As an affiliate marketer, you need to understand certain terms like CPA, CPC, bounty, and of course, revshare.
We’ve discussed a great deal about other affiliate marketing terms in a previous article.
In this article, our main focus in revshare.
Revshare, also called Revenue sharing is a multi-meaning term. Most affiliate marketers either don’t understand it’s true meaning or confuses it with performance marketing.
A lot of articles don’t explain what revshare is exactly.
What revshare precisely means will change depending on who you are:
- An affiliate marketer – selling products you don’t own
- A business – affiliate marketers to sell your products
Let me explain what revshare means in both of these situations.
1. For an Affiliate Marketer
As an affiliate marketer, there are multiple ways to make money. The common method is to sell products and earn a commission on every sale you make.
The other method is by recruiting sub-affiliates, who use the same platform as yours and sell the same product as you do. Each sale of your sub-affiliate results in earning you a commission.
This is known as revshare for affiliate marketers. In layman terms, you make money by adding more affiliates, and each sale your sub-affiliates make earns you a commission.
Revshare is made up of combining two words, Revenue + Sharing.
A lot of affiliate marketplaces allow you to add new affiliates under your account. Once new affiliates join, they are linked to your account.
If your sub-affiliates promote and sell any products listed on the marketplace, you’ll earn a commission.
Note that most of the time you’re earning a percentage from marketplace profit, and not your sub-affiliates commissions. Sometimes, marketplaces charge the advertisers for paying sub-affiliate commission.
For example, there’s an affiliate program marketplace called ShareASale. I refer someone as an affiliate for ShareASale and I’ll get 10% of the profit ShareASale makes per sale.
If that user earns $100 commission, and ShareASale made $10 of profit, I earn $1.
That’s how the term Revshare works across affiliate marketplaces. It means sharing revenue from recruiting more affiliate marketers.
You’ll also see terms like a two-tier program and sub-affiliate tracking. They all mean the same as revshare.
Do not confuse it with sharing your commission with other affiliates.
FlexOffers is another popular affiliate marketplace. Here’s how they define their Flex Rev-share model:
You can see how your referred affiliates’ earnings are tracked and you earn a percentage of the profit FlexOffers make from that affiliate.
2. For a Business selling Products/Services
Revshare for business owners means sharing a percentage of your revenue with affiliates, influencers, and ambassadors.
It’s simply sharing a percentage of the total revenue the affiliate generates.
Typically, revshare affiliate programs are recurring. This means once a sale is made, the affiliate and the buyers are linked, for life.
Going forward, each purchase made by the linked buyer will result in generating a commission for the affiliate.
There are four types of affiliate commission models:
- CPA – Cost per action (the most common)
- CPC – Cost per click
- The recurring – affiliate gets paid as long as the customer keeps renewing the service. Often used by SaaS.
- Bonded – a user referred to by an affiliate is bonded for life. Any new sales made though the user will earn the affiliate a commission
The most common form of affiliate programs is CPA or cost per action. This means, whenever a purchase is made or a lead is generated, that means an action happens, the affiliate gets a commission.
CPC or cost per click means affiliates get paid on every click on their affiliate link. Mind you, many spammers send bot traffic to CPC affiliate program links. You should avoid offering CPC affiliate program for your business.
Bonded programs are mostly found in pyramid schemes. You keep adding new customers and the scheme churns them till they have no money left. Avoid these nasty, unethical schemes at all costs.
As a business owner, you have got a product or a service to sell.
And to sell you need customers who will and can buy your products.
But how do you reach new customers?
By implementing marketing strategies such as PPC, SMM, SEM and of course, affiliate marketing.
For businesses, affiliate marketing is the only marketing channel that requires no overhead. Most of the time it doesn’t require any investment upfront.
Because affiliate marketing is purely performance-based. If an affiliate performs well enough and sells more products/services then you share a reward with that affiliate.
It doesn’t matter how many people are promoting your product/services, only those who sell get paid. The rest of it is the free promotion and brand awareness.
One of the very few marketing channels that almost guarantee an ROI is affiliate marketing. Just like word of mouth marketing it works on trust, that’s why it is so powerful.
In a summary, revshare means only one thing – sharing revenue.
Now, what revenue you are sharing depends on your business model. As an affiliate recruiting more affiliate sunder your account, revshare for you is earning from your tree of sub-affiliates.
You don’t have any liability towards the product, service, or the sub-affiliates.
As a business owner, you’ve liability. You are sharing your business revenue with your affiliate.
You need to make sure your product is good, and your affiliates generating consistent sales.
Below are a few resources you might find helpful:
- ShareASale – for advertisers and affiliates both
- Rewardful – to start an affiliate program
- Impact – to start an affiliate program for enterprise businesses
Check out our tutorial to build a blog sales funnel to make more money with affiliate marketing.
I hope this guide helped you understand how revshare works in affiliate marketing.