Blog
Aug 09 2020
Tenancy and fixed fees in affiliate marketing
Fixed fees in UK affiliate marketing are common. These additional commercials can help advertisers to further leverage their affiliate partners for increased results. In this article we explain what fixed fees are, whether advertisers should engage in paying them and how to analyse a return from your spend.
What are fixed fees?
Fixed fees are a set amount agreed between an affiliate partner and an advertiser for a specific piece of marketing. This activity is usually ‘over and above’ the standard marketing that takes place by the affiliate to promote your brand. Fixed fees are sometimes referred to as ‘tenancies’ or ‘tenancy placements’.
Affiliate marketing is fundamentally a Cost-Per-Acquisition (CPA) marketing channel, meaning advertisers pay commission to affiliates for each lead or sale. This commercial setup forms the basis of a performance-based relationship between an affiliate and an advertiser.
However in UK affiliate marketing it is very common for some large affiliates to offer additional marketing placements or activity at extra costs, often these costs are not performance-related but in exchange for guaranteed marketing exposure.
Why are fixed fees a powerful addition to your affiliate marketing strategy?
Fixed fees are a way to optimise top partners further as they may unlock additional reach and engagement with the affiliate’s audience.
Paying a fixed fee should always result in additional marketing placements or activity. These placements can be strategically used at certain times of the year that are most relevant to your business. For example, if you are an online florist contending with your competitors in the run up to Valentine's Day then paying a fixed fee to leverage an affiliate’s traffic could be a great way to guarantee getting your brand in front of potential customers at the right time with the right message.
Strategically using fixed fee placements can lead to increased performance, driving more revenue to your business and creating a better, longer-term partnership with an affiliate.
How do fixed fees in affiliate marketing work?
If an affiliate offers fixed fee placements they usually provide a media pack so that you know what promotional exposure you are buying. These media packs are shared with Adtraction and, if relevant, will be shared with you. A good affiliate media pack will usually include:
- Details about the affiliate’s website and how they generate traffic
- Demographic information about the affiliate’s traffic / subscribers / members
- Details of what additional marketing placements and activity are available, including dates
- The cost of the additional placements
- A case study or real examples that brings to life the marketing activity
If you do decide to pay a fixed fee to an affiliate then Adtraction will ensure that there is written detail of what this fee is paid for - this is usually communicated via email but occasionally may be detailed out in an Insertion Order (IO). The fee is then simply added to your next Adtraction invoice and paid to the affiliate through the usual payment process.
Should you pay fixed fees to your affiliate partners?
Fixed fees in affiliate marketing are completely optional and there is no obligation to engage with them if you do not want to. They are utilised by many brands as a daily part of affiliate marketing optimisation but for smaller business the costs, particularly those cited by large affiliates, may be hard to justify.
Here are some considerations if you would like to test paying a fixed fee:
- Always talk to your Adtraction contact who can provide their consultative advice on the opportunity - that is what we’re here for!
- Additional marketing exposure that might prove worthwhile with one partner may not yield the same result with another partner. Be prepared to test and learn
- Affiliates are often flexible to what you’d like to try even if it’s different to the placements they have in their media pack - there may be an opportunity to negotiate for the right placement
- The more feedback you can provide to your Adtraction contact about what you are prepared to spend on fixed fees the easier it will be for Adtraction to source appropriate opportunities
- Ensure you are clear on the CPA - most fixed fee placements will also expect you to pay the CPA but the amount might be different to what you usually pay the partner
- Be wary of paying for activity outside of the Adtraction ecosystem - if we don’t have visibility on what was agreed it can be difficult for us to mediate should an issue come up with disputed payment or unfulfilled activity
- Remember that paying fixed fees has no guarantees of sale performance, you cannot ask for fixed fees to be returned if you are unhappy with the sales performance
How to measure a ROI from fixed fees
When deciding whether to pay a fixed fee always consider what return you would be happy with.
On some occasions you may feel that paying for the extra marketing exposure could be a worthwhile branding opportunity for your business, even if it doesn't deliver a lot of sales. This may well be the case with a large content site or high profile Influencer, where you feel your brand reputation would be increased by partnering with them.
On other occasions you will want to calculate the Return-On-Investment (ROI). This could be as simple as factoring in the overall cost against how many orders you would like to receive from the activity, for example:
Of course, the break even point should be the absolute minimum requirement, so it’s also worth thinking about how many sales you’ll need to return higher ROI figures.
Testing fixed fees during Q4 Christmas peak trading
Q4 is typically the peak trading season for ecommerce retailers and there are many more fixed placement opportunities available around the key trading dates such as Singles Day, Black Friday and Cyber Monday.
If you would like to test fixed fee placements during this period please get in touch with your Adtraction contact who can share and discuss opportunities with you. Our goal is to provide you with suitable opportunities that are based on analytical reasoning.