What Is Pay-Per-Lead Affiliate Marketing?
Pay-per-lead affiliate marketing is simple at its core: affiliates (also known as publishers) generate leads (contact and marketing information) for advertisers (also known as companies, businesses, merchants, or service providers) in exchange for a flat commission.
Is Pay-Per-Lead Only About Affiliate Marketing?
In this article, I’m considering pay-per-lead in the context of affiliate marketing, but it goes far beyond affiliate marketing. For example, if you hire a lead generation agency, you’ll be tied by a B2B service contract, not an affiliate agreement.
Here are three things that define pay-per-lead as an affiliate marketing strategy:
- There’s a third party that promotes a product or service
- There’s an affiliate contract or agreement that regulates the process
- The payment is made per qualified lead
Although affiliate marketing remains the main pay-per-lead domain, there are half a dozen cases where the pay-per-lead model extends beyond the scope of affiliate marketing. In fact, it includes any form of business relationship where an external party is paid per lead, and there’s no affiliate program or affiliate tracking links.
How Does Pay-Per-Lead Affiliate Marketing Work?
Step 1. Advertisers Set up an Affiliate Program
Before a company can buy leads from affiliates directly or through an affiliate network, it needs to establish what type of leads are paid. So, first of all, an advertiser creates an affiliate program that explains all the pertinent details, from what constitutes a qualified lead to the payment size to all the minute details that affiliates and affiliate networks may need to know.
Optional: Advertisers join an affiliate network. Some advertisers prefer to run their pay-per-lead programs in-house to control the process and have direct relationships with affiliates. But running a pay-per-lead affiliate program on your own might be too limiting, especially for smaller advertisers, so many outsource it to an affiliate network.
Step 2. Affiliates Join an Affiliate Program Directly or through an Affiliate Network
Once the program is up, any affiliate that satisfies the program’s conditions can register, receive a unique affiliate link, and start generating leads.
Optional: Affiliates and advertisers analyze their leads. Throughout the lead’s journey from discovery to conversion, or if the lead was rejected, there are plenty of marketable details affiliates and advertisers can collect and analyze. In-depth lead tracking and analytics distinguish successful marketers from mediocre ones.
Now that you know the basics, let’s take an affiliate’s perspective on pay-per-lead marketing.
Pay-Per-Lead Affiliate Marketing: Affiliate’s Perspective
Put Quality Above Quantity
The biggest mistake of beginner affiliates: chasing volume over quality. Of course, you’d like to sell enough leads to hit the payout threshold, but low-quality leads will not only be rejected but also get you blacklisted if you send them constantly.
Example: If the minimum payout threshold is $100, and you’ve generated 15 leads at $5 per lead, you haven’t hit the threshold and need five more leads to get paid. However, as I’ve mentioned, bridging the gap with low-quality leads might have the opposite effect. So, choosing a program with a lower payout requirement might be better than compromising traffic quality.
Track Your Side of the Funnel and Beyond
Lead tracking is the number one strategy to maximize both lead quality and volume, so I’d suggest going as granular as technically possible. Use sub-IDs to track traffic sources, ad creatives, landing pages, locations, and keywords – this way, you’ll know what efforts drive quality leads and what traffic channels and types of leads underperform and why.
Important: As an affiliate, you’re naturally limited to your side of the funnel – you don’t know whether your leads convert or how they behave after being sold – so it’s important to work with advertisers or networks to get this data. Post-lead tracking can take your campaigns to the next level.
I recommend checking the affiliate network’s or advertiser’s terms of service for sub-ID guidelines and discussing your tracking setup and what performance insights they can provide for the leads you sell. You can create sub-IDs like campaign1_ad1 and track them internally (usually, no agreement needed) and also pass them to the advertiser or network for feedback.
Diversify Traffic Sources and Affiliate Programs
Relying on a single pay-per-lead program and traffic source is highly risky. What are you going to do if the advertiser terminates the affiliate program or algorithms change? Diversifying risks is surely a high priority for any pay-per-lead affiliate marketer.
A good starting point would be to join 3 to 5 pay-per-lead affiliate marketing programs and allocate around 65% of your marketing budget to proven channels while using the rest to scale and experiment – an allocation that grants a balance between stability and growth.
Negotiate Better Terms with Advertisers
Many aspiring affiliates are surprised that most advertisers and networks are open to negotiating higher payouts, faster payments, and other incentives. It’s quite true, but you have to support your request with data.
The gist is to show your advertiser that you both will be better off if they increase the commission size, implement tiered payouts, or make payouts more frequent. I would recommend bringing in “you vs. other PPL affiliates” statistics: how many leads you generate, how many of them convert, how much you’re willing to charge per lead compared to the average affiliate, and how much more your advertiser will earn by having you as their partner.
Ensure Compliance When Generating and Distributing Leads
First, you need to check whether your advertiser accepts the types of leads and the traffic sources you’re using. For example, they may only accept leads from one or a few states, of a certain income level, or they might exclude, say, social media or SMS traffic.
Next, you must ensure your creative assets and claims comply with federal rules, state-level regulations, and the advertiser’s specific terms and conditions (if any). With software like ValidRecord, compliance is quite manageable.
One more thing: To stay safe, keep records of your leads, ad creatives, landing pages, and traffic sources. Then, if a merchant disputes your leads, you can defend your case. The good news is that ValidRecord stores detailed lead records, so you don’t need additional software.
Get Maximum Value Out of Lead Rejections
Some of your leads will inevitably be rejected by the advertiser, even if you generate quality traffic otherwise, because of a mismatch, compliance violations, or low intent.
In this regard, you can do several things:
- Review the merchant’s requirements thoroughly from the start. Check allowed traffic sources, lead generation methods, geo-targeting restrictions, compliance rules, and other qualification criteria, and ask clarifying questions to confirm ambiguous criteria.
- Simulate pay-per-lead campaigns before taking action. Use predictive modeling software to get data-driven predictions of your pay-per-lead outcomes without risk. Simulate campaigns with different variables until you find the perfect setup.
Pay-Per-Lead Affiliate Marketing: Advertiser’s Perspective
Naturally, pay-per-lead advertisers aim to acquire as many purchase-ready leads as they need at the minimum possible price. This demands effort: demonstrating to affiliates that your program is the most competitive in your niche.
Communicate What Leads You Need
While you know what leads you need, this may not be obvious to affiliates. Clearly define your ideal lead, including demographics, traffic sources, compliance, and other qualifying conditions. Try to find a proper balance.
On the one hand, you can’t be too restrictive unless the demand among affiliates is high. For example, requiring a credit score upfront for mortgage leads may scare off affiliates. On the other hand, you need to be precise enough to get the leads you can convert into sales.
Reward High-Performance Affiliates
First, make sure to enroll only meaningful publishers in your pay-per-lead program. Accepting everyone might be a good strategy to kick things off, but you have to start screening affiliates rigorously once you’ve gained some momentum so you can get quality leads.
A pay-per-lead affiliate program is a set of rules that establish what qualifies as a paid lead; in other words, what customers the advertiser pays for and what customers don’t result in a payout. Lead qualification criteria include location, traffic source, income level, gender, and other parameters. Pay-per-lead affiliate programs are created by advertisers that either run them on their own or submit them to affiliate networks to gain access to more affiliates. Explore our curated list of 12 best pay-per-lead affiliate marketing programs.
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