American and European CPA models

American and European CPA models

Xoxo, Reznik here! Today we gonna split CPA networks apart, prepare your chainsaw.

From the point of view of a simple man in the street, almost all affiliate networks look the same: we create the traffic and get paid for conversions … or for leads. This is where an interesting aspect arises that rarely interests webmasters, suppliers, network owners, but delivers a lot of ass-pain to technical staff.

Important! Everything described in this article at the time of publication is not an established common truth of the CPA community. This is nothing more than a personal opinion of the author on an important technical aspect of the affiliate network functioning.

LD;DR: summary

All affiliate networks can be divided into two groups according to which entity underlies their work: conversion or lead. The American (Western) model works with conversions, the European (Eastern) model works with leads.

What is conversion?

Conversion is a light-weight entity which indicates a paid action. This entity is truly light and usually has only this data fields:

  • Date and time. No way to work without them, they are the heart of the statistics. You may leave the exact time of conversion, if your statistics works on by-day basis.
  • Offer. Conversion cant exist single, if it appears – it must be liked to an offer. Even if you have only one offer in your network, conversion belongs to it.
  • Payment. The third required parameter the conversion can’t live without. Anyway, conversion is primarily a payment for the committed action. Sometimes zero …
  • Status. Quite often, conversions have not only their existence, but are in one of the elementary statuses: waiting, accepted and rejected. At the same time, only accepted conversions are paid.
  • Goal. If the offer has several paid actions, each of them is a goal. Conversion payment usually depends on the goal it reached.

All you need to know about conversions from a network perspective is their number and total amount. Each specific conversion does not matter. We only use quantitative, but not qualitative accounting, and this is the most important.

What is lead?

Comparing to conversion, lead is much and much fatter. It appears, if you put the conversion on a diet of donuts and burgers. And no diet coke!

The key and most important difference from the conversion: the lead is not just a digit in the columns of the statistics tables, but a full reflection of the real order carried out by the buyer, or the action performed by the user. It always contains all the fullness of information necessary for its processing.

The lead inherits the complete composition of the conversion data and may additionally include:

  • Customer data. Usually the most important of it is the telephone, which is used by the call center when processing a lead. This data also includes the name of the buyer and his e-mail. When registering for services it can also contain a login and password.
  • Delivery address. An integral part of the commodity business. When calculating statistics, the address takes into account at least the buyer’s country.
  • Delivery progress. Also has a direct relationship to the commodity business. Delivery status is used to calculate buyout statistics. In some cases, the lead payment itself depends on this status.
  • Order contents. It can take very diverse forms. There may be just a sum, if we are talking about the reflection of a simple service or, for example, a payment in a casino. Or it may be a shopping basket – an expanded order with indication of specific goods, their unit price and quantities.

Looking around this whole set of fields, we can immediately reveal another important aspect: unlike conversion, a lead is a dynamic entity that can change over time. It receives a part of the fields immediately when it is created, it becomes overgrown with a part of it during its life. Conversion can only change the status, but only in some cases.

Speaking of statuses. Lead has a whole bunch of interesting and not quite understandable states that can confuse an unprepared person. And here’s what’s new here:

  • Trash. Special status for cancelled leads, which allows you do differ valid cancellation from fake lead cancellation. Yes, trash can only be can only be applied to leads. Conversions can’t be trash by design, because they have to data to validate.
  • Cancel reasons. They can either be separate statuses or just tags for “Cancel” and “Trash”. Here you can find both technical reasons like incorrect phone, wrong geo or duplcatated order and ordinary human quirks дшлу “Changed my mind” or “Expensive!”
  • Call-center. It’s not one status but a group of statuses which can contain various types of notes about calls to customers, such as missed calls, requests to call back or scheduling a control call before sending.
  • Warehouse. One more status group responsible for the process of packing parcels, searching for goods, preparing for sending and so on.
  • Delivery. Status group again with the statuses of the delivery process and parcel search, typically containing the final statuses of commodity traffic processing – “Paid” and “Return”.
  • Deals. This group of statuses reflects work with info-products and services, including negotiations, document preparation, payment verification for franchises, courses, real estate or some other serious objects of ownership.

Such a wide variety of statuses makes it possible to apply different payment models. Here we get branches of classic CPA, such as CPS, CPL or CoD, with payment not for approved action (conversion), but for completed deal, valid order, action of any status etc. Conversions can only have one work model – CPA, no exceptions. Again, in the absence of other statuses except for confirmed and rejected conversion.

American or Western model

It’s Obvious even without the Captain: since these entities have such differences, they must have their own areas of application where they feel great.

Conversions formed the basis of those offers where each specific action is not too important. First of all, it is such a vast area as games and applications, whether mobile or desktop. Paid actions in applications ideally fit on this concept – the fact of registering in a game, reaching a certain level, killing a monster, or simply installing an application does not require any extra data.

Similarly, actions on serious third-party resources, such as major online stores and online services, fit into this model. Here it is also sufficient to commit the fact that some user action took place, and assign a price tag for this action.

In such conditions, the entire real process of the conversion processing is hidden from the affiliate network.The network simply sends the visitor to the target resource with its unique number, and in response asks the resource to send notifications about the results. As the result, the network only needs to count and sum the conversions.

I call this model American or Western, since it is most widely spread right to the west of Greenwich. Probably, it was born there. It’s used in such CPA platforms as HasOffers, Affise, Cake and most American affiliate networks.

European or Eastern model

Leads found their place in the sun in the commodity business. With this model the affiliate network bears much greater responsibility for working with each particular lead. It needs to be cherished and nurtured, growing to the state of the order or deal.

Most often, the lead originates on separate sites directly belonging to the network – landing pages, optimised for the sale of a certain product. Sometimes it enters the network from the side using the API. At the same time, in any case, it is full-fledged and contains everything necessary for processing. Actually, it does goes on processing further. It can be carried out in the same place where it has already come, or in a third-party CRM system. Such a chain of lead transfers can be organized indefinitely.

I call this model European or Eastern by completely similar principle – it has taken root to the east of Greenwich. It’s implemented in my AlterCPA, various CRM solutions (like, LeadVertex), in most commodity affiliate networks of ex-USSR. Some of them, like AlterCPA, even have serious CRM solutions inside. For example, great internal CRM for merchants of MonsterLeads CPA.

Pros and cons

Captain Obvious here again. Since both models are so actively used, and neither of them has the upper hand, it becomes quite obvious that they will have both pros and cons from which their areas of application appear.

Conversions are perfect for their lightness and simplicity. It is impossible to come up with a better solution for working with applications, third-party services and sites.

As part of data structure, conversions are easily placed in very fast static database tables. Leads will yield to conversions in productivity, without proper fine and wise optimisation of work.

To work with conversions, it is enough to receive minimal notifications from the merchant resource with a visit number and a conversion price, which can be easily implemented on any site.

The advantages of conversions over leads end here. If you put the lead on a fairly strict diet, it eventually degenerates into a conversion. Therefore, all the advantages can be easily used by leads in case of good optimization.

The undoubted and one of the most important advantages of the lead model is the possibility of full-fledged integration by API, which opens up wide spaces for resellers. Lead can be safely transferred between networks hidden from prying eyes, as described above.

Integrations include more than just a reseller model. They are also needed for cloaking. No matter how you try, in no way will it be possible to fasten the cloak securely to an external resource, while it works perfectly with the landing page. In addition, landing pages are very easy to steal or get from the supplier.

Leads due to their “fat contents” require much more technical resources. Both hardware for data storage and brainware for the implementation of such a data model that won’t be wildly slow.

Which approach is better?

It is impossible to give an unequivocal answer, each approach has it’s pros, cons and use cases. It is up to you to choose, after a careful and thoughtful analysis of your subject and working area.

I chose leads for AlterCPA, because this approach allows you to implement absolutely any workflow. At the same time, I put a lot of effort into optimizing the entire technical side as much as possible – this is how leads work at the speed of simple conversions.

Reznik here. Out!