Best Payout Models for Forex Affiliates - CPA, CPL, RS, P&L | Apexum

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Best Payout Models for Forex Affiliates – CPA, CPL, RS, P&L

June 17, 2019

Forex trading appeals to retail traders because of the enormous potential for generated an extra income. The online trading increased popularity gave birth to a new industry that generates excellent revenues: the affiliates industry.

A Forex broker partners with various entities (either individuals or companies) in the race to attract as many traders possible. There is no standardized affiliate program due to the diversity of potential affiliates. For this reason, a Forex affiliate program may take various forms, depending on many factors (the size of the affiliate business, what the Forex broker looks when associating with an affiliate, and so on).

Not all payout models work for all affiliate businesses. In essence, the introducing broker business works like this:

  • affiliates take all the necessary steps to introduce the Forex broker’s services to as many potential traders as possible
  • the higher the retention rate, the better the chances that the broker will additionally reward the affiliate
  • after the trader opens and funds a live account, the affiliate will get paid based on the affiliate payout agreement

We can say without a shadow of a doubt that there is not one best profitable payout model. Each model has its pros and cons and may appeal to each affiliate differently.

For instance, the CPA (Cost Per Acquisition) may appeal to the ones starting an affiliate business as it implies a quick revenue and a shortened checkout period. On the other hand, over the medium to long term, it doesn’t favor the business like the RS (Revenue Share) model. Hence, depending on the time horizon or the initial business plan, one affiliate may find the CPA model to work better than the RS, or the other way around.

The ideal payout model combines the advantages of the CPA and RS. A hybrid model, therefore, will work best for most affiliate businesses.

For instance, during the developing phases of an affiliate business, the CPA is desired, until the initial investment is recovered. However, later down the road, an RS with the same broker will ensure constant cash flow, but it has additional risks: the income will continue to pour only if the trader remains active.

As we know by now, statistics aren’t too favorable with the retail trading industry. As it turns out, most retail traders lose money, with over ninety percent of them doing so on their first deposit.

Therefore, it is ideal that the affiliate knows what the experience of the introduced trader is before choosing the payout type. Believe it or not, some brokers allow that.

Some brokers also use CPA (Cost per Action), meaning that the affiliate gets paid only after the trader fulfills a minimum traded volume. Obviously, it isn’t something that many affiliates favor, but if a trader is able to complete the volume requirement it implies that it is further suitable for a RS scheme. However, the Forex broker must be fully flexible with an affiliate promotion like this as it doesn’t want to pay commissions on an indefinite basis.

All in all, a combination of CPA’s, CPL (Cost per Lead) and RS is the best payout model for an affiliate marketing campaign, and this is what all affiliates strive to achieve.

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