How Various Online Payment Models Work in Affiliate Marketing

Remember my post on picking my brain for free? Today is one of those days when someone is doing it, and, hopefully, for the benefit of others, as his questions are pretty broad and answers to them should address not only in this particular case, but help many others in the future too.

I have received this email:

I’m following your blog for the last half year and it helped me a lot.

There is one issue that is always a problem mostly in the Forex industry.

We have few types of Affiliates/Media partners: (1) CPC (only Google), (2) CPL, (3) CPA, and (4) Offline.

Our cookies are valid for 90 days.

There are few questions that I will be happy if you can answer…

1) Does cookie on CPC is consider same as affiliate cookie? and What about cookies for CPL?
2) Do I need to pay to a CPL in case they send me lead although he came from other affiliate/media partner? and What about CPA in this case?

I want to be fair with everyone but I also want to know what is common do to.

Being fair is a very good place to start. In fact, this (the fact that you’re trying to build a system where everyone is compensated in a just way) is one of the reasons that I’m replying to the above questions.

1. Is “cookie on CPC” the same as an “affiliate cookie” or “cookies for CPL”?

Much depends on the context, or how exactly you’re tracking and paying for the CPC program. It can be handled through an affiliate program (which is not the case in the above-quoted scenario), but even then — click (in the CPC model), lead (in the CPL model) and action/purchase (or deposit, which is frequently the CPA “action” in Forex programs) are three different types of actions. And while the affiliate cookie may be the same, since these qualifying actions (or the basis for payout/commission) are different, they are also tracked separately. So, for example, if you’re paying $0.50 on the CPC front, $1.00 for CPL, and $50.00 for those deposits (or, in other contexts, sales), then, should any one affiliate refer you a visitor that first clicks, then qualifies as a “lead” and then performs the “action”, you’ll end up paying that affiliate $51.50.

2. If before turning into a “lead” (or performing an “action”) a visitor clicks several affiliate links, could I end up paying more than one affiliate?
(I had to paraphrase the original question — I hope I’m reading it correctly)

Neither in CPL, nor in CPA scenarios will you pay twice (provided your tracking is in order, of course). The majority of affiliate programs nowadays go by the last-click-wins rule, which, basically, means that the last affiliate to set/drop the cookie on the end-user’s machine is the one who will receive the full commission. Having said this, should one affiliate refer the customer as a lead, and another set the cookie on their machine prior to them committing to buy (or deposit funds, as is probably your case), the CPL bounty would then go to affiliate #1, while the CPA payout would credit to the account of affiliate #2.

Should you have any questions related to the above scenarios, feel free to post them under this post. I will address every one of them.

6 thoughts on “How Various Online Payment Models Work in Affiliate Marketing”

  1. Pingback: Marketing Day: January 23, 2012

  2. Hi Geno,

    Thank you very much for taking the time to reply my questions, and I would like to let you know that it is very helpful information.

    Although some of the things you wrote is what we thought of doing, and shows me that it was worth following you all these time, some didn’t even occur to us, like paying for more than one compensation at a time.

    You raised a point that about the separation of the CPL from the CPA, which we have not thought about.

    The last win click rules is exactly how we are going to build it and following this post, we are even more sure of doing that.

    Thank you very much

    1. Danny, you’re most welcome, and thank you for the good questions. Another advertising (and payment) model that you may want to look into is Pay-Per-Call. It works well both with CPL and CPS programs. I have a number of articles on it here.

  3. Hello, sorry for offtop. I am really interested in affiliate marketing in Russia and want to make something for it. How do you think what the best niche for start to make program or network in? what niche is free of competitors?

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