When setting up your forex affiliate business, it’s important to understand the different types of commission plans that you’ll often have to choose from.
There’s no question that partnering with a forex and CFD broker can offer you some of the highest returns of the entire affiliate industry. With that said, you need to understand which commission plan is best suited to your business and your financial goals.
CPA (Cost Per Acquisition)
CPA, which stands for Cost Per Acquisition, is the method of compensation that rewards you with a one-time payment every time one of your referrals opens an account, deposits and places their first trade. Your commission may vary depending on certain factors like the trader’s country or other predictive measures of lifetime value.
There are often other strict criteria involved in order to ensure that valuable referrals earn you a payout. These criteria might include a minimum deposit amount, for example.
Every broker will be different when it comes to how much CPA they pay per country, their qualifying criteria, time of payout, etc. It’s important to understand the ins and outs of each plan before deciding which brokers and plans are the right ones for you.
Rebates are a form of affiliate payouts that are tied to trading volumes executed by your referrals. This type of commission plan rewards trading volumes instead of acquisition. Rebates plans can differ from broker to broker and may be based on a fixed commission rate per lot traded, a percentage of spreads, or in the form of a fixed number of pips per lot.
Most rebate plans are based on the lifetime of the referred customer. That means you’ll receive commission for their trading for as long as they are with the broker, whether that be weeks, months, or years.
While the lifetime potential of rebate plans is very attractive to forex partners and includes more potential for passive income than the CPA model, it’s worth noting that the lifetime value of any referred client will depend largely on the quality, trust and reliability of your broker.
If your referred clients quickly become unhappy with the broker, the lifetime value of your rebates will be consistently cut short and fall well below your expectations.
Make sure when choosing a rebate plan that you’re dealing with a reputable, regulated and respected broker who offers a high standard of customer service and a popular trading platform like MT4 or MT5.
Traders who do not receive these services will be quickly tempted to change brokers in search of better trading conditions, and your commissions will suffer as a result.
CPA vs Rebates. Which One Is Right For You?
When it comes to choosing which commission plan is right for you, there are a number of factors to consider.
Think about your business. Who are your referrals and where are they coming from? Are you referring anonymous traffic or do you know your followers personally? Are you an affiliate or an introducing broker?
As an affiliate, your job is mainly to refer traffic to the broker. Your conversions depend on the quality of your broker’s website in order for them to register, and the ability of your broker to convert registered traffic into traders. Because you don’t have a personal relationship with the people who visit your site, your job as an affiliate is out of your hands once your traffic moves from your site to your broker’s site.
In contrast, introducing brokers know their clients on a personal level and play a much more involved role in convincing clients to trade with their broker of choice. In addition, there is a certain level of ongoing contact and support for as long as the client is actively trading with the broker, and the introducing broker will play a significant role in client satisfaction and the lifetime value of each client.
For this reason, introducing brokers often choose rebates as their preferred commission plan because they are confident in their ability to extract maximum long-term value from their referrals because of their personal relationship. Affiliates on the other hand often prefer to lock down a higher first payout based on the first conversion. This also helps them more easily forecast future earnings based on existing and projected website traffic.
Above all, your returns will be largely based on the quality of the broker you partner with. At TIOmarkets, we offer a highly regulated and reputable trading environment, with high conversion rates and extended client lifetime value.
If you join our partner programme, we’ll help you pick the right commission plan that works for you. Get in touch today to learn more about our generous payout structures and how can we help you make the most of your affiliate or IB business.