How do I set commission in a new affiliate program?

For your affiliate program to be competitive and, in the same time, attractive  affiliates, it needs to be differentiated from its competition inside 2Performant. Therefore, the first step in launching an affiliate program is to conduct a competitive analysis. 

Keep in mind that for an affiliate program, the competition doesn’t mean just affiliate programs in the same category, but all programs inside the network from any category.

The value of your commission is one of the most important attribute for affiliates, but it’s not decisive. A high commission value may not bring along a large number of affiliates and fantastic results in a short period of time.

Why? Because no matter how small the commission value is, affiliates are more interested in the conversion rate of your entire store and the average order of a shopping cart; these two being the performance indicators affiliates follow the most.

Let's take the case of two advertisers from our platform:

At first glance, Advertiser’s Y offer seems more attractive to a potential affiliate, because it offers a higher commission value than Advertiser X, and also the average shopping cart is higher. However, after doing the math, it turns out that things are not exactly how they seem:

• advertiser X → an affiliate generates 150 orders x 150 EURO/average shopping cart x 15% commission → the affiliate gains commissions of 3,375 EURO.
• advertiser Y → an affiliate generates 80 orders x 200 EURO/average shopping cart x 20% commission → the affiliate gains commission of 3,200 EURO.

The difference, though it may be small, only 175 EURO, becomes an important factor when talking about large volumes of generated  commissions.

The proposed commission grid offered to affiliates, can also be made of variable values, based on the category of the purchased product. If on a product category, the advertiser has a competitive offer and has a higher margin, the commission might also be higher. For the product categories where the margin is lower, the commission rate may also be lower. In this way, the purchase costs for each category are being  adjusted.

!!!Remember!!! Affiliate marketing is about the program’s profitability and efficiency. Affiliates will always look for affiliate programs that offer the greatest profit margin under the cost conditions it has. At the same time, the advertiser must gain profit compared to commissions rate the program offers.