In one of our previous articles, we covered the factors that forex affiliates should consider when deciding on the right forex affiliate payment plans. In this article, we speak about choosing the right commission plan for binary options affiliate programs. Which brings us to the question you might be wondering, how does it differ?
If you think binary options and forex belong to the same category you might be highly mistaken. While both binary options and forex fall under the online financial trading category, they are quite different when you look closer. Unlike forex trading, online binary options are more focused towards short term profits and is more volatile than forex. On the same note, it’s much more easier to market due to factors such as web based trading platforms, low initial deposit requirements and high bonus payouts to first time investors.
Forex trading on the other hand requires a bit more skill and knowledge and is definitely not for the faint of heart. While at the outset forex trading might seem just as simple as exchanging currency there is a lot more that goes in the head of a serious forex trading than compared to a binary options trader.
Nonetheless, binary options offer great excitement to an otherwise seemingly boring and complex forex trading. In fact a good number of forex traders do take to binary options from time to time to test the waters or when they are on a roll.
For a more detailed article refer to the differences between forex and binary options to get a better understanding.
To begin with, the CPA’s in the binary options affiliate industry vary from $125 to $300 based on the initial deposit criteria, the quality of traffic webmasters send and so on. The revenue share for binary options affiliate programs are in the range of 15% – 30%. There are a few binary options brands that offer a hybrid deal as well. Now that we have a fair idea, the next question that comes to one’s mind is what commission plan is the most lucrative.
In order to answer this question, binary options affiliates or even forex webmasters need to understand a few insights about their sites. As with any affiliate program, revenue share always works out in the long term, but at times CPA is the safer option as the amount you profit depends solely on the initial criteria that customers referred would deposit a certain amount.
Revenue share in binary options
In binary options, the business model from a general perspective is that traders do not pay any commission or fees for trading. Instead when a trade goes against an investor or a trader, it converts to profits for the binary options provider. Also one should note that most binary options providers have a maximum trade limit which is on average $2000.
In order to understand how affiliate commissions are generated, webmasters need to look at the following example:
Trade A makes an initial deposit of $200 and starts trading. The trader chooses to play safe and sticks to the minimum trade amount of $10 for every trade. In effect the trader, for his $200 deposit is able to make 20 trades.
Remember that in binary options there are only two possibile outcomes, which translates to a 50% probability of winning or losing.
- Revenue Share scenario: If we translate this into numbers, then from the $200 deposit, the trader has the potential to lose $100. Now if the revenue share plan was at 25%, this would mean that the affiliate would get a commission of $25. If we throw in another factor, which is the mindset or attitude of an average person, losing continuously or not being able to make a profit will eventually get to the person which ends up in an inactive trader.
- CPA scenario: Sticking to the same example above, if an affiliate is under a CPA, then the job ends the moment the trader has made the deposit (and eventually trades of course)
It must be noted that the above example is just a very generic case study and does not define the entire trader or customer mindset trading binary options.
Signs to look out for
If webmasters are still unsure of what commission plan to choose then this quick check list below will be beneficial.
- What type of a website are you using. For most affiliates who manage their websites, this is a good indication on the kind of traffic you are able to attract. If your site is completely focused on financial news and updates, then chances are that the traffic you receive is well informed and have the potential to convert to good traders. A revenue share option would be the best bet in such circumstances.
- Incoming search terms. The keywords are a good indication of the mindset of the visitor to your website or blog. If someone is looking for a free bonus, chances are that they make the least potential traders, but on the same level if someone lands up on your site searching for a piece of financial news, that doesn’t necessarily mean that they will end up as a good rewarding customer.
- Analytics. If your website has been around for a while, then the analytics should be able to give you a fair idea on the type of traffic your website receives, factors such as bounce rates and incoming search terms form a good criteria to identify the potential from your site.
- Promotion methods. How do you intend to promote a binary options merchant. This plays a critical role. If you are just going around dropping your affiliate links, then it makes obvious sense to opt for a CPA but conversely if your website deals with educational information and tools related to the finance industry then chances are that the traffic you send is much more informed.
The key to an affiliate marketer’s success is being able to join a good forex affiliate marketing program, and to utilize good marketing techniques in promoting salable goods to a targeted list of prospects. There is no such thing as the ideal affiliate marketing program, as one program might make a certain affiliate marketer a millionaire, and another a frustrated loser. Choosing the right affiliate commission plan is quite critical in the fact that, binary options affiliate marketing can be a blinding success for one and an absolute disaster for another. But there definitely are plenty of excellent binary optionsaffiliate marketing programs out there, it is just a question of starting with one, and discovering if you can turn it into success.