Affiliation can be defined as referring other people to a certain business. It is the use of a third party program to increase the business’ sales. It is usually made of four components: the merchant/ brand who owns the business, the network who facilitates payments, the affiliate who is the publisher and the customer who is the trader. Forex affiliate program entails referring potential traders to Forex brokers.
Affiliates often use regular advertising methods such as recommendations, banners, links, e-mail marketing, search engine optimization, content marketing and other forms of marketing collateral.
How Forex Affiliation Works:
- The affiliates provide links or banners on their website for visitors to view as a way of referring them to the online Forex broker’s site.
- A potential trader clicks on the link and may go ahead to register to trade with the broker. When this happens, the trader becomes a client of the affiliate that provided the link.
The affiliate program depends purely on financial motivations to drive sales unlike referral marketing which depends on trust and personal relationships. Forex Affiliates Programs are also most similar to Introducing Brokers except for the fact that their operations are online and they are less institutionalized.
Types of Forex Affiliate Programs
1st tier whereby A Forex affiliate refers potential traders to a Forex broker’s site.
2nd tier: A Forex affiliate refers another Forex affiliate to the Forex affiliate program. Both affiliates will share in the referred forex affiliate’s revenue at an agreed rate.
How Forex Affiliates are Compensated
- Revenue sharing: In this case, affiliates and brokers share in profits and losses.
- Cost per Acquisition (CPA): Payment is made when a referred client signs up for an account or makes a deposit. The more the deposit amount, the higher the compensation amount.
- Cost per Lead (CPL): Payment is made when a referred trader provides his or her details on the broker’s landing page. Rebates: Payments are made as per the volume of clients made.
- Cost per mile (CPM): Payment is made per an estimated 1000 views. This only requires the forex affiliate to put the advert on their site.
- Cost per click: A visitor must be made aware of the advertisement and click on the advertisement to visit the Forex broker’s site. Hybrid compensation: This mode of compensation combines two or more options mentioned above.
Cost per click and cost per mile forms of compensation are less used nowadays because of their lack of emphasis on trader acquisition. Pay per click is subject to click fraud issues.
Before making the decision to affiliate a Forex broker, you should ask around and do your own intensive research on the Broker, considering performance, complaints made about the broker, the length of time they have been in the business and real time ease of traders depositing funds and affiliates withdrawing commissions. You should not focus on rebates alone no matter how high they seem. Some brokers are a scam and may not pay you your deserved commission!