Understanding The Deal For Binary Affiliates

Understanding The Deal For Binary Affiliates

Michael Katz looks at the questions to ask and which revenue models to pursue to get the best deal on finding a binary option brand to send traffic which is reputable, offers good deals and pays ontime.

Published 13th March 2016

Cue flashing lights and ambulance sirens! The majority of online trading platforms, whether it’s forex or binary options, begin life like an episode of Casualty or ER. Starting from critical condition, born from an emergency situation to make money, these newly formed brands rely on the life support of strong lead generation, resulting in hard and heavy deposits, in a best case scenario. Without being shocked to life with an intake of leads that convert via a strong sales conversion team, and then continual depositing from the work of heavy hitting retention agents, the platform will cease to exist. Rapidly! New binary and forex brand owners are compelled to let their heads of marketing know that the whole success of the business is upon their shoulders. Should they fail in their role, there will be no business. No pressure there then. That’s just how it is. So, from day one, online marketing directors for newly established online trading platforms have fear of failure as their key motivation, which drives the marketing effort for good or for bad. Not such a good starting point for complex deal negotiation. Then, while the marketing director is establishing new deals, the goal posts change. The owners add three more languages to the sales team, bringing the total number of telephone sales people to 23. Now, in addition to frantically hunting for the right online partnerships and media, the marketing director has to supply enough leads on a daily basis to keep 23 people, in four languages, busy. “Where are the leads?” becomes the mantra of the owners. “These leads are bad. They don’t answer!” becomes the mantra of the sales team. Then the dilemmas start to kick in for the marketing team. Should the deals be CPA, knowing that the lead count per affiliate will, in all likelihood be pretty low to begin with? Also, how long can the affiliate remain happy if the sales team is unable to convert leads? With that in mind, CPL sounds like the option to choose. Just one problem. CPL deals are costly and the owner has already made it clear to the head of marketing that an immediate return on investment is mandatory. Knowing this information from the affiliate perspective should assist affiliates in deciding which platforms to promote. Depending on your own traffic sources, working with the big established platforms is not always the right move either. For example, some of the bigger operators do not concentrate on conversion. In fact they put in minimal to no effort on conversion. So, unless your traffic is ‘self-converting’ it could be a waste of your resources.

The burning questions

So how then should affiliates decide which brands to promote and which to avoid? And which revenue models to pursue to obtain the best deal? Here are the key primary questions to ask an affiliate manager. And let’s assume that the answers given won’t be too liberal with the truth.

  1. How long have you been in business?
  2. What are your payment methods for affiliates?
  3. How many sales people in your call centre?
  4. What’s the percentage split between retention and conversion?
  5. What is your conversion rate for each of your targeted geos?
  6. What’s your average trader value?

These are basic questions that may or may not be answered. If they are blatantly not answered, it would probably indicate a ‘problem’ and should set off a warning sign to avoid working with the specific program. Questions one and two relate to the brand. If it’s a new brand, the chances of paying affiliates on time should be high in order to establish a good reputation. However, if there is only one option for affiliate payments, for example ‘wire’, then the chances of paying affiliates on time, if at all, are slim. Even if a brand is seen as an official sponsor of a bona fide soccer team, it shouldn’t be assumed that they have money to pay affiliates. On the contrary, if a new brand enters into the marketplace with a big sponsorship deal under their belt, the chances are that they are in a financial hole from day one.

The remaining questions relate to the working operation. It’s very unlikely that an entire call centre would be dedicated to affiliate conversion. Therefore, to get an idea of how much effort will go into converting the traffic that an affiliate may send to a brand will take some probing. There would definitely need to be a split between conversion and retention. The split is unlikely to be 50:50 but more like 80:20 in favour of retention. Retention is where the money is at. If a broker doesn’t have a strong retention team, then they won’t be in business for very long. And by retention I mean people who sit on the phone, calling depositors to make them a compelling offer to re-deposit and continue trading. Not justa string of promotional emails which may end up in a spam box. Conversion rates for geographical locations will be something that won’t be instantly known by the majority of affiliate managers. If an affiliate manager immediately answers the question with statistics, in all likelihood the information is made up. If however, this prompts a dialogue where the affiliate manager asks where the traffic is from, whether the traffic is incentivized, which funnels are used etc., this would suggest that the affiliate manager knows what they’re talking about. Still doesn’t mean that the figures are real. But they could be within a rough ball park figure. It would seem that more regulated binary operators are looking to do revenue share deals. Especially for specific geographic locations such as GCC. And why not? The deals are less risky and it leaves more time to pay affiliates. But affiliates beware! Understand the calculation. Profit/loss minus withdrawals does NOT account solely for deposits. Losses come from deposits and bonuses, so make sure to understand which figures go into losses and also if any trader profit is carried over indefinitely. With carry over, all it takes is one trader winning a large amount to negate all profit for quite some time. When revenue share is on the table, it’s always prudent to ask about average trader value. To understand how to benefit from the best deal – do the math. Current CPA’s range from $250 to $550 depending on geographic location and traffic sources. Additionally, CPA’s only kick in once the trader begins trading. Many affiliate programs place a minimum volume requirement to activate a CPA payment. Revenue share deals range from 20% to 45%, but most brokers cap at 35%. If an offer of 40% to 45% is made I would suggest proceeding with caution. CPL deals range from $10 to $30 per lead but would only be done by new operators. Additionally, if using sales funnels for lead generation, there would be a need to involve API integration. Not every platform has this functionality. The brands using spot option technology should all have this readily available. In order to choose a revenue share deal that would work out well for the affiliate, the trader value would need to be in excess of $1,500 and would depend on an expert retention team constantly working with traders in order to keep their accounts actively trading. Therefore, try to read between the lines in order to establish how good - or not so good - the retention efforts of the brand really are.

The key players offering binary options platforms to brands consist of SpotOption, TechFinancials, Tradologic, Playtech and newcomer OSystems. There are now over 400 online binary option brands utilizing their trading platform, CRM and miscellaneous other components. Finding a brand to send traffic to has never been easier. Finding a reputable brand which pays on time and offers competitive deals is not as easy. It’s hard to predict what the future holds in store for trading binary options online, but one thing for sure is the growth of mobile apps for all trading. This gives affiliates an opportunity to drive traffic through mobile sales funnels which is currently considerably cheaper than web based traffic. But it all comes back to the question of conversion. My advice to affiliates who are starting out and looking in the direction of lead generation from sales funnels would be to ensure ownership of the leads. Create funnel pages and capture the leads prior to sending them to a brand. Try to avoid spending money on media to send traffic directly to the landing pages offered by the brand. Dive into the mindset of an online trader and try to think from a different angle. Understand what would entice a person to open a trading account. What would assist people trading online? Is there a way of offering something that would persuade people to deposit without a call from a conversion agent? None of this is rocket science but it does require hard work and perseverance to enjoy the rewards of trading affiliation. 

“In order to choose a revenue share deal that would work out well for the affiliate, the trader value would need to be in excess of $1,500 and would depend on an expert retention team constantly working with traders in order to keep their accounts actively trading.”

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