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AFFILIATE COMPENSATION MODELS

Best Types of Affiliate Compensation Models

What Are the Best Types of Affiliate Compensation Models?

Are you dabbling in affiliate marketing and wondering how you actually get paid? Did you know that there are different types of forms of affiliate compensation? 

Yep – there are all different ways for you to get paid. 

Affiliate marketing is not only a great side hustle – it’s a way to generate monthly recurring revenue, without lifting a finger. Well, you might have to lift at least one finger to get started… 

There are certainly a range of creative ways to promote a business and its products, and connecting with others is a crucial part of affiliate marketing.

Let’s be real, though. 

It’s money that makes the world go round, and it’s money that will keep you afloat on the waters of affiliate marketing.  Here are the 4 types of affiliate compensation: 

  1. Pay Per Sale (PPS)
  2. Pay Per Action (PPA)
  3. Pay Per Click (PPC)
  4. Pay Per Mille (PPM)

Want to know how you’ll be compensated for your marketing achievements? Read on!

Ready to get paid? Check out these types of affiliate compensation models to see which one is best for you! #affiliatemarketing

1. Pay Per Sale (PPS)

If you read just one entry in this article, make sure it’s this one. That’s because the pay per sale method of affiliate compensation is the most often used in the game, present in more than three-quarters of all affiliate partnerships. 

It essentially sees the affiliate earning a portion of the revenue from every sale generated by engagement with one of their links. Whether the sale takes place minutes, hours or days after clicking on the link is irrelevant. 

All that matters is that the customer clicks on the affiliate’s link and makes a purchase at some point in the near future.

This method is the least risky for businesses because they don’t have to shell out a cent if the affiliate doesn’t generate any sales. That means that you, as an affiliate, will have to be on top form, using every tool out there to secure those sales.

2. Pay Per Action (PPA)

Rather than determining “success” solely by whether the affiliate generated a clear-cut sale or not, this method of affiliate compensation places value in the benefit of other actions a buyer could take upon following an affiliate link. 

Pay Per Action, or PPA, could see an affiliate earning dough by guiding visitors who go on to make accounts, sign up for newsletters, download ebooks and more. As a result of the non-sale nature of this compensation model, payment is not made as a percentage of each sale’s value, but rather upon a pre-arranged sum.

There are a huge number of visitor actions a business could deem valuable; it’s down to them to know their audience and recognize which non-sale actions will help them in the long run. 

Two common PPA success factors are “pay per call” and “pay per install”. The former hinges upon a customer making a phone call to the business and the latter is based around the installation of a business’ smartphone app.

3. Pay Per Click (PPC)

While it’s not a very common method of affiliate compensation, PPC is the most straightforward. Every time someone clicks on an affiliate link, that affiliate gets compensated a pre-arranged sum. 

Whether that customer buys anything, engages with the business or does anything at all is irrelevant. The “success” factor is the simple act of a prospective customer clicking a link.

The reason for this being less popular is quite clear: it’s risky for businesses

There’s no obligation for the affiliate to generate sales, and so the potential is high for a business to lose money on empty affiliate referrals.

4. Pay Per Mille (PPM)

Don’t worry, you don’t need a driver’s licence for this one—this is “mille”, with two Ls. 

Pay per mille is simply an accepted term referring to compensation awarded based on a predetermined number of affiliate-driven website impressions, normally 1,000. Impressions are essentially page views, so every time a visitor lays eyes upon the business’s website, it counts as an impression.

The term “mille” comes from the Latin term for one thousand. Therefore, pay per mille = pay per one thousand. Pretty simple!

A is for A Wrap-Up

You’ll have to be clear about the terms of your compensation as an affiliate marketer. 

Are you getting paid per sale? Per click? Or perhaps something else entirely? 

None of these are inherently bad, but you’ll want to know where you stand with your affiliate partners, not least because it will help you craft your marketing strategy.

Unsure about anything we’ve covered here? Feel free to reach out! We’d be glad to lend you a helping hand. Until then…

Sloth on!

A is for Affiliate
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Alexis Pickett Fam

Welcome! I’m Alexis, an affiliate marketing guru and founder of A is for Affiliate. My focus is to help you create a successful affiliate network.

Learn how to monetize your website and increase your bottom line!

Be sure to reach out to me and my team whenever you’d like! We’d love to hear from you 🙂

Nathan

Yo! I’m Nathan, an affiliate marketing magician and co-founder of A is for Affiliate. My focus is to help you make you money – lots of it.

Reach out to me if you want to learn how we live that affiliate lifestyle. 

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Hellllloooooo! It’s Caylin White and I run all things content at A is for A! 

I want to help you make money, write blogs and have the life that you’ve always wanted. Reach out to us today to learn how we are crushing it in the affiliate marketing game.

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