Today’s customer-controlled purchase journey requires brands to be ever-present in order to achieve results—a burden exasperated by cost and complexity. With year-over-year (YoY) cost increases for key players in the consumer purchase path (read: Facebook’s 18% YoY CPM surge and Google’s 8% YoY CPC increase), marketers need a scalable, cost-effective alternative to subsidise their primary sales and marketing channels and create the operating leverage necessary to fuel growth.
A 2019 Forrester study uncovered that executive-level marketers cite the affiliate channel as one of their top customer acquisition and revenue driving channels. This finding points to the value marketers place on the affiliate channel as a cost-effective solution for driving incrementality (or conversions and engagement) that would not have otherwise occurred without an affiliate touchpoint along the consumer purchase path. It’s the channel’s triple threat of unique targeting capabilities, expansive reach and a dynamic, outcome-based payment model that make incrementality a chief performance metric for the channel, despite what many may believe.
Historically, the affiliate channel has carried an unwarranted label for adding cost to transactions that would have occurred regardless of the publisher partner touchpoint—a reputation fabricated purely from a lack of transparency. Marketers that subscribe to this falsehood are victims of the status quo—viewing their affiliate data in a silo, rewarding partners with uniform commission, forgoing innovative capabilities that enable them to scale. Fortunately, there’s good news: brands can overcome their affiliate incrementality woes in four easy steps:
1. Define incrementality in your own terms
Without a universal characterisation, true incrementality depends on which metrics help attain a brands’ key performance indicators (KPIs). For example, revenue, traffic, transactions, views and engagement can all be considered drivers of incremental value in the affiliate channel dependent on broader business goals. A brand may consider incremental value to be channel-driven revenue above their average basket size, in-cart products that have a long-term impact on customer lifetime value, or email signups that signal prospective new customers. Or, traffic can be incremental—think: a prospective customer or first-time site visitor that was driven by a social campaign or featured exposure on a partner site.
2. See the big picture
Although a primary success indicator, many affiliate providers are not designed to appropriately measure incrementality despite claims that click-stream reporting is an accurate way to identify such. A lack of innovation from legacy affiliate networks has fractured brands’ view of their overall digital mix—a hindrance that blatantly fails to address modern marketers’ problems. Their data is trapped within the confines of these legacy providers and creates black boxes that prevent brands from making accurate, data-driven decisions.
As a solution to data black boxes, marketers need appropriate measurement tools and reporting consistency that enables them to accurately calculate the incrementality of the affiliate channel—a simplified means to pipe their affiliate data into their reporting source of truth. With 35% of executive-level marketers reporting that they struggle with knowing how to measure affiliate’s incremental impact, viewing affiliate data side-by-side with other digital channels gives brands visibility into the big picture.
Further, integrated reporting eliminates data silos that make it impossible to appropriately allocate spend and identify the affiliate channel’s true impact. By integrating affiliate program data into their existing analytics and attribution provider, sophisticated marketers gain the visibility necessary to make data-driven decisions that fuel incrementality in the affiliate channel and gain a better understanding of the scale it provides.
3. Embrace innovation
Once a brand identifies what incrementality means to their business and gains transparency into their holistic digital mix, dynamic payment functionality should be implemented to support these goals. As affiliate providers continue to evolve, they deliver new functionality that gives brands the right tools to be smarter about driving incrementality across the affiliate buyer journey and, simultaneously, put marketers in control of the associated costs.
Specifically, dynamic commissioning capabilities that reinvent the standard affiliate payment model have become a table stake for driving incrementality. These structures enable marketers to automate partner rewards for multidimensional attributes beyond last click, such as new vs. existing customers, AOV threshold, code redemption, device referrals, creative details and more.
As a complement to dynamic commissioning structures, spend allocation tools enable marketers to easily adapt to the changing consumer journey by rewarding partners based on their presence or position in the clickstream – functionality lets them assign value that maps to their incrementality goals. In turn, they’re able to maintain control over spend by paying for their desired outcomes instead of paying for audience access and can maximise reach without sacrificing revenue.
For example, D2C brand, Pact, implemented both dynamic attribution and dynamic commissioning capabilities within Pepperjam’s Ascend™ platform to optimise a relationship with publisher partner, Business Insider. By utilising these multidimensional reward structures, Pact was able to drive an overall 10:1 return on marketing spend (ROAS) with a partner that would have carried a considerably larger price tag utilizing expensive, traditional sales and marketing channels. It’s affiliate’s pay-for-performance model that enabled Pact to gain featured placement that wouldn’t have otherwise occurred in order to drive incremental revenue.
Measuring incrementality is not a one-size-fits-all approach. Brands have flexibility when it comes to analysing their incremental results. Marketers can evaluate the affiliate channel’s incremental capabilities in their reporting by considering:
- Presence of an affiliate click in the buyer journey. Does a touchpoint from a publisher partner increase the consumer’s propensity to convert? Are new customer rates higher in the affiliate channel in comparison to the overall digital mix?
- Speed to conversion when an affiliate click is present in the path. Do consumers feel an increased urgency to purchase when influenced by a publisher partner? Is the time between site visit and conversion shorter in affiliate than other digital channels?
- Total basket size driven by publisher partners. Is the dollar amount for affiliate channel transactions higher than the ecommerce average? If so, how many incremental dollars are driven per order?
- Increased lifetime value. To what extent does affiliate play a role in driving higher lifetime value, brand loyalty and repeat customers against other channels? How frequently are customers returning to purchase through the affiliate channel?
- Above average earned media value. Is the affiliate channel driving a stronger earned media value (EMV) than traditional sales and marketing channels? To evaluate, brands can calculate the number of impressions received multiplied by the market rate for cost per thousand impressions (CPM) in paid media. The outcome will give you transparency into the incremental return the affiliate channel delivers.
Armed with this data, brands can revisit step 3 (embrace innovation) to implement equitable reward structures and spend allocation tools to optimise with partners that are the true drivers of incrementality for their business.
By coupling sophisticated commissioning functionality with integrated affiliate channel data in widely-used analytics and attribution platforms, marketers have better control and visibility into affiliate relative to their overall marketing mix. The combination gives them the automation capabilities and transparency necessary to fully leverage the channel’s ability to drive incrementality.