Affiliate Marketing

CPA Meets Revenue Share: Introducing Hybrid Deals

April 08 2017 08 Apr 2017 13 min. read
CPA Meets Revenue Share: Introducing Hybrid Deals

To fully understand the beauty of hybrid deals, it is important to familiarize yourself with the needs and wants of different affiliate marketing stakeholders as well as the pros and cons of standard CPA deals and revenue share agreements; all of which will be covered in the following article!

Affiliate Marketing Advertisers vs Publishers: Which Are You?

Success in business springs from mutually beneficial agreements, and while people usually think of sellers and buyers, if you’re in the affiliate marketing business then you know that the seller category is divided into two subgroups: publishers and advertisers.

Who Are Affiliate Marketing Advertisers?

Affiliate marketing advertisers are essentially the producers of an item or service. They are referred to as advertisers because they design and offer the products that publishers feature and promote on their sites and blogs.

You can find an extensive list of affiliate marketing advertisers along with a full review of their featured affiliate programs here.

Who Are Affiliate Marketing Publishers?

Publishers in affiliate marketing are needed by advertisers to carry out sales, and in return they receive commissions for the traffic and customers they manage to convert on the advertiser’s site.

Affiliate marketing publishers use a wide variety of media channels to convert customers. Outlets can include blogs and sites that range from casual to formal, modern social media channels such as Instagram and even video platforms like YouTube and Twitch.

Who Are Affiliate Marketing Publishers?

Two Stakeholder Groups: Two Different Sets of Needs

When comparing affiliate marketing advertisers vs publishers, it is important to understand that the two have very different business models and, therefore, different objectives when it comes to negotiating an agreement.

While they both share the common goal of driving and converting traffic to the advertiser’s site, the way these two sellers earn off that customer is completely different due the commission driven nature of affiliate marketing.

Affiliate marketing advertisers vs publishers

Publishers aim to collect as big a cut as possible from the revenue streams they create for advertisers, while advertisers focus on minimizing this cut so that they reduce marketing costs and earn as healthy a profit as they can.

Depending on which category you fall into, you may prefer a revenue share program or a cost per action affiliate program. Both options will be analyzed and discussed below to determine how each affects the success of affiliate marketing publishers vs advertisers.

Who Benefits Most from Revenue Share Agreements?

As mentioned earlier, when it comes to deals between publishers and advertisers there are two categories of business agreements that dictate the commission affiliate marketing publishers receive:

1. Revenue Share Agreements
2. Cost Per Action or CPA Deals

First, let’s go over exactly what a revenue share agreement entails and what the advantages and disadvantages of this type of contract is before comparing it to a cost per action deal.

What Is a Revenue Share Agreement?

A revenue share agreement is an incredibly common affiliate marketing deal made between advertisers and publishers. It involves setting a fixed percentage of sales made through the publisher as a commission, and offers an ongoing source of revenue for publishers without posing as an immediate cost for advertisers.

What Is a Revenue Share Agreement?

Pros and Cons of Revenue Share Agreements for Advertisers

As a advertiser, your objective is to incentivize your publishers with a deal that is appealing enough for them to push for sales, while also making sure it doesn’t eat too much into your own profits.

The key advantage of revenue share agreements over CPA deals is that when you offer publishers a commission off sales you are essentially paying for what you get and nothing more. It is a way of ensuring that the cost of working with an publisher remains consistent with the returns they produce.

The disadvantage of course is that the publisher will continuously profit from the customers they bring, meaning that instead of their commission being a one-time cost, they will continue to eat away at your earnings over an extended period of time.

Pros and Cons of Revenue Share Agreements for Advertisers

Pros and Cons of Revenue Share Agreements for Publishers

Revenue share agreements work incredibly well for publishers who are looking for steady and consistent sources of income. If you’re an affiliate marketing publisher, revenue share programs allow you to benefit from repeat purchases and loyal customers converted via your marketing platform.

For an publisher to truly profit from a revenue share contract, they would need to do their best to attract loyal customers who make multiple purchases rather than a single buy. Moreover, they would need to be confident in their ability to reach such customers, much less convert them effectively.

Pros and Cons of Revenue Share Agreements for Advertisers

The Best Revenue Share Agreements on OAW

If revenue share agreements sound like the kind of arrangement you are looking for, we suggest you try one of the following sky high commission deals featured on OAW:

What About Cost Per Action (CPA) Deals?

Cost per action affiliate deals are an alternative to revenue share agreements. Depending on your niche, industry and level of experience as a advertiser or publisher, these may be more appealing to you than revenue share agreements.

We’ll get into the why after briefly explain what a CPA deal is and how they benefit publishers and advertisers.

What Are Cost Per Action Deals?

In affiliate marketing, cost per action deals and agreements can be best described as one time commission fees paid by the advertiser to the publisher.

What Are Cost Per Action Deals?

Unlike revenue share agreements, these deals are a cost or bonus with a value that is unaffected by a lead’s purchase volume. They are paid once a determined user action is completed and depending on the negotiated deal, the payable action can anything from a sign up to a completed purchase.

Pros and Cons of CPA Deals for Advertisers

The obvious advantage of CPA deals is that they aren’t a running cost like revenue share agreements are. Once a specified action is completed and a customer is converted, publishers receive their commission and the costs of receiving that customer end.

There are, of course, a couple of negative sides to such deals. The first being that while theoretically you don’t need to split the revenues from loyal customers, publishers are more likely to focus more on driving any potential buyer regardless of long term earning potential.

Another disadvantage is that without long term incentive, publishers’ efforts are focused on driving a single purchase or action rather than a consistent buying pattern. While this seems like an obscure point, it can drastically affect the tone and points emphasized in publisher campaigns for your product.

Pros and Cons of CPA Deals for Advertisers

Pros and Cons of CPA Deals for Publishers

If you are just starting out and are looking for a way to jump start your site’s revenue, then CPA deals are a great way to go. They offer quick cash returns for the outputs you produce, and your commitment ends as soon as the user completes a purchase or sign up action.

There is also a negative side to the speedy profits that CPA deals generate. Depending on the size of your target audience you may run out, or at least struggle to continuously find, new customers to convert.

And there's more:

If you sign a CPA deal with a advertiser, you will miss out on a ton of potential profits that the advertiser won’t need to share with you if you happen to direct a loyal customer; even though your business is the source of these profits!

The primary objective of all businesses should be continuity, which is why it is equally important to have a long-term source of revenue and enough cash flow to keep your business afloat. Believe or not, thanks to hybrid deals, affiliate marketing publishers can now have both!

Pros and Cons of CPA Deals for Advertisers

The Best CPA Deals on OAW

If CPA deals interest you then you should try out some of these incredible offers featured on OAW:

Hybrid Deals: The Best Bet for Both Advertisers and Publishers

Ideally, affiliate marketing advertisers would prefer a deal that would encourage publishers to promote long term purchasing patterns without having to cut publishers in too much on future revenues.

On the other hand, affiliate marketing publishers aim for an agreement that pays both long and short term, allowing them to form a long term financial strategy while also fueling current cash flow. Hybrid deals make both ideal scenarios possible, and here’s why.

Why Hybrid Deals Beat Revenue Share Agreements and CPA Deals

Hybrid deals are exactly as the name suggest, they are a combination of a revenue share agreement and a CPA deal on top.

Why Hybrid Deals Beat Revenue Share Agreements and CPA Deals

How does this make things better for publishers and advertisers?

As opposed to the standard options, hybrid deals allow publishers and advertisers to get what they want out of their business relationship in a way that is both mutually beneficial and that encourages long term, healthy partnerships which are, after all, at the core of any successful business.

With hybrid deals, publishers leverage the lack of control over future spending of a customer and compensate for low revenues with a CPA. On the other side of the fence, advertisers can instantly motivate publishers at a lower initial cost and encourage them to drive quality leads as opposed to one time buyers.

Why Hybrid Deals Beat Revenue Share Agreements and CPA Deals

While a hybrid deal may have a lower CPA commission than a pure CPA deal, and the hybrid program may have a lower revenue share percentage than usual, it reduces the financial risk for both parties significantly.

While lower risk means lower returns, it also means that the chances of your efforts of an publisher or your CPA investment as a advertiser becoming a wasted cost of time or money will also drop significantly.

The Best Hybrid Deals on OAW

Get the best of both worlds here on OAW where we offer some incredible hybrid programs for members of our extensive affiliate network:

Finding Hybrid Deals on Affiliate Networks

Affiliate networks like Online Affiliate World are portals that aim to connect publishers and advertisers. Because these networks operate at a larger scale they can offer and negotiate superior deals to publishers while offering advertisers a wider audience of potential partners.

You can find even more competitive CPA, revenue share, and hybrid affiliate programs in the online gaming and VPN security industries on OAW. You can browse through all available offers on OAW here, or subscribe to our newsletter for weekly updates on new affiliate programs and offers.

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