Understanding CPA, Hybrid, and RevShare: Which is Right for You?

When you start in the world of affiliate marketing, one of the most critical decisions is selecting the right type of deal. This choice can significantly impact your earnings and success. In this guide, we will help you understand not only your role as an affiliate but also the perspective of the iGaming operator, ensuring both parties can achieve their goals.

But first things go first:

What is CPA (Cost Per Action)?

CPA, or Cost Per Action, is a performance-based payment model where affiliates earn commissions when users perform a specific action defined by the advertiser. This action can vary depending on the campaign’s goals, such as a game download, registration, or first deposit in the iGaming sector.

How CPA Works in Affiliate Marketing

For example, if you spend $100 on ads and acquire 10 new players, your CPA is $10 per player. In affiliate marketing, CPA refers to the amount a company pays you when you bring users who complete a specific action.

How do you maximize the profit with CPA deals?

Is a game of numbers (volume), if you get an offer of 50 euros per CPA (this means a company will pay you 50 euros per an action that they will define), then this means that you need to find a way to get low cost per that specific action.

To profit from a CPA deal, volume and optimization are key. Suppose you have a CPA offer of €50 per action. If your cost per acquisition is €40, you earn a €10 profit per action. Scaling up, if you bring 1,000 CPAs, you earn €10,000. Further optimization to reduce your cost to €20 per action can increase your profit to €30 per CPA, resulting in €30,000 for 1,000 actions.

Restrictions that may apply with a CPA deal

Companies often set minimum KPIs (Key Performance Indicators) to ensure quality. In iGaming, a common KPI is the baseline deposit amount, which players must meet before affiliates are paid, preventing incentivized or low-quality users.

What is a Revenue Share Deal?

Revenue Share, or RevShare, is a preferred model for many companies because it minimizes their risk and aligns incentives with affiliates. Affiliates earn a percentage of the revenue generated by the customers they bring, typically ranging from 20% to 40%.

Benefits of RevShare Deals

RevShare deals can be highly profitable for affiliates if they bring high-quality customers who generate significant revenue over time. Unlike CPA deals, RevShare income depends on ongoing customer activity, making it essential to attract engaged and loyal users.

What is a Hybrid Deal?

A Hybrid deal combines CPA and RevShare models, offering affiliates upfront payments per action and a share of the revenue generated by customers over time.

You will get this type of deal if you can provide a good volume of good customers to the business and you have evidence of that.

Considerations for Hybrid Deals

• Volume and Quality: Hybrid deals are typically offered to affiliates who can demonstrate the ability to deliver high volumes of quality customers.
• Lower Initial CPA: The upfront CPA in hybrid deals is usually lower than in pure CPA deals, balanced by the ongoing revenue share. For example, instead of a €50 CPA, you might get €20 plus a revenue share.

And all it makes sense, at the end of the day is a business, and the company that is making this deal has to calculate the possible risk and minimize it

CPA, RevShare, or Hybrid: Which One Should You Choose?

Choosing the right deal depends on various factors, including your traffic quality, marketing skills, and risk tolerance. To help you decide, here’s a breakdown of the pros and cons of CPA and RevShare deals:

Conclusión

If you are starting in the affiliate world, a CPA deal might be the best option initially. CPA deals allow you to gather valuable data and refine your strategies to reduce costs per acquisition over time. However, as you gain experience, you may encounter situations where bringing in high-value customers (high rollers) demonstrates the significant benefits of RevShare deals.

RevShare deals offer long-term revenue potential by sharing a percentage of the revenue generated by your referred customers. This model aligns your success with the quality and loyalty of the customers you bring, which can lead to substantial earnings over time.

Final Advice

The key to success in affiliate marketing is to thoroughly analyze the market and understand your strengths in customer acquisition within your chosen niche. Set realistic goals and choose the payout model that aligns best with your expertise and business objectives. Negotiating effectively with operators requires a solid understanding of both CPA and RevShare models, ensuring you can articulate your value and secure the best possible terms.

By continuously optimizing your strategies and staying informed about industry trends, you can maximize your earnings and build a sustainable affiliate marketing business.