For an affiliate marketer, deciding where your commission should go is not a decision that should be taken lightly. Perhaps the key questions to be asked are:
- Do the publishers you’re investing in fit with your objectives?
- Do they fit with the brand?
- Will they provide incremental value?
The first two are straightforward and should be reviewed constantly as publishers and advertisers adjust their offerings and the market continues to change. Clearly what was suitable before may no longer hold true as the market moves on. The third question is the most difficult, but also the most significant.
The issue with incrementality is the application of it –measuring and defining incrementality is subjective and has accuracy limitations dependent on available data. Are some sales worth more than others? Are some customers worth more than others? What about interactions before the last click? And how do you assign a value to those? Once you’ve settled on a measurement for incrementality, it has to be consistent across all channels, which is certainly not always the case.
Incrementality issues aside for now, all of the questions above should be reviewed as available data improves. If not, the consequences for an affiliate programme and the channel as a whole are far reaching, and potentially damaging to long-term investment.
The market changes; data evolves
To understand the consequences of change, let’s remind ourselves of some of the key movements in performance marketing over the last few years:
- IAB research shows performance marketing spend rising year on year with 4,000 advertisers spending £1.1 billion in 2014 across 12,000 publishers, generating £16.5 billion in revenue and an average ROI of £1:£15.
- Mobile traffic from publishers climbs to around 50% of all Affiliate Window network traffic as of Q3 2015. Mobile sales, including tablet devices, account for 37% of network sales.
- Customers behave in a device-agnostic way, using the nearest device to start their path to purchase. Cookie-based tracking is now less effective.
Some things do of course remain consistent, such as:
- CPA maintaining its status as the favoured payment metric for most affiliate programmes.
- The general makeup of an affiliate programme seeing large cashback, voucher and aggregator publishers (depending on sector) generating the majority of last-click volume.
- Advertisers having a desire to both reduce risk and increase overall programme ROI by having a strong ‘long tail’ of publishers.
To summarise, with such a consistently strong ROI it’s easy to see why advertisers would spend more in the channel. The driving force behind the high ROI is the payment method, assuring advertisers of a guaranteed return. With CPA being the dominant payment method, the larger publishers – specialised in last-click conversion – have continued to grow by increasing revenues, traffic and members. Those publishers deemed less effective at converting on a last-click basis have done comparatively worse on a commission basis as their true value has gone under-reported.
Doing the same, expecting different results…
The theme here is that the market has thrived thanks to the CPA model. It would be ill-advised to completely move away from this – it’s the industry’s USP and a great one. But there are opportunities being ignored because influential publishers who add value before the last click have struggled to demonstrate their true value in business cases.
We have intuitively known there is some movement, highlighted by the relatively common practice of paying tenancies on top of CPAs to large aggregator sites. Unfortunately this tends to only apply to the trafficked elite and undoubtedly others are undervalued and underinvested in because they don’t hold the same sway, or convert as well on a last click. Advertisers want a strong long tail, but haven’t altered the way they allocate commission.
Clearly something has to change – doing the same thing and expecting different results is Einstein’s definition of insanity and so the onus is on networks to bring this unseen value to the forefront of the discussion and make affiliate marketers reconsider the publishers they invest in.
The data’s evolved; time for affiliate programmes to follow
The release of new tools over 2014 and 2015, allowing marketers to understand the influence of publishers across all channels – in real time – and address the tracking issues posed by multi-device journeys, means it’s no longer acceptable to only look at your publishers on a last-click, cookie-tracked basis.
If growing the long tail and reducing the reliance on the top partners is a key objective, we must reassess all the publishers we’re working with and invest accordingly. It’s not just that last-click, cookie-based analysis favours some publisher types over others; it’s that this one-click, one-device picture is increasingly less fit for purpose.
What happens if affiliate marketers don’t reassess the publishers they invest in on the basis of their influence and continue with a complete last-click focus? Well, on an individual basis, not a lot.
Their programmes will remain the same in the short term but over time costs will rise as the dominant few continue to grow and rightly command higher rates. Competitors who do look beyond last click will capitalise on opportunities, whilst those who misunderstand influence suffer a declining ROI, a lack of new publishers and reduce future growth, all because they didn’t explore the data at their disposal.
What happens on a wider level, if affiliate marketers do not reassess the publishers they invest in? The current trends continue; blogs and content sites struggle to monetise on a last-click basis and turn to AdSense, direct relationships and other monetisation models whilst the affiliate channel itself becomes increasingly reliant on the few and loses it’s much celebrated diversity. That would be the real loss.