internet without in-depth advice, which is why a “pay per sale” payment can be ruled out, as it is not possible to assign an offline order to the respective intermediary. However, the advantage of “pay per lead” over “pay per click” is the promotion-related remuneration of the sales partner. Only high-quality traffic is actually remunerated.
The commission is remunerated as soon as the customer generates sales. Usually, this means the sale of goods or services to the customer. Originally, the remuneration per sale was a one-off payment on a brokered turnover. However, in order to bind sales partners more closely to their own system, some affiliate programs are moving to attribute not the individual sales of a customer to the respective referring partner and to remunerate them accordingly, either within a period of time after the click (usually 30 to 90 days) or “lifetime” (as long as the customer continues to buy or generate sales). “Lifetime” systems of this kind are currently found almost exclusively in the adult affiliate segment (affiliate programs with mostly pornographic or erotic content). This can largely be attributed to the strong competition offered by affiliate systems and the fact that customers usually read reviews of the product before making a purchase or use price comparisons and order later.
Lifetime remuneration is usually a combination of the pay-per-sale model with other promotions, for example by charging a publisher (affiliate) a fee for each additional purchase made by the recruited end customer. In most practical cases, a pro rata commission is then paid on the long-term, “lifelong” shopping cart of the referred customer (since his first registration in a shop system).
An airtime fee is specifically developed for the telecommunications sector and gives the publisher a commission for every minute of calls paid by the referred end customer, for example in the case of a mobile phone contract, over a certain term. This condition model is often used in conjunction with lifetime compensation.
For some models, various actions are included in the calculations:
- Pay per Click Out: The referred visitor must click on a provider listed on the merchant’s website or on another page of the sponsor (“click out”). Only then will this be taken into account when calculating the commission. This is intended to mitigate the disadvantages of pure “pay per click”, also known as “pay per active”.
- Pay per link: Only the display of the link on the affiliate’s website is counted and taken into account. However, this option only pays off if it is followed by further actions, and is therefore only found with a few providers. As a rule, this technical option is therefore contractually bound to further actions by the customer.
- Pay per print out: In the case of terminals and coupon machines that are controlled via the Internet, the paper printout can be remunerated. Remuneration or billing designation is “cost per print” and “cost per print out”. Nowadays, this application can only be found with a few providers.
- Pay per view: Each tracked (valued) delivery of an advertising medium is remunerated, i.e. the frequency of views of an advertising banner is counted and the website operator is then remunerated. Since this method has not proven to be very effective in recent years, the pop-up function is increasingly being used.
- Pay per SignUp: Similar to “Pay per Lead”, you are only remunerated when the referred visitor logs on to the merchant’s website. Pay per SignUp is therefore a subcategory of Pay per Lead.
- Pay per install: This is paid for the (first) installation of software on a computer, such as toolbars or demo versions.