How do most affiliates make money, by the click or by commission?

[ron_ron]

I want to start an affiliate program and wonder which method would attract more affiliates, paying by the click or paying by commission on sales. I supposed you could offer a combination of the two but that would be complicated and would rather not do it that way.

I realize that amounts paid per click and percentage of commission for a sale run the gamut but can anyone tell me what would be considered good?

For example: 5 cents a click? 10? 20% commission?

I want to be a little better than average.

[TrustNo1]

"I want to be a little better than average."

Not enough info, have no idea what you're selling but your best bet is to check out who you consider to be your competition and see what they're paying out to get some kind of idea.

[jimbeetle]

It's hard to categorize a lot of terms in internet marketing because the lines can become blurred, but in my mind PPC is advertising, not an affiliate program. My definition of an affiliate program is where the sponsor partners with somebody to sell goods or services based on either commission or flat fee. In general, a PPC campaign is much easier to manage than an affiliate program (Heck, you can run one through the AdWords content network), whereas an affiliate program takes a bit more work to recruit quality affiliates, track sales and write the checks. So I think you should first decide exactly what you want to do, run a PPC advertising campaign, an affiliate program, or both. Then, as Trust1 said, the best way to gauge what you should pay is by a bit of competitive research.

[markwelch]

Ron - I think it's really important to identify your "real goal," and not to focus on intermediate or "proxy" goals like "signing up a lot of affiliates."

I assume that your "real goal" is to sell products or services, at a profit. In general, a commission-based affiliate program is ideally suited to this goal, because you ONLY pay affiliates who drive those sales, and you only pay them the amount you know you can afford (the commission percentage).

A commission-based program is somewhat "self-regulating," in that affiliates whose sites are clearly unrelated to your products are unlikely to join or drain your resources.

In contrast, a pay-per-click program tends to attract a lot of unscrupulous fraudsters, who may generate fraudulent traffic; it may also attract lots of low-quality affiliate web sites whose visitors have little or no purchase interest.

Choosing the rate to pay is often very difficult. In general, your "gross profit" margin will set the upper limit -- few merchants selling tangible products can afford commissions higher than 30%. However, you must also look at what your competitors (not just your direct competitors, but also non-competing merchants who may compete for your prospective affiliates' attention) are paying.

Commission amount is not the only factor that affiliates consider. Good affiliates will recognize that a 25% commission promise is worth very little if the merchant has a low conversion rate, or a low average transaction size.

There are many potential "red flags" on a merchant's web site that may factor into an affiliate's decision NOT to join the program. Some examples: top-of-page appeals to "Call our toll-free number now"; undisclosed or high shipping costs, many out-of-stock items (low/thin inventory); missing or incomplete "privacy policy" and "contact/about" pages; reports on affiliate discussion forums of transaction reversals.

[wrgvt]

Also, don't make someone join your affiliate program to read the Operating Agreement for it. This causes too problems. First, many affiliates won't join if they can't get the details up front. Two, there will be those who join who decide never to put a link after reading the fine print. Your affiliate database is then full of inactive affiliates.

[Whitey]

PPC can pay more than commission , but that's too simplistic.

You need to analyse your business strategy to decide on the bigger picture. For me it's too complex to try and explain, simply to say you can likely devise a unique approach to it.