Deciding on a payment model is one of the biggest decisions that gambling affiliates face when selecting new operators to work with.
Whether you choose a cost-per-acquisition (CPA), cost-per-lead (CPL), revenue share, or hybrid payment system has serious long-term consequences, so picking the right one is a top priority. The bigger challenge is deciding which payment model is right for your sites and specific situations, especially if you’re just getting started.
To help sort out this alphabet soup, here’s a breakdown of the various payment models and the pros and cons of each one.
CPA – Cost-Per-Acquisition
CPA Defined: CPA programs pay out affiliates for every player they send they send to a program.
In most cases, the player needs to sign up for an account and/or make a deposit before the affiliate partner gets paid. (The exact definition of an acquisition varies from program to program, so read the T&C to make certain you’re on the same page as your operator.)
CPA Pros: CPA payment plans are ideal for new affiliates who are looking for revenue that’s going to come in right away. Though no one is really certain yet, it seems likely that CPA is going to be the revenue model of choice in the newly opened American online gambling market.
If you’re chasing a low-rolling demographic, a CPA model is a good choice.
CPA Cons: With this model, whales and minnows all pay the same amount. If you’re the type who wonders how much money you might have left on the table with a one-and-done payment plan, you might want to try one of the other options.
Revenus Share Defined: Revenue share plans pay partners a set percentage of their players losses, usually for the lifetime of the player.
Rev Share Pros: This is the most popular option for experienced affiliates because it, potentially, offers years of residual income. So long as your players are losing (which is likely) and your affiliate partner is honest (choose wisely), rev share plans can keep the cash flowing for years.
Rev Share Cons: Ever hear the expression, “The house always wins,”? Well that applies to affiliate partners as well as their players. Some programs use what is known as a negative carryover clause to recoup the cost of winning players out of the affiliate’s share of the action.
This means that one winning player can completely wipe out an affiliate’s profits for months, and even years.
While there’s nothing inherently wrong with negative carryovers, it’s important for partners to know what they’re getting into before signing on with a negative carryover operator.
CPL – Cost-Per-Lead
CPL Defined: In their simplest form, CPL plans pay out any time a visitor goes from your page to your partner’s page. In their most common form, CPL plans tend to resemble a CPA model where you won’t get paid until the visitor actually does something specific (usually signing up and depositing).
CPL Pros: The advantages of a CPL plan are similar to CPA; you don’t have to wait for a player to start losing to make your money.
CPL Cons: CPL is another one-and-done payment plan, so you may wind up leaving some money sitting on the table. This model can also be frustrating when you get lots of click-throughs, but limited action. (Remember, pure CPL’s are pretty rare.)
Hybrid Models Defined: Hybrid payment models normally mix elements of CPA and rev share. For example, an operator might pay a small amount for individual players during an introductory period and then follow up with a rev share plan for a limited time.
Hybird Pros: Hybrid programs offer up the best of both worlds with partners getting paid up front for the player and getting a cut of their losses. This can be good for less experienced affiliates who are still developing their player base.
Hybrid Cons: Most hybrid plans are limited time offers so, as always, reading and understanding the terms of T&C is very important.
Not every revenue plan is right for every website and market segments. For example CPA model might be better than rev share when promoting events like the Super Bowl that draw lots of casual bettors.
Each of these models has their own qualities and, over time, affiliates develop a good sense of which one is right for their sites.
What’s your preferred revenue model? Share your thoughts in the comments section below.