Building a healthy long-term affiliate programme is something we can agree that we all want to do but many of us fall into the trap of getting caught up in our day to day and end up prioritising short-term revenue at the expense of long-term gain.
There is always the temptation among account managers to focus on driving short-term revenue by securing new customers, quick placements and relying on a small number of publishers, but the holy grail is actually improving the lifetime value of its existing ones. Even more so when times are tough it’s very tempting to only think about the short term, especially if you’re stretched in multiple directions, or if you are an advertiser that’s trying to save as much money as possible making the low hanging fruit desirable and easily achievable. That approach will only get you into more trouble in the long term, as siloed new customer rates, lack of publisher diversity and spending money for the sake of it leads to a loss of competition and a loss of long-term revenue.
As an account manager, I’m often asked about how to achieve incremental sales, and there is no simple answer to this question as I am not confident anyone really knows how to define incrementality. New customer volumes seem to be the most effective way for clients to define incrementality, but these clients are missing a big opportunity as the true value in new customers comes from turning them into high lifetime value customers. Delivering long-term value is key to maximising profit, ensuring investments return value beyond a single campaign or specific period.
Customer lifetime value
Doing the type of integration required for affiliate networks to evaluate the customer lifetime value by publishers and even campaign is a long-term investment on the client and networks part. However, the results from this will drive more sustainable long-term revenue. As an affiliate manager, you can look at which publishers drive the type of customers that go on to shop on a regular basis or even those that shift to a once a year purchaser to a once a quarter shopper. This information allows you to focus your energy and budget on the publishers that create the most value.
Through discovering the need for improved lifetime value there is also a crucial need for publisher diversity in a healthy long-term affiliate programme. Publisher diversity is important at all levels of a programme and increasing the size of your long tail is great but it is also essential to not be reliant on the top five publishers in your programme. I’m sure that most people would have heard the same industry rule of thumb, 80% of your revenue is often driven by 20% of your publishers – this is a rule that I have never personally followed, and I think leads most account managers to focus on optimising and investing in a small number of top publishers for maximum short-term return.
Diversifying a publisher base is a daunting long-term objective for most advertisers as you need to have a stable revenue stream and good relations with your top publishers, and let’s face it, who would change a good thing that works. However, we know that good things don’t last and putting your eggs in one basket put your reliance solely on a handful of publishers, this is dangerous in case things go wrong.
Google’s algorithms have always provided uncertainty and ups and downs for affiliates, but a new era of privacy compliance also means potential fluctuations in the way’s publishers will be able to reach their users. This danger doesn’t only lie in what if a lack of publisher diversity tends to lead to a lack of competition in your publisher base. In my experience, this means publishers on top rarely work their hardest to maintain their position and offering the most creative exposure or even the best response times.
Reducing publisher concentration
In order to avoid this challenge, here are some things I have found that have made a difference in reducing the top publisher concentration. Transforming the view on my programmes from a last click view to a single customer view has helped me understand who the users are that are interacting with my clients. Looking into the specific publisher audiences to identify strengths and weaknesses for each publisher – utilising this knowledge, we were able to distribute exclusive codes, cashback rates and PPC rights during peak periods for these publishers.
Looking at the audience profiling I could identify audience overlaps through different publisher bases which made the decision of moving exposure away from key publishers to new/mid-tier publishers easier as I knew we would be reaching a large portion of the same audience. A key tool for me has been Affiliate Customer Journey, really helping me understand how my users are interacting between the publisher’s sites, this combined with the audience view I was able to adapt my publishers in a way that reduced the concentration of publishers to support efficient growth and deliver long-term value for both my clients.
Finally, I will leave you with a couple of tips and tricks fresh from account management trenches:
- Lifetime Value: Don’t panic when you don’t hit your revenue goals for one week, look at the long-term value you have provided for the client and continue working towards achieving long-term efficiency
- Incrementality: Last click revenue is not the only valid KPI to look at when reporting on campaigns, to avoid revenue being the default set out objectives for every campaign (no matter how large or small)
- Reducing publisher concentration: Keeping your publishers competitive, make them work for the exclusive content but also understand what motivates them and what they are trying to achieve – the harder they work the greater the reward
- Marketing is ultimately about the user, so know who your users are and what it takes for them to convert