PPL, PPS, PPC, and PPI: Affiliate Compensation Models and Their Benefits

by | Feb 25, 2015 | Advertising

The acronyms PPL, PPS, PPC, and PPI, affiliate marketing, and advertising compensation method, are probably familiar to most online marketers. Each compensation method pays differently and has a different earning potential. Which one is right for you?

Each has its benefits, its drawbacks, and its applications. Generally speaking, certain types of compensation pay more than others, but it should be noted that these rates can vary greatly, especially when it comes to highly competitive industries. 

Pay-Per-Lead (PPL)

Most companies place a high value on leads and offer pay-per-lead (PPL) – often considered a type of pay-per-action (PPA) – compensation methods. As with most affiliate networks and compensation methods, the rate can vary greatly from advertiser to advertiser and from industry to industry. Lead-generation programs offered through affiliate networks can pay anywhere from $2 to $20 or more.

Subscription-based services, such as internet service providers and cell phone networks, as well as other service-based vendors, tend to use this model.

Pay-Per-Sale (PPS)

Pay-per-sale (PPS) requires payment in the form of a commission each time a product is sold. This commission is almost always a percentage of the total cost of the product. As with the other compensation models, the exact rate can vary greatly. But, in general, this rate has the potential to be as high, if not higher, than the others.

Some sales, such as a $2.99 ebook with a 6% commission, doesn’t have a lot of monetization potential, given the low commission rate as well as the low conversion rate for purchases. A camera, however, that generates the same commission on a $1,500 sale would have the potential to be much more lucrative.

This compensation model is very common in affiliate marketing and can earn marketers a great deal of income, but it is also highly competitive and quite time-consuming.

Pay-Per-Click (PPC)

Pay-per-click (PPC) advertising is one of the most ubiquitous, common terms in the online advertising world. With this compensation method, marketers earn money each time a person clicks on an advertisement. Anyone who wishes to monetize an app or a website, for instance, can insert PPC ads as a way to generate an online income stream.

In general, PPC ads don’t earn very much revenue – often less than a few cents. Highly competitive niche markets, however, can pay much more. Logically speaking, then, the more traffic you have and the more you engage them, the more money you will earn.

Pay-Per-Impression (PPI)

Pay-per-impression (PPI) ads are another common compensation model for display ads and text ads. They generate revenue based on the number of times people view the ads. From the advertiser’s perspective, this compensation method is typically called cost-per-mille (CPM), which means cost-per-thousand impressions.

As with PPC, the pay tends to be low relative for this compensation model, and often requires large amounts of traffic in order to gain a significant income.

Which Compensation Model is Best for Marketers?

After reading the above descriptions, it may seem that PPL and PPS are the better way to go. After all, they earn you much more money, so why wouldn’t you?

It’s true, but there are other factors that you should take into consideration.

PPL and PPS take more time to implement. Adding ads to your website, software program, or browser extension is usually a matter of inserting the proper code. And if you have enough traffic to your site or users engaged with your app, you’ll be able to generate decent revenue.

On the other hand, it can be harder to convince someone to spend money on a product or service. You have to put time and effort into contextualizing the offer, creating good content to pitch the sale, and earning people’s trust. This type of marketing can often be a part-time or even full-time job.

Affiliate marketing is highly competitive. Generally, when people use the term “affiliate marketing,” they are referring to PPL, PPA, and PPS compensation methods. Because this type of marketing can be so lucrative, it is also highly competitive. The niches have all become saturated with talented, tech-savvy marketers who make it very difficult to squeeze in. And, as time goes on, these fields will only become more competitive.

Certain types of content are more suited to certain types of marketing. PPC and PPI ads are ideal for certain types of content, but not as ideal for others. They can be excellent for monetizing software, apps, or browser extensions, for instance. Since PPS and PPL marketing often relies heavily on context and content, it can be more of a creative and logistical challenge to use these types of marketing to monetize anything code-based.

 

While there is no one right way to monetize anything, there are two general things to consider: what type of content you’re trying to monetize and how much time you have to put into your online marketing efforts. For those who want to put less time into marketing and more time into content creation, PPC and PPI ads are probably the way to go. But for those who want to focus on the marketing side of things, context-driven sales, and so forth, PPL and PPS compensation methods will probably work well.  

Pay-per-Sale or Pay-Per-Lead? – How to Choose the Best Sales Affiliate Program for You

by | Aug 18, 2014 | Monetization, Monetization News

Pay-per-lead affiliate programs offer revenue each time you refer a potential customer to a merchant, while pay-per-sale affiliate programs only offer a payout when a sale is made. Each type of programs has its own benefits and these may be more suited to certain monetization strategies than others.

Many major affiliate networks, such as ShareASale or Commission Junction, offer pay-per-lead affiliate programs in addition to the more common pay-per-sale programs. At the time of this writing, ShareASale offers more than ten times as many pay-per-sale programs as they do pay-per-lead programs. However, with almost three hundred programs on ShareASale alone, there are still many options.

Which is Better?

Each type of program has its own pros and cons. Which one you should use is often determined by the type of sales vehicle you have (for example, website, email newsletter, or mobile app), how much traffic you get, your income goals, and so forth.

Where to Find Pay-Per-Lead Affiliate Programs

Pay-per-sale affiliate programs can offer leads for as little as $0.01 or upwards of twenty dollars. Higher commissions are possible, but extremely rare – at least in the case of network-managed affiliate programs.

Affiliate networks and affiliate tracking software that run pay-per-lead programs include ShareASale, Medley Affiliate Network, ClickBank, and others. Some merchants manage their own affiliate programs, using proprietary affiliate tracking software or licensed software such as Post Affiliate Pro.

Another option that hasn’t been fully tapped in the affiliate space is local lead generation. Most of the major affiliate marketers tend to focus on highly competitive niches, which means that local areas have yet to be fully saturated.

Like large national or international companies, local companies will also pay for leads. Local lead generation can often earn more per lead and is often less competitive.

Where to Find Pay-Per-Sale Programs

Pay-per-sale programs dominate the affiliate marketing industry. Some affiliate networks operate exclusively on a pay-per-sale model, while those that offer both always offer more pay-per-sale options than pay-per-lead options.

There are a few reasons for this. Pay-per-sale programs require no up-front investment on the part of the merchants. That is, they don’t need to pay for leads that may or may not convert. A pay-per-sale program only takes money out of a completed purchase.

Also, pay-per-sale programs are less risky for merchants. With an increasing amount of online fraud, false online traffic, and false leads, merchants have ended up paying for leads that don’t convert. This is one reason that pay-per-click affiliate programs have become so unpopular.

Since virtually all affiliate programs offer predominantly pay-per-sale compensation models, a simple Google search will reveal the top affiliate programs and merchants relevant to your niche. And that’s one of the best ways to determine which type of compensation model is best for you.

Focus on Your Niche to Find the Right Compensation Model

It’s always best to start with your niche before finding a compensation model that’s right for you. Start with your content or sales vehicle and then find affiliate programs and merchants that have relevant offers. If some of them offer pay-per-lead programs, then it’s worth experimenting with those to see if they work with your sales vehicle.

Pay-per-lead programs are attractive because they rely on lead generation for revenue instead of completed sales. In many cases, they make more sense for both merchants and affiliates: larger purchases and longer sales cycles don’t always result in an immediate purchase.

This means that if a customer returns too late to complete a purchase, the affiliate doesn’t always get credit or compensation for that sale.

If you feel that this is the case for your merchant, or if your audience is less likely to complete a purchase soon after click-through, then you may want to test out a pay-per-lead affiliate program.

Though leads can pay less than a commission for a purchase, for the reasons mentioned above this type of compensation model may end up generating more revenue.

If, for example, your content tends to cater to an earlier part of the sales funnel, then a pay-per-lead monetization strategy may work more effectively for your audience.

This type of crowd may be less likely to immediately convert, but they may still become a follower or customer of your merchant. If you focus on a pay-per-lead model, you could end up generating more revenue and higher quality traffic for your merchant.

To find the model that works best for your situation, it may be prudent to split-test both compensation models. Since so many factors go into the conversion numbers and revenue output it’s often impossible to find the most effective monetization method without testing.

Though pay-per-lead affiliate programs are less common than pay-per-sale programs, they are still a viable option for certain niches and audiences. Explore options by finding relevant merchants, affiliate programs, and affiliate networks, and then narrow down your options with analytics and testing.