Commission model: prepare to dive into Revenue Acquisition

20 July 2020

Let’s start by framing a typical example: You have your app and you want to find a marketing agency. An agency that takes on all of your ideas and objectives for your app while letting you breathe freely and focus on other key areas. You start researching these company lists and… wow, there really are a lot of agencies with similar-looking approaches. What’s the deal here?

The “standard” market model you might see for traffic is CPI (cost per install). CPI is a straightforward approach but it carries risks and has a high potential for fraudulent traffic. App owners, more often than not, want to focus on high volume traffic with good conversion rates. Meanwhile, agencies seek to earn money on your offer. This model can allow agencies to use fraudulent traffic to drive up payouts with low-quality traffic which brings nothing back to your app’s revenue. In some cases, you can simply be duped out of the chance to earn money.

To prevent such situations, you can use a mixed CPI+KPI model, where you specify the goals and objectives for the agency. For example, you can set concrete GEOs, the device model, the ROAS, etc. With this approach, clearer goals are defined which narrow down the scope of the agency’s work and close the gap for fraud.

It’s important to mention there are other models: CPA (cost per action) is another popular approach. With CPA, you can pay for specific actions that users take after they are acquired such as registration, finishing a tutorial, reaching a certain level, etc. In a lot of cases there is not a huge difference from CPI and similar models.

AdQuantum is differentiated from other companies on the market by our unique approach. We call our approach “Revenue Acquisition” as our entire focus is on bringing revenue to apps. It removes the need to worry about fraud, fees and other risks. The way we collaborate is setup so that our marketing team is only concerned with your profitability. We identify the most profitable traffic and help you reach it without the limitations presented by the CPI + KPI model.

You’ve probably already understood that Revenue Acquisition provides specific guarantees for both the client and agency. This is because it is based around the Profit Share model. Our interest is in making the maximum profit for you because this creates a win-win situation for both of us (the profit we bring is shared between us).

Our experience has determined that there is a step we can take before diving into Revenue Acquisition which strengthens our position when starting on this model. By starting on a commission basis with a determined budget, we can acquire the necessary metrics for working in Revenue / Profit Share models. We believe that starting without the commission model means starting without paying the necessary attention to obtaining metrics. Starting with commission carries greater benefits for both sides.

It’s also worth mentioning, agencies that engage in the commission model are not taking on easy work with quick payouts. The commission is not enough to cover their investment, both financial and other resources internally. The agency will still be covering creative production and paying for the work of their UA managers. It’s a mutual investment in search of a stronger collaboration post-test. 

In this situation, the right budget may not be clear. AdQuantum will work with you to find a comfortable way to start the onboarding process. In the case that your app is in the soft-launch stage, this model can carry even more benefits as we will collect all the necessary feedback, analysis, and data from our tests to make things smoother moving forwards.

When you work in a commission model, you simply pay a % commission on the ad spend run by the agency. In most cases, we charge 10-15% depending on the product and additional services provided during the spend. In special cases this fee can be between 15-20% if it is deemed necessary.

Nevertheless, a commission model is not a performance model (except some rare cases). AdQuantum usually suggests a commission test and when it shows success, we can transfer over to a Revenue Share model. Revenue and Profit Share models provide greater transparency to both sides through ad metrics access. We see the commission as the first step towards the Revenue Acquisition approach.

Many agencies will see your test budget as the total sum required for spending, but this isn’t in our interest. At AdQuantum, we believe the test budget should be determined depending on the specific product. If test campaigns are going well, we move the rest of the allocated budget into the main budget for the next stages.

AdQuantum’s focus is your profit, and the main priority is reaching your goals. Do you choose to collaborate with Revenue Acquisition, Commission or CPA? It doesn’t matter! Because AdQuantum shifts the focus away from financial and fraud worries, allowing partners to pursue fresh revenue streams through our performance marketing. 

This article covered the launch stage of our Revenue Acquisition approach. In a following article we will explore further our creative labs and their approaches to creative production.

Don’t hesitate to reach out and contact us right now!


Article's Author: Konstantin Ivanov

Konstantin's Twitter: https://twitter.com/Charodei_Ent

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