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Commission or CPA? Which is better for the advertiser?

3 March 2023

A performance agency is usually catering to a few decision-makers on the advertiser’s team:

Hence, the aspects an agency tends to highlight in the proposal are:

  1. Service
  2. Expertise
  3. Money in exchange for money (profitability)

Every reputable performance agency is active in terms of PR. They are active on social media, attend conferences, and have a portfolio of cases. That brings service and expertise to light. However, when it comes to money (the payout terms), there is less clarity.

There are 3 common payout models available:

To compare:

1. The budget + commission model is often overlooked, but there are ultimate advantages:   

2. CPA is commonly used, but it has limitations:

3. The Profit Share option opens up after testing, so I won’t be reviewing it in-depth.

Commission-based payout model appears to be the optimal choice for the start of the partnership: the advertiser retains control, while the agency receives enough support to ultimately increase ROAS.

Choosing the right payout model is essential for a successful advertising campaign. By collaborating with the performance marketing agency, advertisers can leverage their expertise and service to achieve the desired results. 

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