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Calculating a competitive CPA is an incredibly important part of any successful affiliate programme and yet it's one of the first hurdles merchants fall at.

With more and more companies launching affiliate programmes, there is a huge amount of choice for affiliates, and if you expect them to promote your programme over your competitors, you need to set the right CPA and continually review it.

Continuing on from the trend in my last post , here are your seven tips for this week, this time on the subject of how to set the right CPA for your affiliate programme....

1)    Forget CPA, think EPC – Good affiliates aren’t blinded by a big flashy CPA; it has to translate into a competitive Earnings Per Click (EPC). If your site doesn’t convert it won’t matter how high the CPA is, you still won’t be competitive.

2)    Align your channels – If you see affiliate marketing as an opportunity to get sales at a discount CPA you will never realise its true potential. You should always compare your affiliate CPAs to those you are achieving in display and search activity.

If, for example, you run a search campaign, it’s worth bearing in mind that search affiliates will keep an eye on your bid prices. If they see huge discrepancies between the price you’re willing to pay per click, and the effective EPC they earn on your affiliate programme, expect to receive a call demanding a higher CPA.

3)    Communicate with affiliates – These are the people you are trying to motivate so speak to them directly. If you’re just about to launch a programme, then ask your network to connect you with strong affiliates in your sector. If your goal is to offer a compelling CPA then most affiliates will be happy to give you their feedback. 

4)    Understand the true value of a sale/customer – This sounds obvious, but to be able to offer the best CPA possible you need to understand exactly what the customer or sale is worth to you. The best affiliate programmes are often those where the merchant has factored in the lifetime value of the customer and passed this onto the affiliate.

5)    Watch the competition – Checking out your competitors' CPAs is an easy job as the information tends to be readily available. Because of EPC’s significance, it is important to dig a little deeper. Make sure you speak to your affiliate network, who should be able to provide you with average EPCs for your sector.

6)    Watch the paid search space – Affiliates have more choice than ever when it comes to where they send their traffic, and it’s not just confined to CPA-based models. More and more affiliates are comparing the returns available from contextual advertising options such as Google Adsense to those available through affiliate networks.

If the keyword prices on generic terms are incredibly high, and your CPA does not reflect this, then you may see your affiliates switching to the more profitable contextual advertising.

7)    Consider hybrid models – These are becoming more popular and often work by providing affiliates with a CPC rate for all traffic sent and a CPA. Under this model the merchant shares more of the risk in terms of their site converting by guaranteeing the affiliate income on the click, and then a higher bounty if their traffic converts to sales.

Duncan Jennings is the managing director of eConversions, a specialist paid on performance search marketing company.

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Published 28 March, 2007 by Duncan Jennings

5 more posts from this author

Comments (3)

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diorex

Great points. As a super-affiliate, I often don't care about the things you think I care about.

Your payout means nothing if your product is not competitive. Your competitive product means little if your website is all flash or has dozens of conversion leaks. If you don't pay me fast and accurately, even once, you are likely to lose my trust forever. Don't give me any reason to distrust you.

I do not want to jump through your hoops. I want to market and get paid. I am probably going to be your highest cost leads/sales, but I am also going to be your highest volume driver. Don't approach me and then make it seem like it is an honor for me to work with you.

Super affiliates don't need you. So act like you need them. Concessions like limited creative control or even white label hosting made early in the discussion are more likely to bear fruit than taking the tact of "lets see how things go". I already know how things are going to go. I am never going to put any effort into impressing you for the sake of impressing you.

As a super affiliate. I am making a really good living already. If you cannot significantly add to my profits, then I do not need the headache of helping to grow your business.

It might be an elitist attitude, but the reason you want me on your team is because I am one of the elite. Recruit me like you would a prized employee or even a spouse. I am going to be selective about who I work with, and I like the idea that you too are selective about who you work with....

over 9 years ago

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Jess Luthi

I agree 100% Diorex
"I do not want to jump through your hoops. I want to market and get paid. I am probably going to be your highest cost leads/sales, but I am also going to be your highest volume driver. Don't approach me and then make it seem like it is an honor for me to work with you.

Super affiliates don't need you. So act like you need them. Concessions like limited creative control or even white label hosting made early in the discussion are more likely to bear fruit than taking the tact of "lets see how things go". I already know how things are going to go. I am never going to put any effort into impressing you for the sake of impressing you. "

Spot on.. affiliates have always had the power, top perming affiliates dont need educating, they just need good conversions and commissions. How ever in the real world, this cant always be the case, so does this mean merchants with poor converting aff programs should back off from aff marketing? Nope, not if merchants are ready and willing to listen to what is being said by affiliates or people who more then likely will know a lot more then the merchants on the aff marketing side of things. The problem arises when merchants switch off and are not open to dialogue or constructive criticism. It’s the “we know better then you” attitude. Affiliates should be seen as valuble parters who can bring a lot to the table with regards to the merchants business objectives.

over 9 years ago

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Sofa Tables

Affiliates are specialists in performance marketing, and totally focused on helping advertisers and publishers work together to create promotions that are exciting, enticing, well-managed, fair, and profitable for everyone involved. They must be treated properly so they can treat you the same. Also most important is to make them work for you in maxim quality conditions but if you want that you must offer in turn maxim quality conditions. So this is a two way business and who ever thinks otherwise is wrong.

over 9 years ago

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