One of the biggest advantages of affiliate marketing is that it is performance-based, which means that brands can pay based on the conversion (lead, visit, registration, sale, etc.). This is a huge relief for businesses with limited budgets who want to maximize reach.
For advertisers considering affiliate marketing, there are a number of commission structures to consider, each with their 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.
Linear
A linear structure allows an advertiser to pay their affiliate in a single, evenly distributed payment amount based on how far along the consumer is in the purchase process. The amount can be directly proportional to your gross profit, which means that the affiliate will get a predetermined percentage of the sale. This setting is ideal for campaigns that generate a fixed amount of revenue.
decay time
Decay-over-time payment structures give credit to the affiliate that influences a conversion closer to the event. In other words, one affiliate may have initially captured a consumer’s interest, but another affiliate will receive the full commission (or a larger portion) if it reaches the buyer just before the point of purchase. This structure is especially beneficial for popular brands whose campaigns have become saturated over time. It is also beneficial for businesses that are looking to advertise across multiple traffic channels and use multiple affiliates to do so.
based on position
Position-based commission structures consider the psychological process a consumer goes through when making a purchase decision. In some cases, a customer may visit a site or search for multiple products before converting. With position-based attribution, the affiliate who reaches the consumer first and influences their purchase is rewarded.
coupon codes
Coupon codes are a widely used commission tool and allow brands to work with a larger group of affiliates, including those who are offline. The affiliate is rewarded for any transaction that is accompanied by their unique code, regardless of how the consumer received the code.
Shopping Cart Disqualification
Brands want to know that their marketing budget is being allocated in the most efficient way possible. With shopping cart disqualification, businesses can decide to only pay affiliates who influence a purchase decision rather than those who come into play after the customer has already decided. For example, a customer may put an item in their shopping cart and then browse online or through your emails to obtain a discount code. Traditionally, the coupon code would be associated with an affiliate and reward them for the purchase. However, with shopping cart disqualification, retailers can disqualify an affiliate from receiving a commission if the coupon code is retrieved after the item is added to the cart and the shopper browses and temporarily pauses the transaction to find a discount before purchase.
fixed margin
Similar to the linear commission structure, fixed margin payouts base the affiliate payout on a fixed percentage, regardless of the amount of the sale. Fixed margin structures make it easy to keep track of things and leave little room for discrepancies. This style of commission is very popular due to how methodical it is for both the advertiser and the affiliate.
Cross-platform tracking
Cross-platform commission structures are becoming more prevalent as 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 shopper switches from one device to another before taking a payment action.
Many more structures are available, including custom pay levels that can be adjusted to suit a specific industry, service, or product. Networks tend to have the most options available due to the wide range of companies they work with and the need to accommodate the tracking requirements of many different business models.
