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Payment models in affiliate marketing are crucial to your business. Find out why!

Affiliate marketing is an industry that is worth $12 billion, so you don’t need much to realize that this profession is really profitable and successful. However, in order to be successful, you must select the appropriate payment plan.

Which payment you will use depends on what your ultimate goals are. Nevertheless, it is essential for you to choose the right one.

The first one is CPC (cost per click) payment. This is the method where you pay for each click on one of your campaigns. So, basically, CPC measures the overall cost per click of your ads. For example, if you paid $100 for your PPC ad and it receives 100 clicks, you’re spending $1 per ad click. Affiliate programs that use this model can be very appealing, because getting the clicks is much easier than closing a sale. However, you might be paying more for fewer qualified leads. On the other hand, we have PPC (pay per click method). It is an essential component of your marketing strategy that, when executed correctly, can increase your volume of top-of-funnel leads. PPC advertising, once activated, allows your business to appear in search engine results pages based on certain keywords and phrases that your potential buyer is looking for. In terms of functionality, you only pay for the ad when users click on it. Essentially, PPC and CPC are two sides of the same coin. PPC is a specific marketing channel or approach, while CPC is a performance metric.

Then we have CPL (cost per lead) payment. It is an online advertising payment model in which payment is based only on qualifying leads. That means that the advertiser only pays for leads generated at their destination site. No payment is made for visitors who don’t sign up. It gives you a possibility to cast a more precise net, and to get the most out of your affiliate’s work. It is important for you to know that there are three main types of leads:

  • Consultation calls – you pay affiliates for customers that reach out to you for a consultation call;
  • Email sign-ups – Affiliates get paid by you for every new email subscriber they refer to you;
  • Free trial sign-ups – Many companies pay for free trial sign ups so that customers can see the efficiency of websites first hand.

The third method is CPS (cost per sale). This is a process that pays the publisher or owner of the website based on the number of sales that are generated from an advertisement on the site. So, the advertisers only need to pay for sales generated by the site based on the agreed commission rate. There are various advantages to cost-per-sale (CPS) affiliate campaigns. For starters, they help independent software owners save money on marketing and promotion. You pay only once a sale (containing an actual credit card transaction) has been accomplished while executing a CPS campaign. This contrasts with the potentially dangerous nature of other marketing and advertising solutions, where costs must be reimbursed up front, regardless of whether the campaign succeeds or fails. Furthermore, cost-per-sale affiliate marketing lowers your risk of being a victim of fraud.

Now, the question is: what payment method is the best?

Well, our answer is that there is no best or worst payment method in affiliate marketing. It all depends on the preferences of the affiliate. The truth is, every method that we have listed has its own advantages.

Because CPA is the most widely used pricing model, it’s probable that most of the goods you’ll ever promote will utilize it. CPC is difficult to come by, despite how simple it sounds. Such ad campaigns are almost exclusively carried out by large retailers with well-established brands. Furthermore, rather than affiliates and affiliate programs, they are handled by professional marketing companies.

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