Luke Atherton

The Four Pillars of Affiliate Marketing

Last month our Affiliate experts exhibited at the industry’s biggest event, PI Live 2017, where our Network Director, Luke Atherton, shared his knowledge of the four key principles of a successful affiliate marketing campaign. Incase you missed it, here’s a recap!

You don’t know the damage you’re causing!

When I hear Affiliate Managers talk about the ‘critical’ foundations of affiliate marketing I often hear a lot of discussion on publisher verticals, advertiser objectives and seasonal planning. I wince when I overhear these conversations because, in my opinion, although these areas are certainly important, they aren’t the pillars that support the entire account and all of the campaigns.

Think of it like this, your ‘pillars’, or ‘foundations’, need to be rooted deeper in the elements of account configuration, transparency and scalability. At Visualsoft, we often break this down into four core areas:

  1. Cookies / Tracking
  2. Data / Commissions
  3. Cross Device / Mobile Tracking
  4. Validation / Automation

I still see more accounts either not utilising the various technologies available or using them incorrectly. No matter which publishers you recruit, or how amazing your strategy may be, the full potential of your campaigns will never be realised if the basic principles of the industry are ignored.

But my campaigns are driving good performance?

I do not doubt that campaigns can still perform even with complete ignorance of these core topics. However, I would argue that the relationships you build are at constant risk of deterioration and your performance results could be great, not just good.

For example, your cookie structure may not be able to support the overall objectives of the advertiser. It’s very easy to reward the wrong publisher for a sale even before we get into a conversation about true attribution.

But cookies and tracking are already taken care of?

Of course you need tracking in place before your account even launches, and cookies are still the most widely adopted form of tracking in the industry. Although I have seen the use of cookie-less tracking rise over the past 6 months, unfortunately it still suffers the same issues as the more ‘traditional’ cookie option.

Take the following graphic:

diagram showing the hidden value of cookies in affiliate marketing

 

Admittedly, this is a super simplified example, but one that highlights the core issue of the last-click model. It’s been an issue in the industry since it’s birth. While true attribution is making strides, it’s still not a complete solution.

Most networks offer the ability to essentially create a basic priority (attribution) system using what is widely known as a ‘soft’ cookie. While it is a super simple answer to a very complicated question, the soft cookie can completely reinvigorate an entire account, reassigning rewards to different parts of the cookie chain. In essence, it is a basic form of attribution.

Throw in an impression based cookie and you could have a structure more akin to this:

diagram showing how introduction a soft cookie can benefit

 

But Publisher 2 still wins the commission because each publisher in the chain still uses standard cookies (despite other options being available).

Introducing a soft cookie to the chain could create the following alternative outcome:

diagram showing the benefit of introducing a soft cookie

 

The soft cookie is unable to overwrite the standard cookie and thus Publisher 1 earns the reward instead of Publisher 2. For any Affiliate Manager it’s clear what the positives and negatives of this tool are and I wouldn’t profess a single solution that fits all accounts and campaigns but, in my opinion, you have to work to the objectives of your advertiser.

Soft cookies represent a lifeline for publishers that sit further up the funnel and often lose out completely to publishers that either operate on the advertisers website or further down the funnel.

It’s also worth noting that almost every publisher operates in a significantly different way, this is one of the main reasons the industry is stuck in the last-click model. It’s simple, it’s brutish and everyone has accepted its drawbacks.

For example, perhaps your objective is to increase new customer acquisition and you are working with partner A and partner B. Partner A generates the initial interest by tapping into their readership and social following, but partner B is able to target all traffic that interacts with the website. In this scenario it is incredibly easy for partner B to overwrite every cookie regardless of value.

The solution would be to reward partner A the commission because without them partner B would have nothing to target and you would fail your overall objective. Partner B can of course still earn a full commission so long as they have not overwritten another cookie (or on non-affiliate traffic), and you could reward them a bonus if they are helping to genuinely convert a number of sales that have been reattributed elsewhere.

Soft cookies do not come without their negatives, they are a blunt force tool (until true attribution matures further) and they lose significant value if the advertiser has more than one Affiliate Network (or second tier networks) in place.

Lifetime value is grossly underutilised

Ensuring publishers that work hardest towards your objectives are adequately rewarded is extremely important, and we’ve seen a plethora of new and innovative commission models come to the market. But some of these models do not mesh particularly well with any cookie structure, and one of the most lucrative models is still mostly ignored: lifetime value.

If we take into consideration that the most common cookie length is 30 days, even with the advent of soft cookies we still do not get a clear picture of customer value and repeat transactions.

diagram showing two publisher 6 months a part

One of the most common (of the ‘new’) commission models is new and existing customer rates. But rather than unlocking potential, the implementation of this scheme often leads to simple reductions for all existing customer sales and no viable increase for true, new customers.

diagram showing the lifetime value of affiliate customers

 

It stands to reason that any business adopting a model that encourages publishers to tailor all of their activity towards new customer acquisition, should reward them substantially for those new customers (given that many publishers have little control or transparency over this). Some of the most successful implementations effectively withdraw advertiser profit margins on the very first sale due to confidence about repeat purchases in the future. It also works the opposite way for objectives focussed more on the repeat purchase cycle and drawing more value from existing customers.

Personally my favourite strategy is to cultivate both objectives equally.

How do I balance advertiser with publisher when offering commissions?

The answer is data! I often see decisions based on opinion or at least a lack of understanding surrounding the data. Most networks offer the ability to significantly expand the amount of data tracked against each transaction and some even offer the ability to collect data prior to a transaction.

diagram showing the benefit of data on commission

 

It’s an extreme example but many advertisers still only send the most basic information required by the integration with their network. With more data, not only can you gain a deeper understanding through expanded reporting and insights, but you also have more options when it comes to setting commission rates.

Here is a visual example of an expanded data system:

diagram showing more data that can be captured

One of the most common reactions from an advertiser is to haphazardly reduce commissions to help mitigate impact on margins, sometimes going so far as to offer 0% commission on key product lines (which is a divisive topic in it’s own right). However, most of the time when you dig into the logic of such decisions, margins could have been protected and publishers adequately rewarded by creating a commission structure that is simply more considered and more empowered.

Cross device tracking and the loss of nearly 40% of your transactions

This is one of the most neglected features within the industry, in my opinion, as around 80% of all advertisers do not track across devices and roughly 40% do not even track their mobile offering.

Consider the following setup:

diagram showing a journey between desktop computers

And then consider the following:

diagram showing tracking across mobiles and dektops

In terms of data, sales and transparency, the first option is incredibly detrimental and publishers lose thousands of pounds in commission. More importantly though, advertisers often invest less in mobile because they have no data to support it.

As with most of the topics discussed here, your Network should offer a cross-device solution. Most of which use a ‘deterministic’ model to help identify customers regardless of the device they use.

Visually represented, it looks like this:

diagram showing how someone logins then and a profile is made

 

The user’s journey is then mapped out:

diagram showing cross-device journey of individual user is tracked

Ultimately the phrase “customers browse on mobile and purchase on desktop” is simply not true in the current climate. Customers now browse and purchase equally across a variety of devices but many advertisers are yet to catch up.

“52% of UK retail e-commerce transactions take place on mobile.”
– Criteo, 2017

Many retail advertisers also operate mobile apps which add an additional level of complexity, but again, most networks offer a tracking solution that can be easily incorporated into the app.

To give an idea of figures, looking at the past 6 months of transaction data on our own Affiliate Network, 41% of transactions occurred on a mobile device and 57% of transactions involved more than one device (from mobile/desktop and tablet). This is a huge number and should prompt any advertiser to ensure they have the correct tracking solution in place and any publisher to enquire!

Validating transactions is a huge logistical task…

It is, and I would guess that many advertisers still either ignore the process or incorrectly validate sales. One of the most common complaints I have heard from publishers is that they often receive inadequate (or no) details on why a transaction was declined.

One of the most common reasons to decline a commission is for a refunded item, which is as much a negative for advertisers as it is for publishers. If publishers do not realise that there transactions are being declined they cannot effectively change their activity to help mitigate the problem.

diagram showing what can be tracked during a transaction

 

Not only this, the task is a logistical nightmare as the account grows but most platforms already have a solution. Linking your eCommerce platform to your Affiliate Network can essentially automate 99% of order validations, and provide detailed descriptions to publishers.

steps to automating transaction validation

 

You can see the difference a solid rejection reason makes to your publishers.

Want to learn more? Get in touch with one of our Affiliate Marketing experts on 01642 988416  or email [email protected]

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