Thoughts on a Flat Rate CPA Ad Network model?

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Adguy

the "eh" team
Nov 3, 2007
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Need your feedback please on the concept of a Flat Rate CPA Network.

What I mean by this is the following:

As you all know, there are a ton of CPA Networks out there, mostly peddling the same offers, with no new twist.

We are looking to start a CPA network as well, but looking for that twist that will differentiate us. One idea being bounced around is a flat rate model rather than network commissions.

Meaning: As you may know, a network takes a % of the bounty an advertiser pays out, and pays the affiliate the balance. So, the more $$ you make, the more $$ the network makes.

With a flat rate model, the network would take a monthly flat fee, and you would be paid the full bounty that the advertiser pays. Think of it like an All you can eat buffet. Pay a flat fee, and eat all you want, or in this case, generate all the traffic at advertiser payouts.

For smaller publishers, (ie, less than $5K per month), this may not make sense. However, for publishers with revenue greater than $5K, rather than paying a commission on every dollar, paying a monthly flat rate to the network may make more senese.

Agree? Thoughts?
 


Not a bad idea. Question is what would the fee be? Where do you draw the line between making it worthwhile for the network and the publishers? Would you be able to provide the same kind of service, aff managers, etc?

Also, how good would the affiliate managers be? I think most are on commission or salary/commission combination so it's in their best interest to help you out. But what if you paid the AMs a flat $2-3k per month, would they actually care much about their pubs? Why would a good AM work for you instead of network x?

Overall though pretty sweet idea if someone can pull this off. You will definitely need a bit of start up funds before you get enough pubs on board to cover your costs. If the fee was reasonable I'm sure lots of pubs would jump over.
 
Adguy said:
With a flat rate model, the network would take a monthly flat fee, and you would be paid the full bounty that the advertiser pays. Think of it like an All you can eat buffet. Pay a flat fee, and eat all you want, or in this case, generate all the traffic at advertiser payouts.

For smaller publishers, (ie, less than $5K per month), this may not make sense. However, for publishers with revenue greater than $5K, rather than paying a commission on every dollar, paying a monthly flat rate to the network may make more senese.
Click to expand...

So in other words, affiliates would pay to join your network and they could potentially lose money if they don't sell enough to cover the fees?
 
mortal - good point re. the affiliate managers. The concept would be similar to shopping at a Price Club / Costco / Sams Club. You would get service, but you may not always get hand holding AM treatment, as it would be more self serve. You would not get the fancy rewards. What you would get is the best payout possible.

tke71709- that was a point we considered, and although we would want publishers to commit to the program, we would not want them to lose money. One way around this is, we to take a margin on every dollar (say 20%) upto a max of $1000. Ie, so when the publisher generates $5 K in revenue (20% of 5K being $1000), the publisher would switch to 100% payouts. (we would need to cap it to a max of 25,000 in revenue for every $1000 fee). If they are unable to generate $5k in revenue within a two month period (ie, they havent committed to the program), then they would not be able to carry on in this model.
 
mortal makes a good point, I deal with affiliate managers everyday and their skills vary greatly. You would have to get the best AM's for this.
 
I think in general this is a pretty decent idea. It appears of course to offer a discount to pubs and the aff network takes a hit. If you can drive enough traffic to justify the smaller margin taken by the network then it sounds gravy. I also think that aff networks in general run on extremely high margins as it is, so the loss you might incure should still leave you with plently of profit.

But as m0rtal said its going to take a lot of time, resources, money and the right people so there is considerable risk. Keep us all posted!
 
AdGuy, this sounds sorta similar to the model my group uses.
But instead of a flat rate relative to earnings, we have it per sale/conversion/action/whatever you wanna call it.

Basically, every time someone forks over the credit card, the affiliate gets a set amount credited to their account, and it gets paid out at their nominated amount.

Perhaps consider running on a per sale basis like that.
I think you're more likely to get the trust of the affiliates that way, and it doesn't cost you anymore if you've got decent tracking software.

To be honest, the thing about losing out on money would scare the crap out of me if I was considering signing up.
I mean, this is the internet, people are looking for at good ROI, and the chance of a negative one just sounds like a scam.

If you want, I'm happy to talk about some of (not all) the methods we use.
 
Quake - Yes Mortal does make a good point re. Aff managers. I've worked with a few excellent managers in the past, who may have suggested some successful campaigns. Conversely, there are other networks where there is very little, to no hand holding affiliate support, but affiliates were still successful with a campaign that they picked up using their own judgement, or was aware of from previous experiences, and they were still able to make some good coin.
 
Thankyou all for your feedback, please keep it coming.

HarveyJ- - your group uses a flat cpa per sale, where, as opposed to a rev share, no matter what the value of the sale is, the affiliate gets a flat bounty per sale.

Most networks do run offers like this, and there are currently a number of offers using this model. One category where it is somewhat prominent is floral offers.

From this bounty per sale that the merchant gives the network, the network usually takes a certain %. What i'm suggesting is rather than the network take that % amount for every sale, lead, action that occurs, the affilaite would get the full bounty from the advertiser, but pay a monthly flat fee instead.

re. your second point abt. losing money, the affilaite would not lose money as the fee will be deducted as a percentage of revenue, until the fee amount is covered (ie,20% would be deducted until the affiliate gets to $5k in revenue), after which point the affilaite would get 100% of the advertiser's bounty (upto the 25K cap)

I guess the term "flat rate cpa" may be misconstrued as a flat rate per action, as you had stated. Perhaps you are right. Any suggestions as to better verbiage to describe this?
 
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