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Anthony Clements: Affiliate Networks, Internationalisation & Innovation

Anthony Clements: Affiliate Networks, Internationalisation & Innovation

PerformanceIN

“Affiliate marketing is an infinitely better, certainly bigger, and far more credible marketing channel than it was a decade ago.”

Anthony Clements’ entry into the world of affiliate marketing may be familiar to many of its long-standing members; he fell into it more or less by chance.

Having had some exposure to digital media in previous roles - including managing web content for West Ham United - Clements took an entry-level role at a UK-based affiliate network in 2006. It was an era in which the digital marketing industry was growing rapidly; ads were becoming ‘hyper-targeted’ for the first time and Google’s investment into ‘self-serve’ ad tools was providing a gateway for early-stage affiliates to acquire online traffic and direct it to advertisers.

The network he joined was “fantastic, ambitious, exciting and on the way up”, and with many of its early members affiliates themselves - present, future and former - bristling with industry knowledge. Clements would spend ten years at the company known then as Affiliate Window (now part of Awin), building what his peers and former colleagues have called a “cult-like” following within the ranks as the network’s UK country manager.

His credibility was owed to an enthusiastic and eventually visionary grasp of affiliate marketing, coupled with an unabashed belief in fair treatment for publishers. One former employee of his has said his influence could be attributed to “hundreds” of performance marketing careers.

Under the Affiliate Window flag, the former country manager was instrumental in the development of first-to-market technologies including cross-device tracking and 'payment on influence', which in addition to claiming a number of awards for network innovation, can be attributed to the development of the UK industry with close competitors rolling out similar products in the years following.

No longer working with the network and pursuing his own attribution consultancy venture Connected Path, PerformanceIN met with Clements with aims to shed light on his departure from Awin, and to tap into his perspective on the development of affiliate marketing and his position on its claims of innovation.

Anthony, let’s start with your 10-year tenure at Affiliate Window and the impact this had on the affiliate industry...

Anthony Clements: I’m not sure it had any impact on the affiliate industry as such, but contributing even on a small scale to the growth of a company as successful as Affiliate Window [Awin] was incredible.  Awin has contributed as much as any company to the growth of affiliate marketing, and it’s Board, in particular, have been a stable and driving presence in the industry for more than a decade. They aren’t given enough credit for what they have done to generate growth and opportunity across the industry.

I was always very conscious during my time at the network that it was the ultimate ‘middle-man’ business. You didn’t ‘own’ very much. Publishers owned the websites and acquired the traffic; sent the traffic to the advertiser and it’s the advertiser that spends the money to acquire the sales. The network owned some cool tech and a nice looking set of reports, but the purpose of networks was and always will be to facilitate advertising. Ad networks, and especially affiliate networks, without publishers and advertisers, are nothing more than hot air. Success was really about not getting in the way, and making sure it was always more about the partners than it was your own business.

The goal of an affiliate network should be to make advertising between two marketing partners easier. That means strong service, robust core technology and fast payments. Of course, there was also an onus on the network to ‘sell’ affiliate marketing to advertisers, especially early on, and that’s where tools to drive innovation and bring new affiliates to the channel came in. Because affiliate marketing is so established in the UK we don’t see new advertisers enter the channel as much now, and when they do, it isn’t celebrated as much as it should be or used to be.

As e-commerce, customer behaviour, devices, platforms and publishers evolved, so the network has to evolve to continue that core function of facilitating advertising in the most efficient way possible. I was personally pleased to be involved in a lot of interesting work to help the network evolve to remain relevant.

Did innovation remain at the heart of the network’s ambitions up until your departure?

AC: Awin changed immensely during my time there. That’s to be expected of a company that must have grown from 20-odd people to more than 200 in the UK alone, acquired close competitors, and was also acquired itself. At the time I left the size, scale, direction and ways of working were all incredibly different. Not just to when I first started; they have changed a lot even in the last few years.

It’s no secret that internationalisation has been a significant focus for Awin recently and naturally, that means the UK affiliate industry has lost some of the attention of an experienced, resource-rich company that has always done a lot to develop the industry and challenge its problems. That’s a subjective, personal and outsider’s opinion, of course.

Network innovation was normally done with a specific focus in mind, and often it was focused on attracting new advertisers or keeping advertisers engaged with the channel. That’s no longer as important as it once was.

Innovation has always been something I’ve thought the affiliate industry, in general, talked a better game at than it actually delivered. Like any industry, affiliate marketing needs to innovate to evolve, keep pace with the changing demands of its clients, and bring in new partners. The latter as I said was a really important objective when the channel was smaller. The industry has evolved a lot over the years - it has spawned a lot of great consumer-facing innovations which are now commonplace. But I haven’t seen a lot of real business innovation from major affiliate companies recently that I think will make a lasting change to the affiliate channel. The way affiliate marketing works, the way we do it - the model we use, the tracking we use, the principles that dictate it –  are the same as they were more than a decade ago. A challenge for the industry is to disrupt these core areas because despite what’s often said, there is plenty to disrupt.

There are so many things that the affiliate industry could be doing to broaden its publisher appeal beyond loyalty and discount sites, to grow a static base of contributing publishers and improve its underlying technical competence to make customer journeys better.

Did you want to be a part of those plans for expansion?

AC: A lot of people talk about internationalising affiliate marketing as the new frontier. You do at PerformanceIN - you have an International Performance Marketing Awards, for example. It’s already a global industry, diversified across hundreds of markets, and crucially affiliate marketing is developing at different rates in different markets. It generally develops in tandem with the development of other digital channels, e-commerce demand and the economic environment of the country. Affiliate marketing is a very loose concept in some markets, even in Europe and certainly across the world, compared with what we do in the UK and US.

I’ve never bought into the argument that other affiliate markets in some way need the principles of affiliate marketing that we have developed in the UK; they were and are specific to the UK. Lots of affiliate marketing I’ve encountered across Europe is what I would call ‘display arbitrage’ – the practice of an affiliate buying display traffic on a CPM [Cost per Mille] or CPC [Cost per Click] and promoting an advertiser on a CPA [Cost per Action]. It’s something that is very rarely done in the UK and it’s developed because display is a more prominent traffic acquisition method than search in some markets. Likewise in the UK, it is not uncommon for affiliates to appear in organic listings of an advertiser’s direct brand search term; something that is much rarer in other markets, even the US.

I don’t think the affiliate industries of other countries are waiting for the UK’s affiliate marketing epiphany. Yet the UK affiliate industry seems very focused on promoting itself as the ethical epicentre of affiliate marketing regardless.

Affiliate marketing has long been considered - at least by its members - a relationship-based industry; one with a tight-knit community. Does this community, as such, actually exist?

AC: To be perfectly honest, I am not sure the "tight" affiliate marketing community has ever existed in the way we ‘ye olde’ affiliate marketers - myself included - like to remember it.

Because our industry is somewhat niche and was very small when many of us started out, people have known each other for a long time, but I don’t ever remember affiliate marketing as a harmonious, cooperative, philanthropic, ‘for the good of the game’ community. Affiliate marketing has been commercial and competitive for as long as I can remember. There has been loose cooperation around initiatives that had the potential to benefit the whole industry, yet I always remember there were organisations that would go their own way, often seeking competitive advantage. To say there was a grand affiliate marketing coalition that drove the industry forward in ‘09 that doesn’t exist now is wrong.

What we do have is less personally-invested people within affiliate marketing companies now, but that’s to be expected as the size of the industry and the number of professionals in it has grown. Acquisitions, career aspirations, life… people move on. Is that hurting affiliate marketing? No. I don’t think advertisers are going to pull budget from the channel because they fear the industry doesn’t work as harmoniously as it once did. Affiliate marketing is an infinitely better, certainly bigger, and far more credible marketing channel than it was a decade ago. Very few people I know would turn the clock back from what the industry is today to a channel that was less than one-tenth of the size and could scarcely scrape together enough people to fill a Wetherspoons.

I personally believe the affiliate industry has always been too preoccupied with this ‘relationships’ thing; I think it has led to a stagnation in our desire to improve working practices; it’s prevented us automating the way we do business and made affiliate marketing less effective in delivering results to advertisers. Display kicked ‘the long lunch’ into touch a long time ago; it’s high-time affiliate did the same thing. Let’s focus on affiliate marketing being an innovative, efficient channel, rather than trying to replicate the same model we’ve always used, assuming it works and will continue to do so no matter when, how or where we apply it.

Mobile affiliate network Button entered the market and quickly offered something new to the industry. You’ve been involved with them since March 2017. What were your motivations?

AC: Button has built something very compelling for the affiliate industry because it solves one of its core problems - mobile tracking. For a myriad of reasons - related to device privacy settings, apps, image pixels, cross-device behaviour, and third-party Javascript-controlling conversion tracking - affiliate tracking is not as reliable on mobile devices as it should be. Failure to innovate from incumbent companies opened the door to the kind of innovation Button has delivered.

Button has a great solution based on solid technology that improves mobile consumer journeys, enhances an affiliate’s mobile experience, makes tracking more reliable and improves results. One thing that opened my eyes; in the traditional affiliate world a missed order rate of circa 5% is pretty normal - that means 5% of all transactions go untracked. When I first walked into Button they said a missed order rate of above 0.5% would be a red flag! I thought ‘wow’, what a crazy place - but how right they were.

The affiliate industry shouldn’t just be routinely accepting that some orders won’t be tracked because the tracking might not be set correctly on an iOS device, or is being controlled by a third-party and therefore isn’t reliable. So much innovation is needed around tracking, and there are a couple of companies with the potential to do great things for the affiliate channel in this area.

When did the idea for an attribution consultancy arrive? Was it something you’d been planning - a gap in the market?

AC: I wouldn’t particularly say a gap in the market. I think proper machine-learning that can analyse very large data-sets, pick up trends and apply those trends to deliver results will be the breakthrough that digital marketing attribution tools have really needed.

The results of cross-channel digital attribution tended to reflect badly on the affiliate channel, and I did a lot of work in my network career trying to think my way around attribution methodology. I always felt one thing – multi-channel attribution models were incredibly biased. They were based on an individual or company’s pre-conceived notion of what was valuable. For example, if you thought upper-funnel advertising was more valuable you would produce a ‘weighted’ attribution model that placed more value on marketing interactions at the front of the customer journey. That seemed unfair. Who said those interactions were more valuable? It was assumptive. Machine-learned models have created attribution modelling that is free of human bias readily available, and Google has started beta access to a free version of Google Attribution. I think this will help give unbiased digital attribution modelling general appeal.

Our goals are pretty simple – to build a stable and sustainable business. Longer term we would love to get into the technology space ourselves, but our aims and challenges are pretty immediate right now which is to get to grips with running the business.

In a general sense, what do you see as affiliate’s ‘struggles’ today?

AC: New partners and opportunities are the biggest challenges the industry faces - and it’s not a new challenge. If I was an advertiser I would be frustrated at doing the same round-robin promotions of the major publishers month-in, month-out. They deliver results for sure, but the major promotional gains and opportunities are being driven by existing publishers, who create new opportunities and find ways to generate additional traffic. However, the net result of that for advertisers over time will be increased costs to acquire customers from the same partners, and potentially a general stagnation of new customer acquisition; that isn’t good if it isn’t balanced with a channel delivering new audiences.

Affiliate marketing has always ‘thought’ it had the right to higher CPAs because compared to other ad channels its cost to acquire a customer is relatively low - but that view is too simplistic. For sure, affiliate marketing is cost-efficient, but it’s also closer to the transaction than most other digital ad channels and has a harder job maintaining a consistent new-customer rate over time. It’s vital the channel balances the importance of large partners with the need to bring fresh traffic and new audiences to sustain metrics that are important to advertisers.

One of the biggest challenges to finding those new audiences remains the last-click CPA model, which despite the industry’s best efforts continues to alienate a vast number of potential partners from the channel because their promotional models just can’t make affiliate marketing pay.

Ending on an optimistic note, what do you see now as opportunities within the channel?

AC: Affiliate marketing’s great strengths lie in its reach across the internet; its dedicated audience of users that engage with key affiliate sites regularly; its established credibility; its cost-efficiency and its CPA model. Some of these strengths are also its challenges of course...

The opportunities for affiliate marketing are really simple: affiliate marketing should and could be bigger in the UK than it is now, if only it invested time and resources to improve many of the archaic principles that allow it to give up revenue and influence so easily.

The idea of last-click, cross-channel deduplication of affiliate sales is an outdated concept that affiliate marketing should challenge. I’d conservatively estimate based on previous experience and anecdotal conversations that affiliate marketing loses between 10% and 25% of sales due to last-click, cross-channel deduplication which affects only affiliate marketing. Tackling this issue to reduce its negative impact on publishers could be the same as bringing five new top-20 spending brands into affiliate marketing.

Affiliate being run from a ‘cost-of-sale’ budget is an old concept; advertisers assign budget to affiliate like they do other digital channels, therefore the mechanism by which that budget is spent should be the same. Attribution decisions should be retrospective spend strategies that impact all digital channels in the same way.

Tracking is another huge opportunity that I already mentioned: 5% of legitimate sales across the channel could be lost at the moment, maybe more. Improve tracking technology and make user journeys more effective, and that would be like bringing a new top-five affiliate to the channel.

I also think the channel has a huge opportunity to better automate practices. I see on industry forums like Affiliate Cockpit big affiliates raising serious issues with really basic things like validations, payments and not approving affiliates to advertiser programmes quickly enough. I wonder how much the industry loses in revenue each year from not solving these problems.

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Mark  Jones

Mark Jones

Mark manages all aspects of editorial on PerformanceIN as the company's Head of Content, including reporting on the fast-paced world of digital marketing and curating the site’s network of expert industry contributions.

Going by the ethos that there is no 'jack-of-all-trades' in performance marketing, only experts within their field, Mark’s day-to-day aim is to provide an engaging platform for members to learn and question one another, helping to push the industry forward as a result.

Originally from Plymouth, Mark studied in Reading and London, eventually earning his Master's in Digital Journalism- before making his return to the West Country to join the PI team in Bristol.

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