CPA (Cost per Action)

Fixed payout for a defined conversion (purchase, paid signup, qualified demo). Works best with fast quality checks (lead validation, refund windows).

Revenue share

Percentage of revenue (gross or net) paid for a defined period (first transaction, first year, or lifetime). Aligns incentives with retention and ARPU.

Hybrid

Mini CPA to speed activation + a rev-share tail to reward long-term value. Common for B2B SaaS and considered purchases.

Start with CAC, LTV, and payback

• Target CAC: what you can spend per customer or qualified lead.
• LTV: discounted gross profit over time.
• Payback: months to recover CAC; many subscription teams target ≤ 12 months.

Max CPA ≈ Target CAC. For leads: Max CPL ≈ Target CAC × Expected close rate.

When each model wins

• CPA: early-stage products, thin margins, need predictable unit costs.
• Revenue share: strong retention/expansion, longer cycles, high AOV.
• Hybrid: need pipeline now and want partners invested long-term.

The ad ecosystem keeps growing—US digital ad revenue hit about $259B in 2024 (IAB/PwC). A well-run affiliate channel rides that tide. IAB report

Define the “A” precisely

Spell out the action and eligibility (e.g., “paid subscription started,” “qualified demo booked with business email”). Enforce validation windows (14–30 days), exclude self-referrals/duplicates, and document refund/chargeback policy.

Set the number

Back-solve from CAC. If your target CAC is $400 and affiliate-sourced deals close at 25%, a fair CPL may be up to $100. For direct CPAs on purchases, target ≤ CAC and cap by product margin.

% of what revenue?

• Gross vs net: define treatment of taxes, refunds, gateway fees, discounts.
• Time box: first transaction, first year, or lifetime (with caps)?
• Clawbacks: refund/chargeback reversals within the validation window.

Subscription nuance

If early churn is material, use a cliff (e.g., pay after day-45) or “qualified customer” = active at day-30. Consider higher % for annual/prepaid plans to reflect better cash flow.

Example math

Plan $120/mo, 80% gross margin, 10% month-1 churn, 3% months 2–12. A 20% rev-share for 12 months often lands around $216–$240 commission per customer—frequently better than a flat CPA when retention is healthy.

Common structures

• Activation bonus (e.g., $25–$75 per qualified demo) + 10–25% trailing share for first-year revenue.
• Tiered hybrid: modest CPA until N sales, then CPA steps down and rev-share steps up.

When to use

Long buying cycles, multi-stakeholder SaaS, or when partners invest in deep content (comparisons, tutorials) and deserve both time-to-value coverage and lifetime upside.

Performance tiers

Publish a public baseline and create private, time-boxed boosters for top partners (e.g., “+5% for 60 days if you ship 3 new reviews & 1 comparison”). Use rolling 90-day windows so high performers keep momentum.

Fairness & policy

State clear policies on coupon extensions, PPC brand bidding, direct-to-cart linking, and reselling. Enforce with friendly warnings → temporary pauses → removal to protect honest partners.

Models to know

Last-click, first-click, and data-driven models. GA4 documents the options and how to compare them. GA4 attribution overview · Model comparison report

Windows to set

• Click window (typ. 30–90 days)
• View-through (allow/deny; if allowed, keep 1–7 days and low weight)
• Lead validation (14–30 days)

Tracking hygiene

Require clean UTMs (GA4 UTM guide), avoid overlapping coupon codes, and audit redirects. Research shows cookie stuffing often leverages stealthy redirects. UCSD study

Schedule & thresholds

• Net-30/45 after validation mitigates refund/chargeback risk.
• Minimum payout (e.g., $50–$100) to reduce micro-transactions.
• Multi-currency: document rates/fees if paying outside your base currency.

Paperwork

Collect required tax forms per jurisdiction. If you or affiliates process personal data (e.g., emails), ensure your privacy notices and processing meet local laws (GDPR overview; CCPA portal; CPPA regulations PDF).

Disputes

Publish a simple disputes process: time limits (e.g., submit within 30 days), evidence required (logs, receipts), and decisions timeline.

Disclosures

Affiliates must clearly disclose relationships and compensation. See the FTC’s updated Endorsement Guides Q&A and the “Disclosures 101” brochure for examples and wording. FTC Q&A · Disclosures 101 (PDF)

FTC overview page: Advertisement endorsements

People-first content

Google’s documentation stresses helpful, reliable, people-first pages and clean metadata—share this with partners writing reviews/comparisons. Creating helpful content · Search Essentials

Inputs

• Active partners (by cohort: new, growth, VIP)
• Clicks → EPC → conv. rate → AOV → refund rate
• Subscription: gross margin, churn curve, expansion

Scenarios

• CPA-only: predictably scales when validation is strong.
• Rev-share: wins if retention is healthy and upsell exists.
• Hybrid: balances early effort and lifetime value.

Cadence

Weekly leading indicators; monthly partner reviews; quarterly tier resets. Publish a promo calendar tied to product launches.

Day 0: Approval + link generator + disclosure reminder + FAQs

Day 3: Niche content brief + examples that convert

Day 10: Deep-link walkthrough + UTM conventions

Day 20: First-sale checklist + quick audit

Day 30: Review call invite + VIP criteria

What’s a good CPA?

Back-solve from your target CAC. For leads, multiply by expected close rate; for direct sales, keep CPA ≤ CAC and respect product margin.

Should I pay lifetime revenue share?

Only if churn is very low and attribution is stable. Most programs time-box to first transaction or first year, with caps and clawbacks.

How do I handle disclosures?

Require affiliates to disclose clearly and conspicuously. Point them to the FTC’s Q&A and the “Disclosures 101” one-pager. FTC Q&A · Disclosures 101

What attribution model should I use?

Pick one that aligns with your funnel and stick with it. Many teams start with last-click for simplicity or use GA4’s data-driven model; document your choice publicly. GA4 attribution

How do I prevent fraud?

Audit redirects, require UTMs, monitor anomalies, and enforce policy. See studies on cookie stuffing and hijacking for patterns and mitigations. UCSD paper · UIC paper

Do privacy laws affect affiliate tracking?

Yes—ensure notices/consent meet local requirements and contracts reflect data processing realities. Start with these primers: GDPR (EU Commission), CCPA (CA DOJ), CPPA regs PDF.