Affiliate marketing
Paying partners a commission for the customers they send - publishers, creators and comparison sites carry the offer and earn on results. Attractive because the cost is contractually tied to outcomes; the catch is that affiliates gravitate to harvesting demand that already existed, so incrementality checks matter more here than anywhere.
Where it's used
Used by e-commerce, finance and software brands with review sites and creators. Good for paying on results. Watch out for partners who only intercept buyers.
How to calculate it
True cost per extra sale = Commission paid ÷ Sales that would not have happened otherwise
Worked example
Illustrative numbersAn affiliate programme pays $10 a sale on 2,000 sales. A holdout test shows half of those buyers would have bought anyway.
Commission paid
2,000 sales × $10 = $20,000
Sales the affiliates really added
2,000 sales × 50% = 1,000
True cost per extra sale
$20,000 ÷ 1,000 sales = $20
What it tells you
The contract says $10, and the real price is $20. It can still be a good deal, as long as you compare the right number.