Maximizing Earnings with RevShare: A Modern Perspective

Unlike one-time fixed payments, RevShare is like planting a tree and enjoying its fruits season after season. What’s more, this model has turned out to root itself firmly in various industries, especially in affiliate marketing.

In this post, I am going to talk about the nitty-gritty of RevShare, its real-life applications, its pros and cons, and how it stacks against other models like CPA (Cost Per Action).

What is RevShare? Understanding the Basics

Think of RevShare as a team sport wherein everybody shares in the spoils of victory. Whether I’m a blogger, social media influencer, or seasoned marketer, with every profit made by the business through the customers I drive, I get a piece of the pie.

Scenario: I blog excitedly about a subscription box service. Every time a person subscribes through my link, I get a slice of that subscription fee — the best part being not once, but every month they stay subscribed. It’s the difference between selling an apple versus selling an apple tree. With RevShare, I am building a relationship that keeps on giving.

Let me break it down for you with an example. Suppose I am an affiliate marketer working for a web-based subscription service. Let’s say I write a compelling blog post that gets people to sign up. Now, whenever one of them renews their subscription, I get a cut. It’s not a one-time deal; as long as they keep subscribing, I keep earning. It’s like having a rental property — just like the rent checks keep coming in as long as the tenants stay.

Deal structures in affiliate marketing can vary greatly for RevShare. Average ranges can be from 1% to even as high as 90%, depending on the exact agreement and industry. In the iGaming space, for instance, it’s common to see an affiliate like me receive around 40-50% of the net gaming revenue that players I send their way generate. This can amount to huge passive income over time, attracting many affiliates.

Here’s another practical example: Suppose I refer players to an online casino. If these players generate $1000 of net revenue for the casino, and the RevShare agreement is 50%, I would earn $500. This goes on for as long as the players continue playing and generating revenue, thus supplying me with a continuous flow of passive income.

Advantages and Disadvantages of RevShare

Advantages:

• Valuable Earning Potential: Undeniably, the earning potential is very attractive. I can profit from every recurring purchase made by the customers I refer. Imagine referring a friend to a subscription box and getting paid a percentage every month he or she stays on – easy peasy.
• Long-Term Relationships: RevShare can help me build long-term relationships with affiliates and merchants. In other words, it supports continuous effort and loyalty. Building a close network with mutual benefits is straightforward; the more effort I put in, the more we both gain over time.
• Low Risk of Financial Losses: Especially for new affiliates, RevShare reduces starting costs and risks involved, encouraging entry into the market. I don’t stand to lose much in terms of upfront costs; my earnings grow as the business does.
• Motivation for Quality Traffic: I am motivated to provide good-quality traffic that is more likely to convert and generate further revenue. Similar to taking care of a garden, the better you care, the better it flourishes.

Disadvantages:

• Uncertain Earnings: Earnings can be quite uncertain, swinging with the vagaries of markets and customers. While one month may be a windfall, another could be very dry. I need to have an adequate fiscal cushion.
• Dependence on Advertiser Performance: A tarnished product or poor performance and reputation of the merchant’s product/service can hugely affect my receivables. Even the best marketing efforts cannot save a poor product.
• Early Effort vs. Payout Time: It could take quite an effort and resources before one can actually expect to reap something substantial. It’s like planting seeds – you have to give time and care first before you can see the return on your investments.
• Revenue Attribution Disputes: Poor tracking and attributing of possible revenue can lead to disputes. Clear communication and proper analytic and tracking tools help eliminate disputes and save from legal procedures.

Now, Let’s Compare RevShare with CPA

Revenue Potential: Think of CPA as a one-time gig — I get paid for a specific task only once. It’s like a handyman who comes in to fix a leaky faucet — that’s predictable and straightforward — but once the job is done, so is my earning potential. On the other hand, if it is going to be a RevShare deal, then I am more like a landlord. The longer the renters’ tenancy, the longer I keep earning from the rent paid. So, actually, there is no cap on how much money one can make; the sky is literally the limit.

Risk and Predictability: CPA is like working a salaried job, in that I know how much I’ll bring home with each paycheck, so it’s low-risk and very predictable. RevShare is more like freelance work. My income changes every month, depending on how my clients are behaving. It feels almost like a rollercoaster ride, but the possibility of reaping windfalls in one good month can far outweigh a fixed salary. This makes RevShare a bit more adventurous.

Incentive Alignment: RevShare aligns the incentives of affiliates and merchants more closely. Since I benefit from the long-term success of the customers I refer to them, I have an incentive to drive more engaged users. CPA, on the other hand, focuses on short-term conversions.

When to Go for RevShare vs. CPA

Factors to Deciding on RevShare

Long-Term Engagement:

• If the products or services you promote to your audience have a high rate of customer retention, then this model can be very useful. Examples may include subscription services, gaming platforms, online casinos or software that people are going to use on a regular basis.

High CLTV:

• Where the lifetime value of a customer is high, RevShare can really maximize your earnings, especially in industries like iGaming and SaaS.

Passive Income Focus:

• If you want to passively create a steady stream of income over time, it will be best to stick to RevShare. You keep earning, as long as your referred customers stay active.

Incentive Alignment:

• While vested in the long-term success of the business, through RevShare, your interests are aligned with the company. This is good if customer engagement and business growth are very close to your heart.

Deciding Factors for CPA

Immediate Payouts:

• If you like quick returns on your labor, go for CPA. It permits immediate payout for every action, be it sale, sign up, or a download.

Low-Risk Tolerance:

• CPA can be quite helpful when you want predictable, stable earnings with less risk. This model ensures payment for specific actions taken by the user, but at the same time it doesn’t focus on long-term customer engagement.

Short-Term Campaigns:

• If you run short-term marketing campaigns or promotions, then CPA simply works much better. This can be really effective for events, product launches, or seasonal promotions where immediate results are needed.

High-Volume Traffic:

• Provided that you can run a high volume of traffic quickly, then CPA can be very lucrative. It works when you have an ability to drive large volumes of traffic and seamlessly convert many of these visitors into immediate actions.

Balancing Both Models

Hybrid Approach:

• Sometimes, running both models works to your advantage. This could mean starting with CPA to make some profit quickly and then moving over to RevShare once you develop a more established audience for the long haul.

Industry and Product Consideration:

• You want to consider precisely what industry you are in and exactly what product you are promoting. Certain industries, such as iGaming and subscription services, are oriented toward RevShare by default. Others, like e-commerce, might be more oriented to CPA.

Begin with the analysis of these very factors, and you will be able to define which is more beneficial for you — operating on a RevShare or CPA basis — considering the goals in business, risk tolerance, and the type of product promoted.

Conclusion: Will a RevShare Agreement Work for You?

Choosing the proper model depends on your interests, resources, and tolerance for risk. Compared to RevShare, which is suitable for those looking for long-term income and prepared to invest well in traffic and customer engagement, the doubts can be numerous, but the rewards can be significant.

Weighing the advantages and disadvantages, considering the nature of the products being promoted, and assessing the ability to drive and convert traffic effectively will help make an informed decision. Understanding the intricacies of RevShare will help use this model to achieve sustainable success in marketing efforts.

Written by Renat RashevskiySenior Copywriter at Alpha Affiliates