There are various types of affiliate commission scheme used. It depends on the nature of product and the merchant’s preference or strategy in applying the best marketing they want to use to boost the number of affiliates involved and finally will increase sales volume of the product.
Below are the most common affiliate commission schemes applied today:
- Pay per sale (PPS) – the merchant will pay the affiliate an agreed commission each time a visitor buy a product from merchant’s website through the affiliate’s link. Most merchants affiliate programs apply a fixed commission schemes on a pay per sale basis, either a certain dollar amount or a percentage of the sales price. Additionally, to motivate affiliates to boost their sales volume, merchant usually give some extra bonuses paid for a certain volume of sales target over a given period. Clickbank and Amazon are good examples for this kind of affiliate commission scheme.
- Pay per click (PPC) – this kind of affiliate commission scheme is paid based on the number of unique visitor clicks on the advertising (usually contextual ads) display on the affiliate’s website and redirected through the merchant’s website. To make sure that there’s no click fraud, unique clicks are identified using IP tracking. The amount of commission per click is obviously far lower than on a pay per sale basis. However, this scheme will benefit the affiliate with an instant and reliable source of commission, especially for those who have a lot of daily visitors to their websites. Most affiliates combine both PPS and PPC commission schemes in their income portfolio. Google Adsense is a perfect example for this PPC scheme model.
- Pay per lead (PPL) – a pay per lead of commission based model is typically applied by merchants who are in situations where their product or service cannot be easily purchased or downloaded. This is because the sale requires human call-back or has a long sales cycle. A mortgage broker is a good example for this. It requires the user to fill in a form with their contact details to be then followed up by a phone call. Each completed contact form will be counted as a ‘lead’ and the affiliates will get paid for this. Commission Junction offers many products with PPL commission scheme.
Two Tier Affiliate Commission Scheme
In a two tier affiliate commission scheme, an affiliate will be paid not only by his/her own sales effort, but also will get reward from his/her downlines in the 2nd level. For instance, in the first tier position, affiliate will get 15% commission with his/her sales effort, plus a much smaller percentage e.g. 3% from sales from 2nd tier affiliates they recruited to the merchant. This scheme usually developed by the merchant to encourage the affiliates to build their own sales network and get the huge viral sales effect for the merchant. Besides, this affiliate commission scheme will also encourage affiliates to provide necessary training or coaching for the members, so they can boost their productivity and keep them motivated and enthusiastic.