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Originally Posted by will76
Your arguments are flawed.
Several companies do contest EVERY month.
So you telling me paying more per signup will not realize more profits from getting more people to signup/ retaining them longer but contest do the trick??? 
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His arguments aren't flawed, yours are.
Contests are a very effective way to attract new affiliates, and thus they are a great way for programs to attract more affiliates. Higher payouts might do the same in some cases, but in others they might not (especially when the program is relatively new).
Contests are expenses just like advertising, sales reps, affiliate reward points, etc.
Meanwhile, for a smart affiliate, what should matter is how much money a specific sponsor will earn him for a specific amount of traffic. Conversions and retention generally play the largest role in this.