The affiliate channel is the epitome of what digital marketing promises. A wide variety of content, cashback and vouchers sites now run promotions and get paid on a cost-per-acquisition (CPA) basis. If there’s no sale, there’s no fee – and the whole process is tracked by sophisticated analytics, often provided by a third-party affiliate network.
Trackable, results-driven marketing would seem a marketing executive’s dream, but there are areas of concern, and it’s these that the latest innovations are tackling. The most obvious is that, despite growing talk of moving beyond a ’last click wins’ model, brands are almost universally still rewarding the marketing partner that provides the final click. This can be unfair because a content site may have educated a consumer about a product and sent them to a brand’s site, only for the customer to see a voucher box, look up a code and give a proverbial ’goalhanger’ the all-important final cookie.
The potential for attribution to be so severely skewed to the final seconds of a purchase decision is driving brands to look beyond the last click and establish, through sophisticated analytics packages, where value lies in the purchase funnel. Little action of note has come from the move to extra analysis so far, although clothes retailer Boden has promised to split commissions in the second half of the year.
However, there appears to be a strong consensus among brands that they need to re-examine the last-click-wins-all philosophy, and that voucher and cashback sites need to reaffirm their position as marketing partners that can drive value at the start of the purchase process as well as at the end.
Co-founder of VoucherCodes.co.uk Max Jennings certainly believes such sites have matured over the past couple of years. They have become shopping clubs and can, he claims, lie at the start of the buying process, not just its final moments. “We’re definitely seeing brands use us more as partners within their overall marketing mix rather than just panic reactions to rivals’ sales and offers,” he says.
“Voucher sites have also matured and are now able to work with brands in ways that answer some of their concerns. For example, we’re increasingly running vouchers that are only for new customers, so there’s no way we can cannibalise a partner’s existing subscriber base. We can also offer codes that are unique to each person and are not interchangeable so a brand that’s concerned about vouchers being shared on forums can be catered for. These are often companies that don’t want to be seen to be discounting all over the web.”
Nevertheless, many brands are seeking better ways to hold back the distorting power of voucher and cashback sites, particularly voucher operators. With an empty voucher box sitting next to a ’buy’ button, it can be too tempting for consumers to seek a better deal and so overwrite the hard work other affiliates or marketing partners may have put in.
The answer could be a fairly simple step, according to Red Letter Days affiliate manager Joshna Patel. “I think all sites have had that problem when someone gets to a checkout and sees a space for a voucher code,” she says.
“You could’ve done a lot of hard work through other channels but then the voucher code ends up owning the sale. We didn’t want to put off affiliates altogether, though, by watering down payments and so we left our affiliate programme alone and still pay out on the last click. However, when we have sent someone to our own site through, say, email, we don’t put up a voucher box on the checkout to tempt the person to look for a code. Of course, if the click has come through from a voucher code site, it’s likely they have a code, so we include the box.”
Some retailers are taking this a step further and choosing to not count affiliate cookies if they have not played a major part in a sale. Certainly DIY chain Wickes has, for the past three months, chosen not to pay affiliates if a customer has clicked through on a paid-for search advert or a branded email promotion during their purchase cycle. Its e-commerce marketing manager, Keval Shah, claims the change is fairer and has not had an adverse impact on its affiliate programme.
Clothes retailer Boden is taking this notion to its ultimate conclusion with its split payments claim. It is using tagging software from TagMan to establish the value of clicks through the purchase funnel so it can avoid paying an entire commission to the last click provider if another partner can be shown to have played a major part in a sale.
The difficulty here is obviously going to be cashback sites. Its model works on the certainty of a commission being shared with a user and so Boden’s online acquisition manager, Oliver Elliot, reveals the retailer has yet to figure out a solution. If it does proceed with split payments, it will be among the first household brands to activate, rather than just talk about, fractional attribution.
Payment models have long been at the forefront of brands’ thinking towards affiliates, but now brands appear more actively engaged in developing alternative models to last-click-wins. Sky’s senior online marketing manager, Helen Southgate, believes brands need to re-examine the way affiliates are rewarded. She is investigating whether the long tail of content sites that carry Sky television and broadband content could be rewarded on a different basis and treated in a similar way to display.
“We pay affiliates based on the value of the customers they bring us, so someone taking Sky HD and movies earns a higher commission than someone on a more basic package,” she says.
“We also try to reward content sites with higher commissions because they can do a lot of hard work promoting us, only to lose out to a voucher site or a cashback site. The long tail of content sites a brand has promoting it are not dissimilar from display. They both feed in people at the start of the purchase funnel and so, with our network Affiliate Window, we’ve been paying tenancy agreements as well as CPAs. We’re also looking at whether we could move them on to a CPM (cost per impression) basis, like a display advertiser, or even a hybrid of CPM and CPA (cost per acquisition).”
For such re-evaluations of the purchase funnel to be approached with accuracy, brands realise the main innovation they need is good metrics.
“When we look at our average path to conversion there are something like ten touch points,” she says. “So we need to make sure we can measure them all in the same way and moving to our own cookies for affiliates, rather than an assortment of third-party cookies, is going to help greatly,” she says.
“We’ve also upgraded our content distribution system. It works just like an RSS feed where affiliates can literally drag and drop content and pictures on to their sites. The copy’s a lot richer now and, crucially, we’ve upgraded it to allow affiliates to show the ’was’ price when they’re promoting our ranges.”
Now that International Data Corporation figures have shown smartphone shipments outnumbering those of PCs since the end of last year, it comes as little surprise that many brands are adding mobile affiliates to their campaigns. Most of the time these will be an existing affiliate feeding traffic through to the brand’s mobile site but, of course, with smartphones being as much about calling a brand as researching them, there is room for channel-specific initiatives.
Autoglass has teamed up with mobile affiliate Found to allow its brand name to be used in a mobile URL that the affiliate uses and promotes in paid search campaigns. Autoglass online marketing manager Chris Smith says the deal works well for both parties. “Mobile is becoming a big channel for us, up from 4% of all traffic last year to around 18% at the moment,” he says.
“We’re a distress purchase so we have to be available on mobile for information as well as providing numbers for people to call. Although people can book us online, only one in three ever do. Customers like to talk to someone and so we give Found specific numbers which tie the sale back to them for their commission. We have our own mobile site but having a partner pushing us is working really well for both parties.”
So, the latter half of the year could be a major turning point for affiliates if Boden does indeed move to splitting payments between rival affiliates sites or even between different channels. Many brands have talked of doing so in the past but little has ever happened.
In the meantime, the real innovation will be to involve mobile affiliates in pushing brands’ mobile sites while at the same time improving analytics so the entire purchase funnel can be accurately viewed.
Every year the end of a universal last-click-wins model is forecast, so marketers must be cautious, however the awareness among brands of the system’s flaws and the sophisticated analytics to challenge it are now firmly in place.
JJ McCarthy, global director of the eBay partner network
Our ultimate aim at eBay is to be able to establish the value of any click that comes to our sites through our Quality Click Pricing system.
This works on a CPC basis where we pay affiliates like we would any other channel sending us traffic. The skill is in valuing the source of the traffic that each affiliate provides so we ensure we always pay what it’s worth. The idea is that if the average payment for a click were, say, 20 cents, we wouldn’t want to give a guy whose clicks are actually worth 30 cents less than he was due. At the same time, if we’re paying 20 cents for traffic that’s only worth 10 cents we’re paying too much and that fee could actually go to rewarding someone who’s providing better quality traffic.
So we have developed an algorithm in-house that looks at the traffic an affiliate sends us to see how valuable it is. The things that will score highly for an affiliate are sending us a new customer as well as sending us someone who shops regularly. We also give extra credit if they’re sending us someone that has used eBay before but, through them, buys items from categories which they haven’t bought before. Basket value plays an important part too.
So we have a constantly re-evaluated fee we’re willing to pay for each click. This is communicated to the affiliates so they can see what they will get from sending us traffic. We also have a system developed by R.O.Eye which can provide the relevant offers and copy in local languages and with the correct pricing for each country our affiliates’ traffic is coming from.
Our current major work in progress is a really exciting one. For the first time, we’re taking affiliate marketing beyond the click and looking at pre-click so we can factor in the brand value which affiliates bring us just by having us on their site.
We’ve got a system through which affiliates can tell us about their site and then we can look at how long traffic stays on the site, how much comes back regularly and so on. If we feel it’s a site which offers a great user experience we will then reward it with a higher fee or put in a tenancy agreement. We’re hoping this will encourage general portals and large branded sites to consider running eBay promotions. They are normally put off by performance-based marketing, preferring to work on a conventional CPM advertising model.
Adam Kirby, business development manager – affiliates, 3
We took our programme in-house a couple of years ago to give us a lot more control to tailor the way we work with affiliates to fit our line of business. We found that when external people run programmes there can be a ’one size fits all’ type of mentality and, that may be fine for some industries, but it didn’t really suit us.
We wanted a more direct relationship through which we could help our affiliates to help us, and in so doing, help themselves to earn better commissions. We use a platform built for us by Summit Media which allows us to run our programme with a very useful twist.
A lot of people think that sales data is the Holy Grail and they’ll never let anyone else see their figures. However, we think the best way of using our sales data is to share it with our affiliates. We might be able to be more relaxed about sales data because our industry is very much driven by the latest deal or today’s hot handset that will be replaced at some stage. So the value of that data is fairly short term.
So, where it can be best used is feeding back to the affiliates what our top sellers are and, crucially, which demographic is tending to not just apply for a phone contract on a particular phone and tariff combination but which are actually passing our checks and getting connected. We only pay on connection and so that’s more useful information.
It means all our affiliates can see what their typical demographic is buying and so choose to promote those offers. A site with a young female audience may well see it is better off with certain promotions whereas a business-oriented site with a middle-aged male skew will almost certainly be better off pushing other deals.
It’s working really well for us and although you may think it means the popular deals end up becoming more popular than some other deals, because we suggest them to our partners, I really don’t care. So long as we’re putting in front of our affiliates’ audiences the most appropriate deals, that’s all that matters.
- Mix and match affiliates by type and geographic spread.
- For vouchers and cashback sites, consider deals such as new customers only. Blanket money-off promotions will almost certainly lead to cannibalisation.
- Attribution is a hot topic so consider mapping the value each click brings to a sale. This may prompt a brand to give content sites higher commissions to balance voucher and cashback sites getting last clicks.
- Some brands are only putting in a voucher box at the checkout when a customer is coming from a voucher site. This cuts down on people shopping around at the last moment for a code.
- In the future, some brands look set to follow eBay and pay affiliates on impressions (CPM) or the clicks they drive (CPC) rather than the usual acquisition (CPA) model to reward content sites that drive quality traffic but often have their cookie overwritten by a voucher or cash back site.
- Consider sharing sales data with affiliates, as 3 does, to show them what their typical demographic is most interested in. This helps both parties improve sales levels.