Change of Style: CPC in Affiliate Marketing

"Classic Affiliate Marketing" is a phrase you regularly read and hear at conferences, trade shows, and various publications. But what exactly is classic affiliate marketing—and is there still a simple definition for it in the year 2016?

To explore this, we draw on an idea that everyone probably has in mind. Website owner X advertises a product Y, which is thematically appropriate, and user Z, who becomes aware of it through the embedded advertisement, buys the product. XYZ, done—so is it really that simple?

Affiliate Marketing in 2016

The basic principle has remained, but the paths to the goal have become significantly more complex. Even though the term Content Publisher still sounds appealing to advertisers' ears in 2016, it must be noted that in the modern affiliate mix, these often serve as mere decorative extras in the orchestra of major, self-outsourcing online channels.

Where a few years ago collaborations in areas like couponing, price comparison, or even retargeting could only be structured via direct contracts on a CPC or CPM basis with providers, they now incorporate content through the affiliate channel into their portfolio.

CPC in Affiliate Marketing?

It is naturally possible for any modern affiliate network to bill such collaborations based on click prices or the number of impressions. But do advertisers even want this, when terms like CPO or CPL are more entrenched in their minds in the context of performance marketing? Undoubtedly, CPC and CPM are also billing methods for a performance-based model—however, they have not been widely perceived as such by the masses so far.

The Solution is eCPC

To still offer advertisers the desired advertising performance based on sales or leads, publishers use eCPC or eCPM as a tool. In this case, the "e" stands for effective and means nothing more than a calculated, or effective, price per click that a publisher achieves with the generated sales. This makes it easy to determine profitability based on their own media data.

It becomes interesting when cooperation on a CPO basis proves to be unprofitable, as it doesn't always have to be a direct commission increase for the publisher. If both parties are willing, they can counteract with a middle ground. The so-called hybrid models are therefore increasingly finding their way into affiliate marketing and make CPC an acceptable supportive measure.

Hybrid Models as a Profitable Middle Ground

In addition to compensation per conversion, a hybrid model accounts for the media performance of the publisher, even if it does not directly lead to completion. This appreciation often finds its way into the affiliate program through an accompanying CPC or CPM. It should be noted that this is significantly lower than what is known from models based solely on these factors.

• Example 1: 5% CPO + €0.05 CPC

• Example 2: €3.00 CPL + €0.001 CPI (= €1.00 CPM)

What may be merely a redistribution of budget for the advertiser can help a publisher achieve profitability and ultimately increase their own revenue and profit, sometimes significantly. While it's not ultimately a breach of etiquette, a small step away from the norm can certainly have a big impact.

What We Can Do For You

As an agency that understands the interaction between advertisers and publishers, we identify potentials for your affiliate program in communication with your partners. To offer you even partially more complex services than "classic affiliate," we develop corresponding solutions—gladly also in a hybrid model. Contact us.