Learn how to best create your compensation structure, what to consider when setting publisher commissions and which tools Awin offers for this purpose.
The success of your affiliate programme depends not only on the quality and attractiveness of your product offer but also on publishers promoting it. Of course, publishers will look at whether your offer fits their target group and platform. But equally they will do a cost-benefit analysis to see if it is worthwhile to promote your programme. That’s why it’s important to balance your commission rates and rewards.
What are commission rates?
Commission rates determine the money paid to a publisher for delivering leads, sales or any other agreed-upon deliverables like downloads, clicks, or awareness for an advertiser's affiliate programme.
Commissions can be paid on either a fixed or percentage basis and often include a bonus element (usually linked to set targets) in addition to the standard rate.
The most common commission types are:
Cost Per Acquisition (CPA) is the amount that an advertiser is willing to pay for a sale. The cost per acquisition may be set as a percentage or fixed value.
Cost Per Lead (CPL) is when the advertiser pays a publisher an agreed fee for each qualified lead allowing advertisers to reward publishers for newsletter sign-ups, brochure requests, or a range of other quantifiable actions. For this transaction type, the commission is always fixed.
Cost Per Download (CPD) is where advertisers can pay for app downloads.
Cost Per Click (CPC) is a payment model by which advertisers pay for each click-through made on their advertisement to drive users to their website or specific offer.
A bonus is usually a monetary reward paid to publishers for good performance but can also be used to attract larger affiliates to promote your brand.
How much should I pay my publisher?
Before you determine your commission structure, it always makes sense to look at the commission rates of your competitors and your margin calculation. Another method, though more complicated, is to include aspects of the customer lifetime value (CLV) of customers coming through affiliates in your calculation. Check how often your customers referred by affiliates make purchases and how high their average shopping basket value is. Check out our “How to determine customer lifetime value” post for more information on that topic.
In summary, you should consider the following factors when determining how much to pay your publishers:
Competitiveness: Check what competitors are paying, because the level of commissions can be key for publishers when deciding which programme to promote.
Transparency: Make sure it is clear to publishers how much they will be paid and for what, and that you will pay the amount specified.
Commission depending on margin: Some product groups have higher profit margins, others lower - this should be considered when setting commissions. However, if there are regular campaigns and promotions, it’s not ideal to always pay the highest possible commission. Be sure to leave some room for campaign-based increases like vouchers to get additional reach if needed.
Customer value: To pay fair commissions, it’s important to know the customer value generated by affiliates. Make sure you know which customers are being directed to your website, how they are converting, and how valuable they are to your business.
Reward valuable customer interactions: A conversion does not only consist of sales. Subscribing to newsletters, downloading an app, or participating in a raffle can also be paid per lead.
Awin Assist: Publishers are usually rewarded with a commission at the end of the customer journey. However, the upper funnel is just as important. Work with assisted commissions to support publishers at the beginning of the customer journey.
Commission Attribution: For even more granular commission allocation, you can use an attribution solution like SingleView that gives you additional insight into the entire path to conversion. It enables you to make data-driven decisions based on which partners are creating the most value for your business, how all your online channels are working together and which commission rates best reflect this.
How to set commissions in Awin
Awin’s commissioning tools offer a range of payment flexibility options that allow you to collaborate with different types of publishers, across different campaigns while being in control over your ROI.
All you need to do is log into your account, go to the “Commission” tab and choose the commissioning option that fits your needs best. Start by using the Commission Manager to set up your commission groups and rates.
Commission Manager: The Awin commission management tool gives you full flexibility to manage your publisher commissions.
Commission by Basket Value: This commission tool allows you to choose a specific commission rate depending on the value of the order.
Commission by Assist: With the commission by assist tool, you can create a commission rule to pay publishers for the assists that contributed to a purchase.
The need for greater transparency in digital marketing is something affiliate marketers have been aware of for many years. With major brands demanding visibility on how their advertising budgets are being spent online, what can other channels learn from the voucher code self-regulatory initiatives in the UK and how competitors have come together to create universally accepted standards?