A question almost as ancient as affiliate promotion themselves – what is the best commission structure and why?
For years affiliates, affiliate managers and gambling sites have been debating what the best affiliate commission structure is – and the answer is – there isn’t one. No matter how many people try and persuade you to take up one – the truth is that they all depend on the program and the genre.
For example – take Casinos. Many casino affiliate programs will pay you a revenue share between 25-40% of Net Revenue or offer you a cut based on turnover, and this is always a good option – but there are many affiliates out there who want cash now and will turn to the CPA option. Now long-term affiliates will blast them for doing this, and 90% of all affiliates will prefer revenue share, but the truth is – that’s not always the best choice.
Two years ago, when the average casino players LTV (Lifetime Value) was higher – 40% of say £500 would net an affiliate £200 and prove a good investment, but as of 2010, in the midst of a credit crunch where the LTV of many players has dropped, that same 40% might be a poor investment if the LTV suddenly dropped to £250 (£100). Why choose revenue share then when you could get a single CPA payment of say £75 and not have to wait a year to get your revenue. Or when some casino programs will offer you as much as $300 a player – why even consider Revenue Share in this climate?
Now I’m sure that many people will be screaming back Hybrid – where you can take a cut of the long term revenue and get a smaller upfront payment – and truthfully this is a good option too – you get your money back for PPC marketing and site costs upfront – and have the benefit of a long-term investment, but there are only a handful of affiliate programs out there that will offer you a decent enough Hybrid to make it worth your while. A measly 20% and £10 would barely cover a few Clicks on PPC and you would actually be better off choosing CPA!
There is a hidden gem however – take CPL. On programs such as Prime Scratchcards or King Jackpot – you can elect to get paid per Lead. This maybe only £3 or so – but this means that for every Free Registration you bring to the site – you get paid whether they convert or not – and in a time of heavy bonus players and Free Money seekers – this isn’t a bad idea. Say you bring in 50 Leads and only 2 convert – most sites might pay you about £100 or £150 at best, but if you were getting paid £4 a lead you would pick up £200 and walk away a happy man.
Hybrid CPL and Revenue Share deals are also available – so feel free to ask your affiliate managers about this and see if you can get something like £3 + 20% where you get paid for your Free Registrations and a cut of all those who convert.
So what programme is right for what gambling genre:
Revenue Share: Ideally this is good for well-established Casino and Betting sites. It is well-known that a good casino/sportsbook can keep its’ players well beyond a 12month LifeTime cycle and can prove profitable in the long run. This is also good for skill games who have a niche market of well-valued players and for Poker sites who do not offer rakeback
CPA: Perfect for Bingo Sites, newly-established casinos and Poker sites offering Rake back. Why take the risk holding out for a lucky player when you can cash in and use the money to promote your site further.
Hybrid: For any program this is a benefit with the right percentages. Look for deals upwards of £15 and 15% and you could be making a good profit in no time. Better on newly-established gambling sites where the player retention schemes have not yet been tested
CPL: Great for all sites that offer No Deposit Bonuses. These are a magnet for bonus abusers or free-money players that will not earn you anything and generally leave your revenue share in the minus figures. Take a quick fee and get out while you can.