Pay for performance with partner marketing

The primary revenue model CPA ("cost per action") is what differentiates partner marketing from other online based sales and marketing strategies where the payment commonly happens per click (CPC), per thousand impressions (CPM) or on a fixed payment basis.

With the CPA pricing model, a payment is made only when a campaign has generated a confirmed lead or policy. It is one of the most cost-effective online marketing channels, facilitating low risk for the advertiser. Considering that the cost is known before a sale occurs, it can be classified a cost of sales.

The four involved parties within partner marketing are:

• Advertiser
  Businesses wanting to increase the sales of their products or services online.
• Partners
  Businesses or individuals who want to generate income from their content or audience.
• Platform
  A platform connecting advertisers and partners, while handling support, tracking and payments.
• Consumers
  Individuals who make purchases online.

The business model can be described as following:

1. An advertiser joins a partner marketing platform and receives access to relevant marketing partners. Partners promote the advertiser's products or services using their channels, for instance websites or mobile applications.
2. A consumer clicks a link or an ad on the partner's website and ends up on the advertiser's website.
3. The consumer makes a purchase on the advertiser's website. The purchase is tracked by the platform.
4. The advertiser pays commission, via the platform, to the partner who sent the sale. The advertiser receives one invoice while the platform takes care of all partner payments.

The advertiser's partner marketing activities are managed in a partner program within the platform. An agreement is signed with the platform (which has it's own agreements with partners) and ads and tracking links are made available to partners that are approved by the advertiser.

Advertiser

A partner program can be run by any business who has a website and where users can make a transaction. There are however a few prerequisites:

• An established business
  New businesses tend to require adjustments that can lead to unforeseen variation in conversion rates. Therefore, partners are often hesitant to promote newly established businesses with unproven business models.
• An optimised website
  As partners are only paid when their activities lead to a sale it is crucial that the advertiser's website is properly tested and optimised for conversions for the partners to get a return when sending traffic to the site.

Partners

Partners are businesses and individuals who promote the products and services of other businesses and in return receive commissions. Anyone with online content can be a partner, but different partners utilise different methods to promote, reaching consumers at different stages of the customer journey. Some typical partners are:

• Content
  Websites and media publications such as newspapers and magazines, health, beauty and lifestyle editorial, product forums and similar. Ranging from the world's largest media publishers to niche content sites.
• Influencers
  Social media profiles with a following on Instagram, YouTube, Pinterest and TikTok. The category also includes podcasts and blogs.
• Affiliates
  Discount portals, loyalty platforms, email marketers and other partners with roots in affiliate marketing.
• Tech
  On-site technologies, mobile apps, partners with API websites and SEM partners.
• Finance
  Typically SEO and SEM partners with comparison sites within the finance vertical.

Platform

The platform connects advertisers and partners. Accessing a broad selection of partners enables advertisers to reach a big audience, while partners can easily find suitable advertisers to promote to their audience.

The most important functions of the platform are:

• Partner access and curation
  It can take years for an advertiser to build up a base of relevant marketing partners. By joining a platform, the advertiser gets access to a broad and active base of partners. The platform manages the partner agreements and consults advertisers when setting up the commission rates they wish to pay.
• Tracking and reporting
  With the performance-based fee model, it is crucial to accurately track the traffic and sales partners send. Both advertisers and partners depend on traffic being reliably tracked and reported, preferably in real-time.
• Quality and reliability
  The platform ensures that advertisers and partners connected to the platform maintain a high quality, and that partners feel confident that they will be paid for sales they send.
• Support
  Partners come in all shapes and sizes, and require varying degrees of support. By managing partner support on a daily basis, the platform unburdens the advertiser of one of the more time consuming aspects of managing a partner program.
• Industry knowledge
  The platform has experienced employees who have worked with a wide range of partners for years. By consulting advertisers and partners, the platform ensures that both parties get the best possible return on their investment.
• Payments
  All partners connected to a partner program need to be paid promptly. With integrated payment solutions, the platform manages all partner payments.

Conclusion

Partner marketing remains one of the cost cost-effective online marketing channels to reach consumers at different stages of the customer journey. From an advertiser perspective, it is a low risk model, in essence only paying partners when they drive a sale. Considering that the cost is known before a sale occurs, it can be classified a cost of sales.

About Adtraction

Adtraction is a full-service partner marketing platform, helping brands attract new customers and sell more, while helping partners monetise their content and traffic. The company works with brands across multiple industries, ranging from e-commerce to financial services. With a user-friendly platform, Adtraction connects brands with a diverse range of marketing partners, ranging from content sites, influencers, affiliates, mobile apps and comparison sites.

The company was established in 2007 and is headquartered in Stockholm, Sweden, with offices in 11 locations across Europe.

Adtraction.com