8 Reasons You Need Dynamic Payouts in your Affiliate Program
Performance marketing has grown from a 2-billion-dollar market to nearly a 14-billion-dollar market in the span of 5 years, from 2016 to 2022. As the market size increases, so do the challenges. The moving pieces of networks, affiliates, influencers, and brands co-mingling, working with and against each other adds a layer of complexity seldom found in other industries. From a brand perspective, there are always other affiliates and influencers “in the sea,” but the same goes for brands. Affiliates and influencers are approached daily by new brands and if brands are not competitive in their payouts, they could lose quality conversions and brand exposure from existing partners when they go to competitors.
So, how do brands ensure they’re keeping affiliates and influencers happy, while not jeopardizing their bottom line? The answer is surprisingly simple – Dynamic Payouts.
Dynamic Payouts Incentivize Affiliates and Protect Brands
What is a dynamic payout? Dynamic payouts are payouts that change based upon changing inputs. Changes may include different in-funnel events, different touchpoints, or a tiered payout structure. Using a dynamic payout structure helps brands to identify affiliates who bring “real” value and reward them for their efforts, instead of rewarding affiliates based on last click attribution that often “robs” TOFA (Top of Funnel Affiliates) of their due reward.
For example, imagine a conversion flow where a reviewer does an in-depth content review of 2,000 words for brand X’s product. That affiliate or influencer is ranking on page 1 for Brand X Product Review and gets 1,000 views on their post per month. Let’s say that 4% of those views move into the sales funnel and proceed to buy Brand X’s product. Let’s assume that Brand X’s product cost $100 and the affiliate earns 10%, that should be $400 a month for the affiliate. However, due to last click attribution someone like Honey or RetailMeNot is “skimming” that last click and “robbing” the affiliate of their payout, or programmatic advertising captures the buyer a few days later. That’s not a favorable program for the affiliate and they’ll likely move on from Brand X’s program.
Now, let’s say that Brand X implements a dynamic payout structure whereby content/review sites are given priority in the conversion flow. Although the affiliate didn’t “close” the sale, they were one of the first touchpoints in the funnel and are justly due some compensation. With dynamic payouts, the commission can be split between affiliates or rewarded to the affiliate that adds the most value.
8 Examples of When Dynamic Payouts Make Sense
Dynamic payouts might not maker sense for ever advertiser or for each affiliate and influencer in their program. Below are some examples of when dynamic payouts would make sense. As a brand, it’s important to first find out whether your network supports dynamic payouts. If dynamic payouts would bring value to your affiliate program and your current network doesn’t allow for it, it might be time to start researching new affiliate networks. An affiliate programs’ success if based upon the product, affiliate network, and affiliates – always strive for the best of all three.
Dynamic Payouts that make sense:
Your affiliate provides two services, like content creation and coupon sharing. Advertisers should look at this like two separate affiliates, but it’s unfair to minimize payouts based on one aspect of their capabilities. Dynamic payouts will let you track and payout based on whether the affiliates content or coupon fired a conversion in the program.
Blog/Content/Review sites that don’t get the last click in the sales funnel. Dynamic payouts allow advertisers to split commissions with top of funnel and bottom of funnel affiliates to keep acquisition costs constant, while rewarding all affiliates involved in a conversion.
Dynamic payouts can be used to incentivize affiliates to focus on bringing new customers. Brands may place a premium on new customer acquisition, by bonusing affiliates and influencers for those new users.
Instead of new users, brands may also incentivize affiliates for sales of specific products or categories.
Brands can also protect margins by reducing commissions for products sold using discounts, or discounts that exceed a certain amount.
Credit and Financial brands may have an ideal customer that brings the best LTV to their programs and thus would be able to give a better payout for delivering that customer type. A credit card company might pay a bonus for high-net worth individuals, where a sub-prime lender might prefer a low credit score.
Travel advertisers find value in dynamic payouts by promoting increased commissions for categories like off-peak bookings, because unlike a physical product a hotel room cannot be booked once a date has passed.
Dynamic payouts can also be offered to an affiliate or influencer who converts in specific geographic areas. Say sports betting was just legalized in a state, a new sports betting app could reward affiliates with higher commissions for driving new users in that state.
The affiliate marketing industry continues to grow by leaps and bounds with more consumers turning to social media for entertainment, while also consuming news and entertainment online. It provides a unique opportunity for advertisers to work with affiliates and influencers, but advertisers need to break the clutter to reach the right partners. Once those partnerships are formed, the relationships need to be cultivated and maintained. The best way to maintain those partnerships is through a good working relationship, and the best way to keep that relationship positive affiliates need to be rewarded for quality traffic and conversions.
Dynamic payouts are the key to strong affiliate and influencer programs. Advertisers should be speaking with the affiliate managers at their agency or their network representative to see what’s possible for dynamic payouts within their program. If advertisers’ networks aren’t capable of tracking dynamic payouts, they should consider switching to a platform like Impact Radius or Share-a-Sale. If their agency doesn’t see the value in dynamic payouts, maybe it’s time to speak with a new agency.