Pretty much every newbie to affiliate marketing is going to think this way : “Higher payout per conversion equals to higher profits!” Let me tell you why this is wrong on so many levels, and why offers with lower payouts can actually make you more money with the same $ spent on advertising.
THE CONVERSION FLOW
This is probably the most important factor. The more you are getting per conversion, the more complicated the conversion flow will be. Flow is the process that leads to a successful conversion. For example: a SOI (single opt in) email flow means the user has to enter their email address, hit some submit button and that’s it. This is a simple flow and the payout for such conversion will be generally on a lower level.
Let’s compare this with a DOI (double opt in) email flow. There is one more step required in order for the conversion to be considered valid – user has to open an “invitation” email and click on a confirmation link in it. So the same that you have to do, in order to join my mailing list on this blog – which YOU SHOULD DO BTW – Form is on top of the right column 🙂 As you can guess, not all users that submit an email address will actually open the email and confirm it, part of the emails are fake or full of typos … the general success rate is between 35%-70% depending on several other factors.
Obviously, a DOI offer will have higher payout than a SOI lead, but can you really earn more with it? This is a numbers game and you need to test it. In some cases it can work, especially when you are good at targeting and writing strong sales copy. But for many affiliates, it’s just better to go with the SOI versions – it’s easier to convert, conversions come in faster and you have more data to optimize faster.
There are many different flows, and it would be pointless to name them all, just let me mention a few extremes so you can imagine how different they can be. On one end, there are the so called Single Click Flow offers – these are usually mobile subscriptions in tier 3 countries, all it takes for the user to convert is to click on some “I Agree” button. These offers pay literally “cents” per conversion, but they are very easy to convert.
On the other end, you have offers that require a payment to be made – these can be tangible or info products, that people actually have to pay for, with their credit card for example. Or think about flows where the user has to call some number and talk with the support for a given amount of time, if they hang up sooner… no conversion. I’m sure you can see the HUGE difference between various flows by now.
GEO (COUNTRY) YOU ARE TARGETING
These days, you can sell something to users from pretty much any country in the world, ok except for North Korea … ) Every country has some specifics that determine how difficult it is to convert their citizens into paying customers or at least prospective Leads.
It’s not possible to address the countries one by one, unfortunately. But I can still give you a few general pointers and examples, that will help you understand why it might be better to choose a low payout offer/product in this context.
High payout offers usually require a direct purchase to be made, and they can work very well in developed countries like United States, Canada or some EU country. But what about India for example? That country has almost 1.3 billion citizens, but they are not exactly wealthy, from the most part. Of course you can try to sell something to these users too, but the results won’t be all that hot in most cases. But offer them a free mobile app or a Single Click Flow entertainment product and the conversion rates will be very good.
The difference between a high payout product and a low payout product is very simple: The first one (expensive product) appeals to a small audience, in case you can target it, the results will be good. The second one (free app or cheap subscription) appeals to pretty much anyone in that country, so you don’t need precise targeting for it to work. So even tho the second one will have a much lower payout, the ease of converting it and the massive volume that you can use, will serve as a leverage and give you the possibility to make way more money with it. Damn, what a sentence, hope you understand what it was supposed to mean 🙂
I used India as an example, simply because it’s the largest GEO that you can target without much limitations, China is even bigger but it’s a specific and regulated market. But there are many more GEOs out there that work just the same way as India – Indonesia, Vietnam, Thailand or go to Latam with countries like Brazil, Argentina, Mexico and don’t forget the Arabic world too… the available volume is immense.
REGULATIONS OF THE GEO OR VERTICAL (Product Type)
More developed countries are ahead of the developing ones in terms of regulations too. These markets are mature and the governing bodies are doing all they can to protect the consumers. This means that the more dirty tricks are already banned in EU or Northern America, but they still work in the rest of the world.
These don’t have to be just flat out scummy tactics, but even things like where to place the “Call To Action” button – below or above the price quote … this can have huge affect on the conversion rate. Obviously, the less regulated this is, the higher the conversion rate will be. Developing countries have less regulations, so even tho the payouts per conversion will be lower, the higher amount of them will make up for that once again.
Then there are regulations bound to certain verticals across the world. Think about stuff like financial products, forex or commodities, pharmaceuticals and medical stuff in general, alcohol, tobacco … you need to follow a ton of rules when promoting these things and precise targeting is required again. So even thou the payouts will be very high, sometimes it’s not worth the hassle.
COMPETITION BETWEEN AFFILIATE NETWORKS AND ADVERTISERS
There is one more factor that can play in favor of lower payouts, and this one is not so clear as the other ones I mentioned. Affiliate Networks and also Advertisers that own the products, are competing for traffic of the affiliates. They want YOU to send the traffic to THEIR offers/products. One of the tactics used is to give you a better payout per conversions. So in order to get more affiliates on board, they will offer way higher payouts than their competitors.
But how can 2 different affiliate networks give you a completely different payout, for the same offer from the same advertiser? The answer is easy, one of them will SCRUB more of your conversions than the other one. And as you can guess, it will be the one with the higher payout. NOTE: I’m talking about big differences, not a few cents. Every network operates with certain margin and they can use it to give bigger share to their best affiliates. Some networks also get bigger payouts from the advertisers by default: I wrote an article about this already, read it HERE.
Use common sense here please, in case you see the same offer with a payout of $5 at one network and $5.50 at the other one, this doesn’t most likely mean shit. But differences like $5 vs $8 should ring a bell. When comparing rates, always make sure that you are comparing offers with the same flow and not SOI vs DOI for example.
Ending the post now, I think the most important parts have been covered. Stay tuned for more.
Thanks for reading.