Forex RevShare Affiliate Commission Model: A Comprehensive Guide
Apart from actual trading, forex traders have various avenues for generating income, and one popular option is through affiliate programs offered by forex brokers. These affiliate programs employ a performance-based marketing strategy, where affiliates promote forex brokers and earn commissions for every new client they refer.
When joining a Forex affiliate program, you will be presented with different payment structures to choose from. Each structure has its own strengths and weaknesses, with the most commonly selected options being cost per action (CPA), revenue share (RevShare), and lot rebate. This article focuses on RevShare and aims to determine if it is the best choice for affiliates.
Understanding Forex RevShare Affiliate Commissions
RevShare, short for revenue sharing, is a payment model where advertisers (in this case, forex brokers) share a predetermined percentage of the revenue generated by affiliates through the clients they refer. Typically, brokers calculate RevShare based on net revenues, which are calculated after factoring in transaction costs, chargebacks, and bonuses. This payment structure is also referred to as spread share. Affiliates can earn between 10% and 50% of the broker’s net revenue for each referred client, although most fall within the 20-30% range.
How Does it Work?
You might be wondering how exactly the RevShare affiliate payment model functions, so let’s illustrate it with an example. Suppose you are a forex affiliate promoting a broker that offers a 25% RevShare commission on trades made by clients you refer.
After joining the forex broker’s affiliate program, you receive a unique affiliate link to promote the broker’s services. Utilizing your marketing skills, you create content on your personal website, as well as on various blogs and social media platforms, all aimed at promoting the forex broker’s services. In each post, you include your unique affiliate link.
A visitor to your website or social media platforms comes across your content and clicks on your affiliate link. Intrigued, they decide to open an account with the broker and deposit $1,000.
The broker tracks the transaction and attributes it to you as the affiliate who referred the client. Once the client starts trading, generating $100 in commissions for the broker, you are entitled to a 25% commission as per the agreed terms, which amounts to $25 (25% of $100).
As the referred client continues to trade forex, they generate additional commissions for the broker, and you consistently earn a 25% commission on those trades.
Over time, as more clients open accounts and trade through your affiliate link, your earning potential expands. Additionally, given that the forex market operates 24 hours a day, five days a week, there is the possibility of recurring commissions as clients continue to trade.
Comparison to Other Commission Types
It is worth noting that RevShare is just one of several payment models employed in the affiliate marketing business.
1. Cost per click (CPC)
CPC is also commission-based and pays the affiliate marketer a fixed amount of money each time a user clicks on an ad or link. So, for example, if your affiliate website posted links from an advertiser, you’d receive compensation each time a visitor clicks on the advertiser’s content. This model is typically used for driving traffic to a website or landing page, but it does not necessarily result in a sale or conversion.
2. Cost per action (CPA)
If advertisers are not using RevShare and CPC, they often pay affiliates using the CPA model. Like RevShare, CPA is commission-based but differs in many other aspects. For example, CPA pays affiliates a fixed amount of money for each action that the referred client completes. In contrast, as explained earlier, in RevShare, the affiliate marketer earns a percentage of the revenue the broker generates for each trade the referred client makes.
3. Cost per mile (CPM)
CPM is another common payment model in affiliate marketing. Similar to RevShare, it is commission-based. However, they differ in terms of payment structure. While in CPM, affiliate marketers are paid a fixed amount of money for every thousand impressions of an ad or link, in RevShare, we explained that the affiliate is paid a portion of the commission the referred client generates.
Factors to Consider When Choosing a RevShare Commission Model
1. The price of the product being advertised
For Forex affiliate marketers, the product’s price might be the cost of a new client joining the broker. For example, higher initial deposits may lock out many potential clients, making it difficult for you to convert the referred individuals into clients. In addition, considering that your earnings are tied to the revenue new clients generate, you’d lose out substantially if you cannot get new traders to sign up with the broker.
2. Commission percentage
How much commission is the broker willing to share with you? It is critical to consider this factor because it determines your income at the end of the day. Also, it helps to understand the finer details of the commission percentage the broker offers. For example, is the broker offering a rate for specific forex products or during certain promotional periods? This knowledge is critical because you can use the details to compare commission percentages across different brokers to find the best partnership for your needs.
3. Conversion rate
As you may recall, conversion rate refers to the percentage of website visitors who sign up with your partner. Therefore, it is crucial to consider the conversion rate of the broker’s website before choosing a RevShare commission model. A higher conversion rate means more potential sales and more commission for you.
4. The broker’s reputation
Yes, reputation matters, especially in the forex market. Given the lucrative nature of the business, the forex space has come under attack by scammers and fraudsters seeking a piece of the cake. Fortunately, reputation precedes good companies, so you must consider this as part of due diligence.
The broker’s reputation is crucial when choosing a RevShare commission model because, as discussed earlier, it has much to do with trust. So, before signing on the dotted line, ensure the broker is clean and has no scandal in its name. Also, ensure to research the broker’s customer service and refund policies to be sure you are promoting a reputable brand that aligns with their values.
5. The availability of tracking and reporting tools
Tracking and reporting tools provide critical insights regarding the broker’s business activities and the performance of the advertising campaign. Knowledge of these details ensures that you agree with the broker’s reporting, which minimizes friction when computing the due compensation.
