Why Your Affiliate Revenue May Not Be Real And What To Do About It

Editor’s Note: We bring you more live coverage from the Affiliate Management Days conference. This series of articles is on topics of interest to businesses that offer affiliate programs.  More coverage of #AMDays.

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Robert_GlazerThe focus on affiliates driving incremental revenue is fairly new in the affiliate industry and causing waves.   With coupon, toolbars and loyalty affiliates under fire, Robert Glazer (pictured left), Founder & Managing Partner, Acceleration Partners, addressed this sensitive issue in his session, “Why Your Affiliate Revenue May Not Be Real & What You Can Do About It.”

Below are some of the key takeaways from this packed session.

Robert started the presentation defining the evolution  of affiliate programs and how they are managed.  He differentiated between “first generation” and better “second generation” programs:

First generation affiliate programs:

  • Managed internally and passed around a lot
  • Metrics and Payout: more revenue and more affiliates meant success
  • 95% loyalty/toolbar and coupon sites
  • Working with multiple networks
  • Transparency: little to none, no referring URL

Second generation affiliate programs:

  • More experienced in-house managers or specialized third-party firms partnering with in-house
  • Incremental revenue:  looking at conversation rate, willing to pay more for top of funnel
  • Working with more niche-content focused sites
  • Fewer affiliate networks;  big is not necessarily better
  • Transparency:  knowing your affiliates, who they are and how they promote you
  • The result is the affiliate program may be smaller, but more focused on customer acquisition
  • The problem in many affiliate programs is people are not looking at the overlap and understanding multi-touch attribution. There are often 5 touch points in a conversion.

Healthy programs attribute affiliate revenue appropriately.  Looking at where your revenue is coming from and its source/tactics is the first step to becoming a Second Generation Affiliate Program.

Examples of low-value affiliate tactics:

  • Trademark SEO – 80-90% of users come to coupon sites through a landing page that is optimized with a merchant’s trademark and coupon keywords
  • Forced clicks
  • Trademark poachers
  • Trademark and coupon PPC bidders
  • Loyalty and affinity sites

What are signs to look for when approving or reviewing affiliates:

  • Affiliates whose methods who cannot be understood
  • Affiliates who bought prebuilt template affiliate sites
  • Trademark bidders and poachers
  • Cookie stuffer and sites that try to get forced clicks (certain coupon sites are big offenders)
  • Toolbars or other software where the ability to uninstall is difficult or impossible
  • Affiliates who overwrite other value added affiliates

Think of your affiliate program as an extension of your brand.  Look at each site and see if you want your brand there.

So now you have the information and suspects.  What do you do next?

Ways to be Proactive:

  • A good exercise to do is to look at the overlap with the network.  A lot of people have over-valued the end of the funnel/closer method
  • Look at the first five sales of a new affiliate to make sure they are legitimate.  No one should be able to convert at 4 times the typical conversion rate.
  • Look for sudden spikes in traffic and conversions
  • Compare last referrer to last referrer cookie
  • Beware of conversions that come from proxies or thin sites with very high Alexa rankings. Think about how a customer would get to such a website.  If it is not obvious, it is probably not incremental.
  • Use resources like BrandVerity, affiliateFairPlay, RiskIQ and Fraudlogix.

Address within your program terms from the onset by outline restrictions on the following:

  • Sites the require users to click to view code.  Not a real offer and they make user click.  Expired offers to entice people to click and set the cookie. These could be coupon or toolbar sites
  • Trademark poaches – incorporate the brand/url in their domain.
  • Trademark plus bidders – brand prices for trademark bid go up.
  • Consider not allowing toolbar affiliates

The affiliate program is a powerful marketing tool.  There are many opportunities for incremental revenue.  Ending this post on a positive note, let’s review what type of affiliates will bring you incremental program.

Who is a valued-added affiliate?

  • The ability to affect a purchasing decision or vendor, not after the decision has been made.
  • Ability to develop loyalty in a new audience
  • They have traffic or mindshare you want
  • 2-3% conversion
  • 75%+ new customer referrals
  • Promotion is often at the product level

In a nutshell, remember, anything that seems too good to be true in affiliate marketing always is.

There was no way to have this session without speaking negatively about coupon and loyalty sites.  I would love to hear your input into what value you these affiliates bring and what a fair solution would be.

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Stephanie Robbins Stephanie Robbins is the owner at Robbins Interactive, an eRevenue consulting agency specializing in launching small businesses online. She manages the integrated online presence for all her clients including affiliate marketing, social media, search engine marketing, store management and brand monitoring.

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