Subsidizing partners in affiliate marketing is a great way to boost performance. Explore how to apply a subsidy program and thrive in any industry.
From time to time, affiliate networks or arbitrage teams want to explore new niches to increase their ROI and generate more profit.
However, since they have little or no prior experience in the desirable segment, they often find it challenging to get reputable sources of quality traffic and competitive payouts from advertisers in a new industry.
One of the ways to break out of this vicious circle is to subsidize their new partners.
What is a subsidy?
In affiliate marketing, a subsidy may take many forms, but usually, it means one of the following:
- Setting higher rates than usual for specific partners. That might happen through reducing the company’s margin or even temporarily going into a negative on revenue to attract the best partners and develop new GEOs and market segments.
- Buying traffic from selected partners on Pay Per Lead scheme by paying them upfront with a goal to recover the investment and generate the revenue from follow-up PPS and Revenue share conversions.
- Implementing a factoring-like subsidy scheme. It happens when a company anticipates a revenue stream from certain partners and pays out the partner upfront, expecting to recover the investment from the follow-up conversions coming from the partner’s traffic.
Why is it essential to subsidize affiliates?
Even though subsidizing affiliates may seem risky since you pay them upfront or share your margin, the scheme can have many benefits for a company. Here are some of them:
Increased sales
By providing subsidies to affiliates, a company can encourage them to put more effort into promoting products or services. As a result, sales and revenue for the company can significantly grow.
Improved brand awareness
When affiliates are more motivated to promote the company’s products, they literally improve brand awareness and recognition. This can be particularly useful for companies looking to expand into new markets or increase their market share.
Better quality affiliates
A subsidy is a great tool to attract and retain high-quality affiliates who are more likely to deliver positive results for the company and are more committed to promoting products effectively.
Cost-effectiveness
Since affiliate marketing usually operates on a performance-based model, subsidizing affiliates is a much more cost-effective way of promoting company’s products, as the company only pays for visible results.
Customized promotions
Subsidizing affiliates allows a company to tailor its promotions to a specific affiliate audience to maximize the impact of the marketing efforts. For example, a company can offer higher subsidies to affiliates with a large following in a particular geographic region or demographic.
Increased customer loyalty
By working closely with affiliates, a company can also build stronger relationships with its customers. Experts say that customers are more likely to trust and continue purchasing from a company with a strong relationship with its affiliates.
Technology that matters
Implementing a scheme of subsidizing partners in affiliate marketing can be extremely challenging since it involves its feasibility, monitoring affiliate performance, traffic generated, and expenses.
However, some performance marketing platforms can fully automate this process in the most transparent and safe way, and the UCLIQ platform is one of them.
UCLIQ’s inventory includes an offer brokerage suite for any network or advertising platform that can help re-package the existing offers and create new ones. The suite contains the following tools:
- Custom offer payout rates for different GEOs, publishers/partners, traffic types, and devices
- Ability to convert PPS/RevShare offers to PPL offers using the Pay Per Lead payout mode
- Ability to group multiple conversions into one with a higher conversion rate using the cumulative payout mode
- Ability to consolidate several offers into a smartlink with custom routing and payout rules
- Subsidizing mode with strictly allocated budgets
- Budget spending monitoring and analytics
All these tools can be used to build specialized campaigns for specific GEOs, groups of partners (networks and affiliates), risk tolerance, and performance goals.
On top of that, the technology of subsidizing allows for the prioritization of motivated and high-quality partners with a goal of a successful long-term partnership that will generate ROI far exceeding allocated subsidies.
How to implement subsidization to maximize its effectiveness?
Overall, the program of implementing subsidization isn’t complex and usually involves the following steps:
1. Selecting a group of partners that can provide a long-term benefit for the company
2. Determining a type of traffic, GEO, and niche that the company wants to grow
3. Analyzing KPI and revenue the selected business segment is currently generating
4. Setting competitive rates that should motivate the partners and subsidized budgets for offers and smartlinks
5. Launching subsidized smartlinks and direct offers for selected groups of partners, GEOs with specified rates and budgets
6. Analyzing the performance of subsidies, spending, and ROI
7. Adjusting rates, rules, and budgets as per the performance of subsidized campaigns
Conclusion
Thus, subsidizing partners in affiliate marketing can provide many benefits for networks or arbitrage teams looking to expand into new niches or increase their market share.
By offering higher rates or paying upfront for traffic, businesses can encourage affiliates to put more effort into promoting their products, leading to increased sales, improved brand awareness, and better quality affiliates.
To successfully implement a subsidy program, it’s necessary to select a group of partners that can provide long-term benefits, analyze KPIs and revenue, set competitive rates and budgets, launch subsidized campaigns, and adjust rates and budgets based on performance.
If implementing a subsidy scheme seems challenging for you, UCLIQ can offer a full suite of tools that can automate the process and maximize its effectiveness. Subscribe to us, get the trial, and hit the jackpot in any industry.
