Commission erosion is a subject that impacts us all in the affiliate industry yet is somehow a topic that never seems to attract much attention.
It’s a curious thing because for a channel premised on being paid for conversions you’d think we’d ferociously ensure our tracking was robust, cookie overwriting was mitigated and we future-proofed our business model.
It’s this central premise that will be at the heart of Affiliate Window’s presentation at this year’s Performance Marketing Insights, at 12:30 on day one.
The title of our session, referencing ‘commission killers’ may seem melodramatic, but the consequences for affiliates ultimately determines whether the mid to longtail can build viable and sustainable businesses. For an industry that claims this silent army of affiliates is so vital we seem fairly lackadaisical in our attempts to defend their (not to mention networks’) revenue.
I suppose the classic course of action that has long impacted commissions is de-duplication; that is whether an advertiser chooses to pay an affiliate for a sale that ultimately was attributed to another channel.
I think few of us that would feasibly argue against some form of de-duplication, such as generic search for example, but we should draw lines in the sand about what is and isn’t acceptable. Direct type in a search box… brand paid search? What is the general industry line on this? There actually isn’t one and therefore what’s to stop ‘de-duplication’ creep.
Very often the conversation with advertisers about de-duplication (often mistaken for attribution) is also framed incorrectly. By focusing on the last click CPA model that we’re all so wedded to, we ignore the 20 clicks or 200 impressions that affiliates generated via Affiliate Window last year for every sale that the advertiser received, without any marketing cost.
Moving forwards?
We had an opportunity about five years ago to outline some definitive guidelines. With the advent of remarketing and retargeting and the new kids on the block wanting to establish themselves within the sphere of affiliates, we decided some rules were in order. Hence the dawn of the so called ‘soft-click’ that establishes cookie hierarchies and states that a remarketed ad with affiliate links cannot overwrite a prior affiliate interaction. It was a bold move but one that was broadly supported by the networks and showed that a middle way could be found. The affiliate industry is an ongoing jostle of competing business models fighting for the conversion and as such walking that fine line is often tricky, but this seemed to offer a satisfactory compromise.
Sadly I think we’ve gone backwards. I know there are competitors of mine who still adhere to the central principle but I also know there are some that don’t. Where’s the guarantee that agnostic tracking companies and other players in the market are abiding by the rules? A changing in the guard at a number of the companies that were involved in the project makes it feel that the impetus has been lost and the issue obfuscated. Again, who suffers the most? Affiliates, and most likely the longtail who can least afford to.
But de-duplication is nothing new. There are more recent trends that continue to chip away at the earnings’ potential of every sale generated.
Mobile tracking…
Over the past two years Affiliate Window has been building a cross-device tracking solution, now in place on around 10% of our advertisers and generating roughly 1,000 additional sales per day. In a nutshell, if an affiliate sale starts on a smartphone, for example, we can trace the journey should it complete on a desktop and assign a commission where previously we wouldn’t have been able to.
Mobile as a commission killer is not a new topic. Affiliate Window regularly tracks in excess of 20% of sales per day via smartphones and astonishingly there are still advertisers who lack tracking on their m-commerce sites. It’s one of the reasons we put a ‘fix’ in place to re-direct traffic in order to record at least some commission. Either that or demand a compensation payment; the affiliate channel may give its traffic away for free but we categorically draw a line at doing the same with our sales.
This is another topic that offers little visibility to affiliates. Despite best practice guidelines, advertisers continue to generate millions in sales that they offer no commission for sales via handsets. Being able to understand the impact in a multi-device age however, takes this to a new level.
Long-term survival
Some new trends are becoming apparent to us for the first time. Affiliates who rely on mobile for a larger part of their traffic are being disproportionately impacted (fashion bloggers, price comparison and those with Facebook content). And mobile first companies, looking to CPA networks to optimise their business models, should approach with caution. For one of our leading retailers a majority of their September sales were cross-device, a doubling of their earning potential on that programme. That’s clearly impressive but it’s also deeply worrying; for an industry that prides itself on both shaping and developing new business models in line with digital trends, are we shutting ourselves off to mobile companies? Too often we’re an insular industry that focuses on smaller issues that, without belittling them, are smaller battles. A focus on voucher or cashback overwriting pale when set against a bigger canvass. And the commission eradication doesn’t stop there. Who can say they know what every company’s attitude is to downloadable software? Do you know whether ad blocking is impacting your earning potential with all the businesses you work with? That’s not to mention general compliance and ethical standards that allow unchecked activity to persist, furthering undermining existing cookies.
These are the issues we’re be exploring at PMI this year. Too often these issues go unreported or creep up on us unannounced. We need to sharpen our minds, collaborate and react to digital trends in ways we have done so before; the industry’s longer term survival could depend on it.