CPA reductions and how to generate more revenue streams

Apr10

CPA reductions and how to generate more revenue streams

Over the last few weeks I’ve noticed a worrying trend in some of the niches that I operate in. Basically quite a few advertisers have lowered their commissions payable to affiliates, anything from a 10% reduction to a massive 40% reduction. One of the most common reasons for doing this I am told is that the Affiliate channel is sometimes the most expensive route to market. I.e. it costs less to acquire new customers through other advertising methods than it does via Affiliate Marketing. Hmmm, not good is it? What makes it worse from an affiliates point of view is that it’s getting more and more competitive being an affiliate. New sites seem to be cropping up every week, adding to the number of sites already out there all hunting for the same new customers. PPC is also getting more expensive all the time. Another worrying trend I am seeing is that although advertisers are decreasing affiliate commissions they are increasing their ppc bids, especially on generic terms. So we are now being hit in two different directions. So what can we do?

One method which I employ is to charge advertisers a tenancy fee as well as a CPA per customer. If you run a popular high traffic site which generates lots of sales for a particular advertiser then why not ask your advertisers if they would like to pay you a monthly fee to feature in the top position of a certain page, or whatever the most prominent position is. This will mean that their product/service will be seen first and conversions will be higher. You could also through in some banner placements, maybe some newsletter editorial, or anything else that will raise the profile of the advertiser. I do this with some of my more popular sites and it works. As long as you put together a professional proposal for your advertisers, and as long as you charge a reasonable amount you will find that it works.

What initially made me think about this was I emailed a popular IT news site here in the UK asking them for advertising rates (as I was thinking of advertising one of my sites on their portal). Anyway they emailed me back with a cost of something like £16k just to place a 468 banner on the homepage for 1 day. Yes that’s 24 hours. OK the traffic was high, but it certainly wasn’t mega high, about 60,000 UV’s a day or something. What amazed me was that although I turned down their “generous” offer I noticed that every day they have fresh inventory running. So people *DO* pay those prices.

I think sometimes we get stuck in the “affiliate rut” as I call it. Whereby we are blinkered into thinking that advertisers will only pay for performance. However, if you genuinely operate a high quality site that has good traffic levels then why not increase your revenue streams and look into other forms of generating cash? Don’t be afraid to ask the question guys.

Music I’m listening to: Anthony Hamilton - “Coming From Where I’m From”.