Make recurring commission your preference

by Martin Reed on 21 September 2007 in Articles

Recurring affiliate commission

What would you rather earn by sending a visitor away from your site? £5 if they subscribe to your advertiser’s site or £2.50? Sometimes the smaller option could make you more money if you push for recurring commission.

Recurring commission: Short term pain for long term gain

If you are running affiliate ads on your website, you should always opt for recurring commissions wherever possible. Quite often you will need to ask for such a payout structure as they seem to be getting increasingly scarce on the popular affiliate networks. If you can send an advertiser quality traffic, there should be no reason why they would reject your request for recurring commission.

Once a visitor leaves your site, it is unlikely they will return. Earning a fiver for a visitor that leaves may seem to be fair compensation, but once you get that £5, it’s over – the visitor is gone, the money is spent and you are back to square one. Recurring commission allows you to continue earning money for that lost visitor well into the future, whilst continuing to earn more money from additional visitors you send to your advertiser.

Recurring commission structures will often pay out a lower initial amount, but over time these amounts can really add up – particularly if you continue to send traffic and converting members to your advertiser.

What is even better about recurring commission is that it requires no work on your part once the visitor is with the advertiser. Once the visitor is there, it is up to your advertiser to sell their product. Most will have invested heavily in market research to ensure the maximum conversion rate possible – your advertiser wants that visitor to convert, and wants to retain them for as long as possible, just as you do. For as long as that visitor remains a member, you can look forward to a regular payment in return.

Always plan for the long term

The great thing about recurring commissions is that they help you build a strong financial foundation for the future. You may be earning £100 per day at the moment by sending 10 converting visitors to an advertiser, but what happens if one day your traffic dries up? What if your visitors become blind to your ads? Overnight your revenue will come to an end. With recurring commissions, it will be weeks or even months before your income dries up – this gives you plenty of time to come up with an alternative revenue stream.

An example

Let’s say you advertise an online dating site. Scenario 1 shows you the revenue on a one-off commission basis, whilst scenario 2 shows you the revenue on a recurring commission basis.

- Scenario 1: £10 per converted member, one-off commission

January – Visitors sent = 500, Conversions = 50, Commission = £500

February – Visitors sent = 400, Conversions = 40, Commission = £400

March – Visitors sent = 350, Conversions = 30, Commission = £300

April - Visitors sent = 300, Conversions = 20, Commission = £200

May – Visitors sent = 300, Conversions = 15, Commission = £150

June – Visitors sent = 250, Conversions = 10, Commission = £100

- Scenario 2: £5 per converted member, recurring commission

January – Visitors sent = 500, Conversions = 50, Commission = TOTAL £250

February – Visitors sent = 400, Conversions = 40, Commission = £200
PLUS 30 members from January renew = £150 = TOTAL £350

March – Visitors sent = 350, Conversions = 30, Commission = £150
PLUS 20 members from January renew = £100
PLUS 25 members from February renew = £125 = TOTAL £375

April – Visitors sent = 300, Conversions = 20, Commission = £100
PLUS 10 members from January renew = £50
PLUS 12 members from February renew = £60
PLUS 20 members from March renew = £100 = TOTAL £310

May – Visitors sent = 300, Conversions = 15, Commission = £75
PLUS 5 members from January renew = £25
PLUS 6 members from February renew = £30
PLUS 10 members from March renew = £50
PLUS 15 members from April renew = £75 = TOTAL £255

June – Visitors sent = 250, Conversions = 10, Commission = £50
PLUS 2 members from January renew = £10
PLUS 3 members from February renew = £15
PLUS 5 members from March renew = £25
PLUS 7 members from April renew = £35
PLUS 10 members from May renew = £50 = TOTAL £185

You can already see a clear pattern emerging – monthly totals soon overtake one-off commissions on the recurring payout structure, even though the commission is half that of the one-off payment structure.

When developing your website, you should always plan for the long term. When developing your site’s revenue stream you should do the same. Suffer some short term pain in order to enjoy long term gain – get those recurring commission structures and watch your monthly revenue grow.

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AmreekanDesi September 22, 2007 at 2:44 am

I see this very dominant theme of writing blogs to make money. I used to think that blogging was about self expression…never thought of it as a profession.
As a ballpark figure, how much traffic should a site receive before going commercial ? Just curious.

Chamonix September 22, 2007 at 9:09 am

Well described concept. I’ve just started dipping my toes in affiliate marketing but hadn’t heard of recurring commission before. It’s a bit like the rabbit and the hare – slower in the beginning for long term gain.

Martin Reed - Blog Author September 23, 2007 at 3:56 pm

AmreekanDesi – This blog doesn’t make any money; if you spot any advertising on it then let me know as your eyes must be sharper than mine!

If you could clarify what you mean by ‘going commercial’, I may be able to offer you some advice.

Chamonix – Very often these days, you need to ask for a recurring commission structure. It is definitely the way to go as it gives your revenue better long term potential.

AmreekanDesi September 23, 2007 at 4:32 pm

Martin – you got me wrong.

I never implied that you are making money off this blog. It was a more general question because i see so many blogs about people discussing how to make money from their blogs, so many tools to get more revenue out of the blog, etc.

By ‘going commercial’ i meant, in simple terms, putting up ads and getting some revenue.

Martin Reed - Blog Author September 23, 2007 at 4:35 pm

AmreekanDesi – My apologies for the misunderstanding. I agree with you that there does seem to be a proliferation of blogs about how to make money from blogging. Hardly any of these authors actually make good revenue, though!

I think you should only ever blog about something that you actually know about, have experience in and are passionate about.

As for going commercial – I suggest waiting until you have good visitor numbers before placing any ads. At the end of the day you need to remember that every ad on your site is an exit point. Are you ready to send away those visitors that you worked so hard to attract?

AmreekanDesi September 23, 2007 at 4:40 pm

Thanks for the info Martin! your site does offer some very insightful tips :)

Smiley September 23, 2007 at 5:38 pm

I’m not too ‘up’ on the financial side of things. I would like to add voice & video chat to my client by December/January, so my target is to be making 300 per month revenue atleast.

So I’m experimenting with at the moment and thinking of ideas for revenue, as ChatBlazer charges 220 per month to add voice & video to the chat client.

I’ll have a gander and see if there’s any recurring commission available.

Martin Reed - Blog Author September 24, 2007 at 5:55 pm

AmreekanDesi – Thanks, I am glad you are enjoying the blog.

Smiley – Voice and video chat is very expensive and I struggle to see how you can offer it without charging users. Of course, you can’t charge users if your site doesn’t have a good number of chatters constantly in the room!

ses5909 October 16, 2007 at 12:51 pm

I’m kind of like smiley in that I’m not the best with monetization. I’ve spent about $2k on my forums so far and of course I would like to monetize them so I can make back some of my money. Otherwise I think my husband would turn off the Internet and not let me get back online.

Do you have any suggestions of things to read for monetizing a community? or any recommendations from your own experience?

Smiley October 16, 2007 at 2:30 pm

I’d never charge users, Martin. I have taken a leaf out of your book regarding password protecting their accounts, though. Their accounts come with profiles that are saved and a contacts list if they password protect it for 2.99 a year. I sell advertising space etc.

I could add voice/video out of my own pocket each month, but I have real life debts to sort!

Perhaps audio/video is something I should think about adding a year or so down the line, rather than this year. Launch it when I have good regular member numbers and stable revenue.

Smiley October 16, 2007 at 2:34 pm

Oops, can’t edit. Was going to edit and add that I’m really, really not interested in profits right now, perhaps I’m just weird! lol. Right now my priority are members, present & future!

I’ll probably change a couple of years down the line and want the profit then.

ses5909 October 16, 2007 at 2:39 pm

@smiley – A big reason I consider monetizing my community is I have already put $2k of my own money into the community and would LOVE to be able to do more but I can’t keep spending money and putting my money into the forum without getting some back. Think about the things you could do for your forum if you had the money to spend on them (rather than continuously dipping into your own pocket). I think it is something everyone should at least consider FOR their members.

Smiley October 17, 2007 at 5:22 am

I agree with you; that’s why I said in the future I would like to get a stable revenue from the site, so I can put it back into the site.

I have real life debts, so I can’t just spend hundreds of pounds on advertising for my members out of my own pocket at the moment. I also need to build up to adding audio/video, I need an e-pals sytem.. plenty of things for me to work up to getting revenue to pay for, for my members.

Martin Reed - Blog Author October 18, 2007 at 3:51 pm

ses5909 – It can be a challenge to monetise an online community, for the reasons I outlined in my article ‘Warning – Big advertisers hate forums‘. You may want to take a read of my article ‘Who else wants more advertising revenue‘ and its accompanying comments for ideas on making money from your community website.

I think the key is to experiment with everything – with your advertisers, with your placement, with the look of your ads etc etc etc. You can make money from an online community, it just takes effort.

Smiley – When Just Chat launched, it lost money for about two years. It was only when it became firmly established and was retaining visitors that it started making any decent revenue. You are already doing better than I was this early on in your site’s life.

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