Almost every industry nowadays, whether directly or indirectly, has some form of affiliate marketing. Fortunately, forex is no exception, with affiliates contributing significantly to the client acquisition of brokers globally.
A vital advantage of any affiliate marketing is the low barrier to entry, affording this potentially lucrative opportunity to just about anyone with minimal qualification and reasonable monetary investment. Let’s dive deeper into how affiliate programs work and things to consider.
How does an affiliate program in forex work?
Before diving further into the workings of an affiliate program, it’s good to grasp the simple concept of this kind of marketing. Affiliate marketing is a type of advertising involving a brand compensating third-party publishers for generating paying clients to their products and services.
The marketer will need a platform, typically a website, blog, social media account, or word-of-mouth, to initiate traffic towards the brand they are promoting. As an affiliate, one generally does not need to worry about servicing the clients they’ve referred.
This attribute is one of the main reasons being an affiliate is so attractive. So, how does an affiliate program in forex work? The referrer enters into an agreement with a chosen broker to promote their brand through targeted marketing channels on the internet or word-of-mouth.
The affiliate is assigned a link that the potential client clicks on their own or through an ad, which will direct them to the broker’s landing page. Assuming the referee goes through the entire process of signing up with said brokerage and successfully executes a position, the referrer earns a small set commission for every order or is compensated another way.
Payments normally come through weekly to the affiliate.
The types of compensation methods
There are several interesting ways in which brokers compensate marketers. The two below are the most common ones presently:
- Rebates: This model is the most generally utilized by brokers primarily because it consists of little payouts for every executed trade and large volume to make it worthwhile for the affiliate.
Every pair will have its own rebate per micro, mini or standard lot. For instance, the affiliate might receive $10 for every EUR/USD standard lot trade made by their customers, assuming they’ve met a few terms and conditions, such as leaving the position on for at least 60 seconds to prevent ‘churning.’
The rates vary widely across the board; hence, there is no set standard. The affiliate would continue to earn rebates from their clients’ positions for the lifetime of them staying and trading with the broker.
- CPA (Cost Per Acquisition): This compensation scheme is when the affiliate receives a one-time payment for their referred client depositing a specified minimum and trading a set number of lots, typically over a month.
These two factors are usually the main requirements, aside from other considerable Ts and Cs. Promoters could earn anywhere from $50 and sometimes north of $1000 per trader depending on the amount deposited, number of referred clients monthly, and the lot sizes they execute.
Other payout schemes, though less prevalent, are revenue sharing, cost per lead (CPL), and hybrid. Revenue sharing is when the broker pays a specific percentage of the spreads each referred client earns monthly to the promoter. For instance, if a trader accumulated $100 in spreads, the referrer might earn, say, 20% of this amount.
CPL is whereby the brokerage pays a set fee for the affiliate when their trader simply signs up. This is, of course, attractive for marketers, though the payout is also lower because the referral is only a lead than an actively trading client.
Lastly, as the name suggests, the hybrid is a combination of the abovementioned. For example, the broker might employ the CPL and also revenue sharing or CPL and CPA.
Factors to consider before joining an affiliate program
The decision to join any referral scheme is similar to a regular client choosing a broker for themselves; reputation is everything.
- Working with reputable brokers: Any potential affiliate marketer will want to associate themselves with regulated brokers who maintain a generally favorable reputation amongst trading communities.
Working with such transparent firms ensures a brilliant customer experience overall, an efficient affiliate tracking and reporting system, receiving the appropriate marketing material, and certainty the broker will stand by their financial compensation agreement.
- Providing value to potential clients: One of the mistakes some affiliates commit is using hard selling techniques without first establishing some form of value-add.
Affiliate programs are normally directed towards digital marketers, website owners, signal providers, account managers, traders, bloggers, social media influencers, and rebate providers with a sizable following and the ability to generate considerable traffic.
Their potential customers should already derive something of value first before considering signing up to a particular broker. This ensures trust and doesn’t make them feel as though they were merely being sold for the affiliate’s benefit.
The drawbacks of forex affiliate programs
The earning potential of participating in an affiliate scheme is virtually infinite. However, some disadvantages are familiar with numerous programs that budding affiliates will continually address.
The most pertinent is the requirement for a large number of clients with consistent execution frequency. Referring only a handful of traders typically won’t produce a sizable profit unless the CPA is relatively high.
Brokers pay small commissions per position or have volume requirements for each client over a particular period for the CPA model.
Therefore, the number of the referred clients is the utmost for this kind of business. Of course, inviting this many people can take some time in the substantial promotion, which is naturally a time and money-consuming activity.
Final word
For any person involved in the forex industry in some capacity, affiliate programs could prove a lucrative opportunity as a full-time or even side business. Like any venture, sufficient knowledge is crucial in understanding how forex works to ensure clients know how they could benefit from the services offered by a broker.
Prospective affiliates should not only be allured by the rewards but strive to provide value first and recommend reputable brands they believe in.
