Affiliates News

CPA vs. Revenue Sharing Models

Monday, 12 December 2016

One of the most debated topics that comes up for all poker affiliates is -- should I choose the CPA model or the Revenue Sharing model? The answer to this can be quite complex and often times vary from affiliate to affiliate.

But first things first, let’s make sure we understand what the two different models are at a high level.

What is CPA

CPA stands for “Cost Per Acquisition”. The basic premise here is that you get paid a flat fee for referring depositing players to the poker account. The amount of money per acquisition varies greatly from program to program. Anywhere from $100 to $300 CPA deals tend to be the norm.

What is Revenue Sharing

Revenue sharing (RevShare) is when you earn a commission for all of the “action” you send a program. When a player signs up at the poker room via your revenue share link, you now earn some percentage of the lifetime rake this player generates for the company. Revenue sharing deals often times are in the 15-40% range and again vary greatly from program to program. You can typically get a larger percentage commission the more players you bring to a program.

Now that we have just briefly visited what these two models are, let’s dive a bit further into each one and try to get some answers on the differences, pros and cons of each.


Some Benefits of CPA Model

First off, some affiliate programs may not give you a choice between CPA and RevShare. But if you choose or are on a CPA model you have some benefits you can enjoy. To start, the best part about being on a CPA plan is that you get paid right up front. You simply refer players and after they deposit some small minimal amount, you get paid your full CPA amount.

If you are a new affiliate or struggling with your cash flow, this is a very good thing. This makes it much easier to know the value of a customer you send to a program.

The second benefit is that you don’t have to worry about this players activity going forward. With the Revenue Share model you are worried about player retention, because the more the player plays -- the more you make. But that’s none of your worry with CPA. Your job is done once they deposit.

A third benefit is the fact that there is no effect on you if an affiliate program changes terms, closes down shop or gets acquired by another company. With RevShare, these things can completely cripple your company if you had spent 3 years building a player base at a poker site and then all of a sudden they shut down. Ouch, no more revenue at all with a drop of the hat. Again, on the CPA model you don’t worry about that. You get your money up front and move on focusing on referring more new players.

There are many different benefits to being on a CPA plan but it all comes down to the fact that you are getting paid your money UP FRONT and not over the lifetime of the player. Depending on the type of affiliate you are, this can be a good or bad thing.


When Should You Choose the CPA Model?

As we mentioned above, there are some programs that won’t allow you to choose the CPA model. But if you do have a choice, strongly consider it if you are hurting for cash. It’s a way to build cash quick. You may potentially lose some long term revenue, but in the beginning it’s a way to get things rolling.

Secondly, definitely choose CPA if you don’t necessarily trust the program you are promoting. This begs the question as to why you are promoting them in the first place, but if you aren’t 100% confident in them, choose CPA so you aren’t stuck with players on a RevShare plan as the site folds.

What Strategy is Best for CPA?

Once you have made the choice to be on a CPA plan -- now you have to execute your strategy. On this model, it’s all about getting as many new players as possible. The “player value” doesn’t matter nearly as much to you as it does on a RevShare model. So continue feeding new players to the site and leave the rest (getting them to deposit) up to them.

Also consider re-investing some of your CPA profits into new player acquisition. Since you aren’t building any “residual” income with CPA, you will constantly need to invest time and money into finding new players.

Ok, let’s now shift gears and talk about Revenue Sharing and what benefits this model may provide.


Some Benefits of Revenue Sharing

One of the best ways to think about the Rev Share model is to understand that you are building “long term” income potential. With CPA, it’s more about making money NOW and moving on. Rev Share you are now concerned about the player value you send to a poker site, because the more they play -- the more you earn.

This can be a massive benefit to choosing the RevShare model. Let’s look at a financial example between Account A that is on a 30% revenue share plan and Account B that is on a $200 CPA plan. These are made up numbers only for this example.

In this example, both accounts send 100 depositing players to the poker site/program they are promoting. With Account B (CPA), the income math is easy… That account made 100x$200 or $20,000 off of those players. Case closed.

With Account A (Rev Share), the affiliate has to wait a bit longer for the income to build up. But let’s just assume every affiliate generated $300 in rake that first year. At a 30% revshare rate, Account A made $90 off each player in year 1. That equates to 100x$90 or $9,000… It would appear CPA is the best route here right?

Not so fast. Now is when we introduce two concepts. First, what about those WHALES! What’s a whale? A whale is the type of player every affiliate dreams of. It’s the type of poker player that plays 30 hours a week and generates tons of rake.

For this example, let’s now assume you had 5 whales of the 100 players you sent. These whales generate 10x the amount of rake of a “average player”. So instead of $90 you now made $900 off of each of these 5 players in year 1. That’s an extra $4,050 in year one bringing the year 1 total to $13,050.

The next thing is the real key benefit to the revenue sharing model. Residual, year after year, income potential. We know poker players are loyal to where they play. Once they find a home, they typically stay put. So let’s assume these same 100 players stay at this site for 5 years. Even with NO GROWTH in the amount they play, you have now generated $65,250 off these same 100 players that you only made $20,000 off of in the CPA model.

So that’s the true benefit of RevShare. It’s a long term play instead of a short term play. You are building residual money from those players.


When Should You Choose the Revenue Sharing Model?

Like we mentioned in the CPA section, this choice really comes down to your mindset and what type of affiliate you want to be. Are you looking for the quick buck? Or are you looking to build long term player value and wealth with a few select programs. If you are in this business for the long run, Revenue Share is a much better model.

You can often times build up more trust and relationships between yourself (the affiliate) and the program when you are on a revshare plan too. Why? Because the affiliate manager knows you are in it for the long term. They know you have vested interest that their site does well.

What Strategy is Best for Revenue Sharing?

The strategy changes quite a bit when you are on a Rev Share plan vs. the CPA plan. When on a revenue sharing plan you now have to take into account player value. If you send a player to a site, they play, and leave that site in 1 month -- you don’t make much money. You want to really encourage long time play for your players.

Teach them how to play the game and how to win. Because remember, the more poker they play, the more rake they generate, which means more money for you.

To Conclude

So to conclude this article, there is no right or wrong choice when looking at CPA vs. RevShare. They both have their pros and cons. In the end it comes down to the fundamental thinking you have as an affiliate. Do you want to make your money up front and then “move on” or are you looking to invest in a program and your players and make your money in the long term.

Good luck with your poker affiliate adventures!



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