A commission is an amount of money that an affiliate agrees to pay a website for particular actions on the website that relate to the affiliate. In many cases, the agreement is based on each sale or each click that an affiliate gets from a website, and the price for each action is often agreed upon before drawing up the contract. It is also called a referral fee as advertisers pay their affiliates for each sale they make through them. It is also the payment made to publishers for each lead that they refer to an advertiser’s website.
Commissions are the driving force behind affiliate marketing programs. For advertisers running affiliate marketing programs, it’s important to use attractive and encouraging commission rates. It keeps the affiliates motivated to make more sales or attract more customers for the advertisers. However, it must be a rate that the advertiser can payout consistently.
A low commission will lead to difficulty recruiting affiliates as they’ll be drawn to competitors offering better rates. However, high commission rates will likely damage the company’s profit. Setting a commission rate requires a good level of balance.
