The Evolution of Affiliate Marketing

The Evolution of Affiliate Marketing

A favorite session of Affiliate Management Days continues to be the panel of key players in the affiliate networks.

Known for controversial topics and heated discussions among respected competitors, the fifth annual network panel filled the room. Rarely do managers get the opportunity to hear the brightest influencers in the affiliate marketing industry address the industry, as a whole, both present and future.

Robert Glazer, Founder and Managing Director of Acceleration Partners, skillfully guided the panel to the hottest trends and discussions within the industry. Below are the representatives from the selected networks:

The Biggest Change in the Industry — Attribution Takes The Win

The first question to the panel was to discuss the biggest changes in the industry since last year’s panel.

Brain Littleton started the discussion addressing how the momentum of attribution continues from last year. More merchants and affiliates participate in deeper discussions with regard to attribution.

Positioning Affiliate Marketing As An Incremental Channel

Brands continue to require validation that the affiliate marketing channel provides incremental value. Networks and service providers need to provide the strategy and tools that relate to providing the evidence of these incremental sales. Michael Jones, of eBay Enterprises, says:

“If you don’t have answers in regarding incrementality as a network or service provider you are in a lot of trouble.”

Todd Crawford from Impact Radius encouraged managers to focus on the data. As brands continue to test their vendors (or in house managers) about incremental value, the manager requires the most accurate data. With this accurate data, the affiliate manager or service provider can provide an objective view or strategy. He explains that we are in the ‘digestion point’ where we need to have discussions based on the data collected.

There Is No One Size Fits All Attribution Solution

Acceleration Partners divides their attribution into internal (looking within the affiliate program) as well as Intra attribution (collects data across all channels). Glazer explains:

“Attribution is the most talked about and least acted upon topic in Affiliate Marketing.”

Desiree Toto of CJ Affiliate by Conversant explains the CJ approach is a more analytical approach that integrates with existing software such as Omniture. The focus is less about the transactional level but more about proper representation within the overall analytic platform.

In regards to attribution resulting in fractionalized commissions, CJ’s approach looks first from a data prospective. After reviewing the clickstream, CJ noticed less than one percent of the affiliate clickstream had multiple affiliates in the clickstream. As such, CJ does not focus on attribution level commission structure but rather providing data from the CMO (Chief Marketing Officer) prospective.

Crawford explained the value of attribution modeling and crediting logic accordingly. Attribution models view all players who contributed to the conversion. With this view, a manager can determine if adjusting the payment/commission makes sense. A holistic view of all marketing channels is crucial. He says:

“If you are looking only at affiliate marketing, you are missing 90 percent of the picture.”

Beyond The Last Click

Jones clarifies that affiliate marketing is so much more valuable than that last click sale. All networks were in agreement. Attribution and a focus on incremental value creates sustainability for the affiliate channel. While attribution may create a painful change in the long run, the benefits to the channel far outweigh the pain.

Littleton warns to use common sense when evaluating attribution data and reviewing multichannels. Data can support any channel. Be wary of feeling overwhelmed by the data and making bad business decisions as a result.

The panel chorused in agreement and stressed just because you can do something does not mean you should. Choots Humphries confirmed the importance of aligning attribution models with overall goals. Loop back to ensure goals were met. Humphries says:

“Consistently the affiliate channel proves to be the most profitable channel including the ability to bring new customers. Our industry will thrive in the intra solution. Not a lot has changed but a lot has been talked about.”

Communication is Key

With attribution taking front stage, communication is more crucial than ever. Affiliates, managers and CMOs all need to be part of the communication and strategy.

If a tiered commission structure is presented, affiliates need to be part of the discussion. In addition, overly complicated commissions generate distrust among the affiliates. The strategy should involve communication and implementation strategies.

On the corporate side, account managers need to be part of the discussions and modeling. Is affiliate being considered in the modeling up front versus a retro vision and fix?

It’s A Public Relations Thing

“Affiliate marketing has negative baggage that it has carried with it for years. It is hard to break that perception. Perception is reality,” explains Jones.

The attribution products, for multichannel need, prove their value. Affiliates are an easy way to justify the cost of the software. You can call back commissions but not any other marketing fees. Make sure they aren’t leveraging affiliates to prove their value. Instead use the attribution modeling to prove the affiliate channel value. In the end, attribution is a new friend of affiliate marketing.

Mobile Takes the Stage

Compared to last year’s discussions, mobile sites are now tracking. However, the problem remains how do we get companies to get app tracking? Merchants aren’t even informing managers that an app has been launched. Crawford explains:

“Problem is the merchant doesn’t see the app as part of marketing. It’s another convenience for our customer. It is done separate from marketing and rarely has goals around it. This needs to be incorporated into the overall ecommerce strategy.”

However, Littleton and other panelists agreed that in-app tracking should not be a priority for network. Currently there is no clear strategy with regards to the apps resulting in a lot of disorganization. Data will not assist with this issue.

Additionally, there are inherent tracking issues due to the cookie drop technology. On an app, there is only one pixel. The advertiser is going to track the life of the users. Not going to pick affiliate marketing. You can’t add more. Pixel called an SDK. As such you need to create an SDK that LinkConnector spends resources to take advantage of this situation. There are technologies out there trying to resolve this gap. Toto explains CJ does have its own SDK but there is a lot of complexity in the tracking.

The conclusion of this interactive and thought-provoking panel illustrates the need for a holistic view of all marketing channels to illustrate the inherent value of the affiliate channel. All panelists agree on the importance of accurate data but, more importantly, on the strategic use of this data. As the industry and technology grows together, a mature and powerful affiliate channel will take the spotlight.

Image: Stephanie Robbins

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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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