Quick Answer: CPS stands for Cost Per Sale. In affiliate marketing, it’s how much it costs on average to generate a commission and a helpful metric used to measure the profitability of campaigns.
Cost Per Sale forms a part of the broader category of Cost-Per-Action (CPA) and is essentially a payment method for advertising products and services on the internet.
This means that every time someone buys a product or service via the link provided by the affiliate, the affiliate gets paid.
This term is commonly tossed around in affiliate marketing.
The CPS starts with a budget and a date range. The publisher has to build a creative asset and then develop a captivating advertising campaign to drive traffic and boost conversion rates.
Every sale made through an affiliate link is tracked and monitored so that at the end of the period, the associated cost for each sale can be calculated which allows companies to design their digital campaigns more cost-effectively.
How Is CPS Calculated?
The formula used to calculate the Cost Per Sale is:
CPS = Total Cost of Campaign/ Total Revenue Generated
A good CPS varies depending on the size of the industry, the products, and the services offered. Affiliate marketers aim for a CPS that is lower than the average order value of the market offering to make sure they’re getting a good return on investment (ROI).
5 Pros Of CPS
CPS is a great way for affiliates to enhance their revenue by promoting the offers. It also seems like a profitable model because:
- It promises higher commissions and rates to the affiliates than traditional methods
- The commissions on CPS offers are not usually capped which means that there is ample room for affiliates to grow
- The return earned on investments is higher with CPS offers, especially when you pay for the ads as the visibility is increased tremendously
- It is relatively easier to create a blog to advertise a CPS product
- CPS offers seldom get deactivated so that is one less thing you have to worry about
3 Cons of CPS
- The conversion is sometimes difficult in comparison to other models
- Some CPS offers are more challenging to promote on ad networks; like health, products require extra disclaimers and additional information
- Some offers have high refund rates because of many fake claims
Why Do Some Affiliate Programs Choose CPS Affiliate Marketing?
Easier Optimization
CPS marketing strategies are designed to help you with real-time reporting and active use of data. As you have the power to leverage data in your favour, you can extract useful insights and optimize your campaigns.
The advanced analytics capabilities help you with monitoring of cost-per-acquisition rate and frequency-cap implementation. This provides you with accurate data and an asset of metrics that you can use to fine-tune the placement and targeting of your campaigns.
Wider Reach
In CPS campaigns, the associated affiliate network yields great benefits. The vast network helps you connect to a wide range of customers and increase your reach and visibility tremendously. You can approach a whole new segment of customers virtually across the globe and strategize via market development.
More Control
CPS offers a great amount of control to the publishers and the advertisers. This model develops a strong correlation between banner quality and campaign design and the consequent number of sales.
As you can control the quality of the banner and content, you can have a great impact on the number of sales achieved. The CPS model also allows you to control other factors like clicks generated by bots and IP addresses.
Longer Exposure
One of the greatest benefits of CPS affiliate marketing is that it allows you to display your banner on the affiliate network for an unlimited time.
With other campaign models like Cost-Per-Action (CPA) and Cost-Per-Install (CPI), you cannot avail of this benefit. This means that after a certain period, you have to withdraw your banner from the affiliate’s page.
Publisher-Centric
It is no secret that in comparison to other traditional models, the CPS does not just offer benefits to the businesses but also secures the interest of the publishers. This approach ensures that publishers have more control.
It is a low-risk strategy that attracts traffic of new customers and allows you to track your spending so that you can optimize your budget. In the CPS model, you only pay a commission when the lead generated translates into a complete sale or purchase.
Cost Per Sale: Final Thoughts
In simple terms, Cost-per-sale is a term used to describe a payment method based on the promotion of products, services, or even websites by affiliates. Merchants pay the respective affiliate a pre-decided commission on the sale made. This translates into less vulnerability to fraudulent activities.
Therefore, if you are new to affiliate marketing, this is a good place to start. It is one of the most fraud-protective and cost-effective ways.
To sum up, CPS affiliate marketing pays for itself as the money is transferred only when a sale is made. Also, it ensures greater visibility, reach and offers better insights in terms of analytics.
