At Grovia we broker a lot of partnerships – on any given day we are engaging with over 1,200 new publishers, affiliates, channel partners, resellers, and influencers on behalf of our customers. It’s safe to say we have a solid grasp on what makes a great partner compensation structure.
One of the most common challenges we see companies run into while recruiting partners is negotiating a pay structure. Businesses want to work on a performance basis (or CPA model). Partners want to work on a flat fee model. It’s an industry old challenge that any affiliate manager has experienced while recruiting publishers.
So – what is the best pay structure for affiliate partners?
Well it all starts with understanding and aligning incentives. Which makes good sense…the very definition of a partnership is “agreeing to cooperate to advance the mutual interests of both parties”. So, when looking at an affiliate or influencer partnership, you have to understand what both parties are looking for. Let’s take a look:
What are the high level goals of each party?
Affiliates / Publishers / Content Creators / Influencers want to ensure that they receive monetary compensation for the work they put in to promoting a third-party product or service.
Advertisers / Brands / Merchants want to ensure that the dollars they spend on affiliate commissions provide the return on investment they are targeting.
When Grovia partner developers are brokering deals between affiliates and brands, it’s vital we keep the incentives of each party top-of-mind. Finding a middle-ground is key, and it’s led us to frequently leverage the “hybrid pay structure” to align incentives between parties.
What is a hybrid affiliate pay structure?
Within the context of affiliate relationships, a hybrid payout model combines a small upfront flat fee with a variable commission based on performance (clicks, leads, actions, or sales).
Unlike payout models based solely on performance, the hybrid model provides initial flat payment to affiliates during their onboarding. This small fee covers the otherwise unpaid period of time and effort leading up to an affiliate’s first sale. We find that partners provided with this small up-front payment typically start generating sales more quickly than partners paid on a performance-only basis.
Unlike payout models based solely on flat-rate fees, the hybrid model provides ongoing commissions for revenue generated by an affiliate. This aligns incentives for both the affiliate and partnering advertiser. The goal of any partnership is creating win-win relationships, and a performance based commission ensures advertisers are truly getting bang-for-their-buck.
How do I pitch a hybrid pay model to an affiliate that demands a flat-fee?
We put together an asset to help partners better understand the benefits of the different payout models available. Feel free to use it in your next partnership pitch! This document has proven helpful in accelerating the negotiation process for Grovia partner developers, and we hope it can prove helpful to you as well.