2020 was definitely the year of affiliate marketing. The performance marketing channel has been able to establish itself as a reliable source of income and a new sales channel, especially for many small and medium-sized online shops in times of the pandemic. Due to the changing buying behaviour, away from retail and towards online shopping, many retailers were faced with the challenge of increasingly shifting their business to the internet and thus tapping into new groups of buyers.
For many website operators, affiliate marketing became a strong lever to counter the competition and thus make themselves less dependent on Google, Facebook, Amazon or Apple. In order to continue to pursue a profitable online strategy in the future, the goal should be to rely on sensible attribution logic.
The different players in affiliate marketing: who’s who?
Affiliate marketing is about the cooperation of several players in a spirit of partnership and the establishment of a long-term relationship from which all sides benefit. When talking about partnerships, it is worth taking a look at the respective partners. These are, on the one hand, the advertisers, the publishers and, as a third actor, the networks. Advertisers are individuals, for example shops or companies who want to sell a product or service.
Through affiliate marketing, advertisers find new ways and opportunities to advertise their own products, reach new target groups and significantly increase traffic. At the same time, they benefit from the recommendation of the publisher who promotes their own articles or services – which in turn can also have a positive effect on their branding.
The cooperation between advertisers, publishers and the networks
Publishers provide their free advertising space, to promote the product or the service of the advertiser. This can be, among other things, a blog article, a banner on the website, a post on a voucher or cash back page, a listing on a results page of a price comparison company or a link in the description box of a YouTube video. If the advertising leads to a purchase or a referral, for example, the publisher is entitled to a commission from the advertiser. By integrating the advertising material, the publisher can create new opportunities for monetisation and increase his reach and his visitor figures through the advertised products.
The affiliate network is the technical interface between the advertiser and the publisher. It offers a fixed and secure framework for the cooperation, supports the technical implementation and takes care of the respective partners. In addition, it guarantees error-free and secure handling of the data used through its tracking and provides reports on the clicks and sales made as well as the amount of commission. The affiliate network also provides new opportunities for monetisation.
Once the terms and conditions have been agreed between advertiser, publisher and network and the contract has been signed, the process can begin. The advertiser provides the publisher with advertising material in the form of banners or links, which the publisher can place on their page or channel. The tracking of the network in turn provides information, for example how many clicks or sales were generated via the respective advertising material. These are then relevant for the payment or for the settlement of the commission. Depending on the billing model, the publisher earns his money with this. The affiliate network is the contact for both sides – advertiser and publisher – and provides support for the individual campaigns and sets rules for the payment of commissions.
Tracking in affiliate marketing: numbers, numbers, numbers
However, the GDPR and e-privacy regulations heavily regulate the possibilities of tracking. It is also complicated from another side: Google has announced for 2022, that it will do without third-party cookies in Chrome. This measure is just one of many that will significantly restrict tracking possibilities, especially in affiliate marketing. These challenges are offset by a shift in the buying process from offline to online, fuelled by the COVID-19 pandemic. This trend will continue in the coming years, and with it the willingness to increase online marketing budgets. This increases the significance of making budget decisions even more efficiently. The basis for this is provided by customer-specific attribution models.
The old attribution (last-cookie/last-click wins), i.e. an exclusive remuneration of the last customer touchpoint with e.g. an advertisement, has long since become obsolete and is being replaced by data-driven attribution models. More and more advertisers are using such data-driven attribution models to control their marketing channels. A data-driven attribution, conditioned by a comprehensive multi channel tracking, is the basis for a cause-related payment of the partners. This allows more partners to benefit from a commission and thus ensures diversity in the publisher portfolio.
Data-driven attribution models as a strategy for success
Experts agree that the future of tracking will move away from a single model, towards hybrid tracking. Through a combination of several tracking methods, it will also be possible in the future to work cleanly and securely with reliable data, despite all the regulations and tightening of the law.
Meaningful attribution requires that as many as possible, ideally all touchpoints, are tracked correctly. The prerequisite for this is the use of first party tracking on the browser side. Due to the ever-increasing restrictions on the part of the browser, it is advisable to set up parallel server-to-server tracking. This ensures that the data stock is maintained.
By analysing and evaluating many historical customer journeys, a precise picture of the role and influence of individual channels can be determined. The development of a data-driven attribution is related to the objective of the respective company. For example, if a company focuses on acquiring new customers, these initiating measures should be given special weight. The declared goal remains to evaluate the channels according to their cause and to create a balance between new customer and existing customer measures.
With a post-view consideration, not only clicks, but also views of e.g. advertising material, are relevant for the attribution. To do this, it is necessary to establish a causality between the view and the triggered conversion. For this purpose, a temporal window is used to be able to understand this causal relationship. The time window can vary from a few minutes to several days. This depends on the complexity of the customer journey, the value of the shopping basket and the industry.
An alternative is to establish a causal relationship between a view and the triggering of a Direct Type-in. If a view triggers a Direct Type-in in a timely manner, this should definitely be taken into account in the attribution, regardless of the time lag to the conversion. What still needs to be modelled is the weighting of a view in comparison to a click, which is done on a customer-specific basis.
Interdisciplinary into the new era of affiliate marketing
Last but not least, it is necessary for a new era of affiliate marketing to initiate interdisciplinary agreement in the company on the new attribution. All departments must learn to work with the new attribution. A cross-departmental but still department-specific reporting is the necessary prerequisite.
The introduction of a new attribution means the end of silos and the shotgun approach. This requires a series of measures concerning tracking, data and organisation. Those who have the courage to change will create decisive competitive advantages and experience a boost in efficiency.