Affiliate Marketing Blog by Geno Prussakov « Geno talks about affiliate marketing, leadership, etc
Geno Prussakov on November 14th, 2014
Semantic discord – situation where two (or more) parties are misaligned
on definitions of key terms which formulate a concept.

I am an active user of Google Alerts and a number of other tools for online content monitoring. One of the key phases that I monitor daily is “affiliate marketing” and I found it extremely interesting that in the course of just one week I was twice alerted of the content that spoke of affiliate marketing but did not talk about it as online marketers know it.

Both pieces were marketing-related, and both talked about “affiliate revenue” and “affiliate marketing”… I chuckled at the first one (quoting it to a friend next day to exemplify how paid search bidding must be focused on the long-tail to reach the right audience and yield the desired outcome), but after seeing the second one I just couldn’t help but make myself sit down and type up the post you’re reading now.

The first piece was on The Walt Disney Company‘s earnings for 2014 (whose fiscal year ended on September 27). Towards the middle of the article, it reads:

The decrease at ESPN was due to higher programming costs, partially offset by higher affiliate and advertising revenue. The increase in programming costs was driven by contractual rate increases for Major League Baseball, NFL and college football rights, the airing of World Cup soccer and new college football rights. Higher affiliate revenue reflected increased contractual rates and subscribers, taking into account subscribers for the new SEC Network, while the increase in advertising revenue was due to increased units delivered and higher rates, partially offset by lower ratings…

Growth at the domestic Disney Channels was due to lower marketing and programming costs and higher affiliate revenue driven by contractual rate increases. Lower marketing costs reflected decreased affiliate marketing support… [source; highlighting mine]

Of course, in the above context, The Walt Disney Company’s “affiliate marketing support” has nothing to do with Disney Store’s or any other WDC’s affiliate program(s), but every use of the word “affiliate” refers to “affiliate fees” or “payments from cable and satellite companies for programming” by The Walt Disney Company [more in this recap of WDC's "Major Sources of Revenue"].

The second piece was spotted yesterday in a regional newspaper of Tyler, Texas which talked about an East Texas Medical Center clinic closure. Of course, when first seeing it in my Google Alerts, I was intrigued to find out what “affiliate marketing” had to do with it. But alas… Another disappointment was to follow (and again due to connotation specifics). Here’s an excerpt:

Fewer patients and declining reimbursement rates from Medicare and Medicaid have led hospital officials to close the doors on East Texas Medical Center-Gilmer.

Effective Dec. 12, the Upshur County hospital will no longer provide emergency, laboratory and imaging services. On Oct. 31, the hospital stopped providing inpatient care…

…Deleisa Johnson, ETMC affiliate marketing manager, said no decision has been made about what will happen with the facility. [source; highlighting mine]

It seems that “affiliate marketing manager” is more of a public relations and communications type of role at ETMC; and no, the closure of the clinic doesn’t have anything to do with “affiliates” in the below sense (and is in no way related to affiliate marketing in the online sense):

Definition of Affiliate

Throughout my own blog and work, as well as overall online marketing, we define affiliate marketing as follows:

Affiliate marketing is a performance-based context, whereby independent marketers promote an advertisers product/service and get compensated for every qualified action generated.

The “qualified action” in the above definition is something that the advertiser spells out while setting their affiliate program (the environment through and within which the affiliate activity gets tracked, recorded, analyzed, and managed). It may be a sale, a lead, or even a call.

Apparently, other usages of terms “affiliate” and “affiliate marketing” are still commonplace. Don’t let them confuse you.

Regardless of the term(s) in question, always let the context

(a) define the meaning

and

(b) guide your approach

The latter will be especially useful when planning Search Engine Marketing efforts around the terms which in different contexts may carry different semantic loads.

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Simon Swan on November 12th, 2014

In the affiliate marketing landscape where organisations continue to wrestle with their digital brand identity, they shouldn’t panic! Brands should make more use of the affiliate pool working in synergy to help the brand provide something that’s truly remarkable and authentic.

affiliateIt’s time for brands to consider their affiliate pool as an extended workforce who can provide a rich insight into the views of your brand, the strengths and weaknesses – it’s time to consider your affiliates as part of your team. Brands need to focus on what their unique selling points are to not only attract customers to purchase but what also attracts affiliates to join and sign up to their affiliate program, and it’s not all about offering the highest commission rates!

Brands should focus on building a platform of trust and loyalty by sharing branded messaging and content with their affiliates who in turn should use this to drive a relationship with the customer in order to help fuel sales and build an ongoing stream of content to support the affiliate program.

Reasons to work with your affiliates to accelerate your digital brand voice

1. Search Engines & the Impact of Brand Domination 

It is the brands that drive the trust and authority that search engines rely on to drive the right answers for searches. Brands should focus on creating content that users want to find to drive acquisition or lead generation for example. To do this brands need to consider getting out behind their desks and reaching out to their affiliate base and get their views on the reputation of the brand, what could be done better. By crafting branded content that brands are happy for affiliates to use to drive the program.

2. Brand Authority

Many brands fail to realise that the branding opportunity is to tell a great brand narrative to engage with existing users and new prospects and to fine tune and optimise branded content through the various different digital channels. Rather than brands implementing this themselves, consider engaging with your affiliates who specialise in specific digital channels e.g. PPC affiliates, SEO affiliates or email marketing specialists. Reach out to your affiliates and ask what sort of authoritative content could be utilised to assist with the objectives of their affiliate campaign?

3. Identifying Branded Online Value Proposition (OVP)

What is it that helps to differentiate your proposition? What is the reason why your organisation exists and what is it you offer that no one else can?  These are the types of questions that need to be answered to help safeguard the future of your brand as well as ensuring you are offering something unique to your affiliate base that is different to your competitor programs

Consider spending time researching your market sector and the affiliate programs and begin to understand points of difference as well as opportunities for your brand offering to create a new, uncontested market place.

4. Brand Storytelling

Brands should not assume “bringing to life your brand through the art of storytelling” should be done in house, consideration should be given to your pool of affiliates – the eyes and ears of your brand who work on the front line in generating lead or sales for you and have plenty of quantitative and qualitative evidence to share with you to aid the brand proposition – use your affiliates as an extended workforce, they are there to help you!

I am campaigning that brands need to consider forming long terms relationships with their pool of affiliates to not only assist them to drive a healthy affiliate channel but also to consider using their pool of affiliates to help drive exactly how and what they should position their digital brand.

The opportunity therefore to build a credible online voice of authority lies with brands who are prepared to join in on the conversation and build authority in the content deployed across the multitude of different digital channels, in this case the affiliate vertical by sharing their digital voice with their affiliates to help drive sales.

Simon Swan on October 15th, 2014

Note from Geno Prussakov: I am excited to welcome our newest guest blogger, UK-based Simon Swan. Enjoy his first AM Navigator post below.

As affiliate marketing continues to mature as a key digital channel to support an organisations acquisition strategy, it is important to have an actionable plan in place to support your program and having set objectives in place to help drive the campaign in order to meet key business goals.

Research, know, identify

For any campaign there are three key features you should look to set the foundations for a successful affiliate strategy: Research the Market, Knowing your Audience & Identify your USP – i.e. how will your affiliate campaign stand out from your competitors?

With this in mind, I have put together an affiliate marketing 5 Cs campaign to follow to ensure you’re campaign can deliver the results

1. Competitor Analysis

Ensure you are assessing the market you are operating in and identify any new affiliate campaigns being launched by the competition

 

Key actions:

  • Listen to your market – Set up and monitor your competitors and associated keywords through free tools such as Google Keyword planner and Google Alerts.  Monitor review websites, affiliate forums and use Social Media tools to listen to the market, views and opinions of customers and affiliates of your competitor programs.
  • Have a performance benchmark? – Key indicators to consider when completing your competitor analysis include: commission tiers, size of their affiliate base, are there any corporate publications that provide a breakdown in how much revenue their affiliate channels generate?
  • Exploit Gaps/Opportunities – From the SWOT analysis, a number of gaps & opportunities should now be identified and should provide you with a strategy. Defining a Gaps and Opportunity analysis  can be very effective if you’re operating in a crowded market place and are looking for a way to stand out to recruit affiliates to your program.
  • Points of Differentiation – Look for the opportunities, what are your competitors not offering the market that you could exploit and take advantage of to boost the appeal of your affiliate program?
  • Surveys – Set up online surveys to send to potential affiliates who sign up to your program and also ask the 3rd party affiliate program to see if they could communicate this to their wider pool of affiliates. Be prepared to offer an incentive or competition prize as a means to drive users to complete the survey – this acts as an effective tool understand the potential, opportunities and to create new incentives

2. Commercials

Ensure your program is competitive and worthwhile for affiliates to sign up to and invest their time and effort to remain loyal to your program

 

Key actions:

  • Override fee –The majority of affiliate networks charge a 30% override which is based on the commission you are prepared to pay your affiliate base.
  • Tiered Commission Levels – As your program matures, you should be looking to segment your affiliates by revenue (or what the objective of your program is) so to clearly incentivise the affiliates or to easily identify clusters of affiliates that may need more time and support on understanding how to best optimise their performance. As much as it is with the lead affiliates, it is also important to incentivise the “long tail” of your affiliates.
  • Bonus - Introduce “Bonus level” commission tiers to help sell through end of line products or If you’re a retailer that produces “own brand” products, you may well have more margin to play with by offering a higher commission level.

3. Creatives

Create a portfolio of banners – Understand your affiliates and what’s needed to promote your campaign

 

Key actions:

  • Know your affiliate community – According to Econsultancy 55% of affiliates consider text to be the most effective linking method with banners (36%) and datafeeds (25%) also voted the most popular form of promotion
  • Banner sizes – Ensure you’re providing a rich mix of banner inventory for affiliates to use on their sites – these can be generic based or targeted around key products/services as well as promotions being run through your seasonal campaigns.
  • Keep it fresh – Make sure you’re keeping your creatives fresh and updated – there is nothing worse in seeing banners promoting out of stock products or Christmas promotional creatives being run in July!

4. Communication

Make yourself approachable to your affiliate base to deliver a successful program

 

Key actions:

  • Open to questions – Get into the habit of communicating with your affiliates as well as the  affiliate network  and better still, face to face so you can build up a good working rapport.
  • Extended Workforce – Your affiliate base should be regarded as an extended work-force of your organisation, they should be supporting you to deliver on the objectives you’ve set and thus should be treated as an internal member of staff.
  • Introduce an Open Day – Launch an annual open day at your offices – Invite your affiliates to come and visit you and the team, introduce them to your product lines, future plans and product promotions you have planned for the year. The key here is to really get their buy-in and that they feel part of your business.
  • Keep the buzz alive – Never let your program become boring and out-dated! – keep up interest levels by running competitions and interesting, topical information on your organisation and the sector you operate. Easy to do plans such as an events or editorial calendar should help to stimulate your team to continue to keep communication going through-out the year with your pool of affiliates.

5. Campaign Analysis 

What are you going to monitor and measure?

 

Key actions:

Below is a list of KPIs that should be considered to assess the effectiveness of your campaign with the objective to generate sales:

  • Active affiliates – those driving key objectives of the campaign e.g. sales, leads, visits
  • Inactive affiliates – those no longer promoting the campaign, left the program
  • Potential affiliates – those no longer driving positive performances based on their historical sales or leads
  • CTR (Click-through Rate) – the total number of ad clicks divided by the total number of ad impressions
  • Impressions – the total number of times your ad is shown. This is a good metric to understand the effectiveness of a banner creative
  • Conversion – the total number of visits divided by total number of sales generated
  • Average Order value – of sales through the program

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Geno Prussakov on September 18th, 2014

Google has had a love–hate relationship with affiliates since the dawn of affiliate marketing [some of which is reflected in/on this SEObook's infographic on how Google views affiliate marketers].

Are you adding value?Just a few months ago (on January 27, 2014 to be exact) that they put something in “web ink” too — by publishing a blog post on their Webmaster Central in which they clarified that affiliates whose websites do not add value may be deemed violators of Google’s quality guidelines and, as a result, they may “suffer in Google’s search rankings.” You may find the full post here, but here is an excerpt from it:

Our Webmaster Guidelines advise you to create websites with original content that adds value for users. This is particularly important for sites that participate in affiliate programs… Google believes that pure, or “thin,” affiliate websites do not provide additional value for web users… Not every site that participates in an affiliate program is a thin affiliate. Good affiliates add value, for example by offering original product reviews, ratings, and product comparisons.

So once again the subject of added value or lack thereof was brought up and underscored as the centerpiece of Google’s approach to indexing affiliate websites. I fully agree with the ungergirding principle of such approach.

Furthermore, I believe that there are two facets of value that should be taken into an account here:

1. Value to web user – Be it original content (textual or visual) or a comparison shopping functionality of the affiliate website, or anything else that enriches the end users’ experience saving them time, money, or adding value in some other way — all of these would “provide additional value for web users” that Google encourages affiliates to contribute through their sites.

2. Value to advertiser – Whether any search engine cares about this or not, merchants who run affiliate programs should look at affiliates through the prism of value too. Is it going to be beneficial to the advertiser’s brand and constructive to the pre-sale process (involving their product or service) to be promoted on this or that online affiliate property? These are important questions to ask.

I elaborated on both of these facets in more detail in my recently-released Lynda.com course on “Affiliate Marketing Fundamentals” and the video on “adding value” is one of very few that is available free of charge. You may view it below:


 

As always, your comments are warmly welcome. That’s what the “Comments” area below is for. So if you have thoughts to add, I encourage you to use it.

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Geno Prussakov on September 12th, 2014

The Small Business Influencer Awards honor companies, organizations, vendors,
apps and people who have made a significant impact on the
North American small business market.
[more here]

I was already nominated for a similar award a couple of times. In 2012, and in 2011 when my work/contribution got a nod via an “honorable mention.”

Apparently, I was nominated for the 2014 Small Business Influencer Awards as well. This is humbling and altogether exciting. Having authored nearly 1,500 articles and blog posts, four books and a video course, having founded the world’s only affiliate management conference, and having contributed to the success of over 100 affiliate marketing programs… I am still very much humbled to be among the nominees.

If at any point of time I influenced your business, I would highly appreciate your support by casting your vote here (or upon clicking the image below). This won’t take you longer than one second/click.

The voting ends on September 15, 2014, at 2:59 pm Eastern. Many thanks in advance for your support!

Prussakov as SMB Influencer 2014

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Geno Prussakov on September 3rd, 2014

A few weeks ago I spoke at Affiliate Summit in New York. This was my eleventh time speaking at Affiliate Summits and, as always, I had a blast. Apparently, the audience had a good time as well.

According to the conference’s statistics my 5 Foundational Pillars of Affiliate Program’s Success session ranked as a top 3 session by attendance [more here], and the number 1 session by audience growth [details here].

I have also received some encouraging attendee feedback on my session. Here are people’s comments on this particular speaking appearance of mine:

Affiliate Summit East 2014Very informative!

Well structured and clear.

Great talking points and resource suggestions.

Excellent points. Very useful.

I attend a lot of conferences in may verticals. Geno is one of the best and informative speakers I’ve heard in a long time I learned a lot of new things. I would definitely attend another session where he is speaking.

Excellent – lots of great info!

Great for beginners – provided great outline of how to run an affiliate program

Well read speaker, nice data points!

Very knowledgeable.

Stats were great. Geno was knowledgeable.

Good session with good Q&A at the end.

If you missed my “5 Foundational Pillars of Affiliate Program’s Success” presentation, you may now find it on SlideShare.net:


 

Enjoy it, and don’t forget to review my blog posts on affiliate program management here and here.

Also, if you have interest in inviting me to speak at your event, check my past and upcoming speaking appearances here, and shoot me an email. I am always open to new speaking gigs.

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Pete Campbell on August 27th, 2014

Note from Geno Prussakov: I am excited to welcome our newest guest blogger, UK-based Pete Campbell. Enjoy his first AM Navigator post below.

content-1024x1024

Very few things in life are black and white (zebras and pianos are notable exceptions) and, more often than not, things fall into that difficult and morally ambiguous “grey area”. This is just as true for affiliate and SEO marketers as it is for everyone else.

If you’ve come across the terms black hat and white hat in an online marketing context before, you’ll know precisely what I’m talking about. In highly competitive niches such as gambling (bingo and poker), law (personal injury claims) and finance (payday loans), it can be difficult to choose between doing your online marketing the “right” way (according to Google), and doing things the “wrong” way in order to gain the upper hand.

What colour is your hat?

The problem is, no matter how tough Google is getting with black hatted online marketers who engage in spammy techniques, doing the dirty is still paying off. You only need to type a highly competitive gambling search term such as “bingo sites” (which has 18,000 monthly searches in UK) into Google and although it might not be obvious, most of the websites on Page 1 engage in spammy black hat techniques. The use of paid link networks and link farms is still rife and still generating search result rewards – for now.

Yet, by all accounts, the days of paid link building are over. Google may not have managed to banish every trace of SEO spam from the SERPs, but the search engine certainly means business. While black hat techniques may inflate your rank over the short term, if you have long term ambitions online, they’re not likely to go the distance.

Google get serious about spam-laden queries

You only need to look at Google’s clamp down on payday loan search terms to see this in action. In tandem with Panda 2.0 (which was updated to get even tougher with low-quality sites with crummy duplicate content and spammy back links), Google released a Payday Loan Algorithm update in May 2014. Designed to target “very spammy queries”, particularly in those competitive niches I listed earlier, the update was launched to start getting rid of the spammiest offenders who target these competitive terms.

While the Payday Loan Algorithm update will affect a small 0.2% of English search queries, it’s a clear signal of intent from Google. The search engine have also claimed that they plan to start proactively penalising and even banning affiliate sites which fail to add value for visitors.

And if you think Google are calling spammy webmasters’ bluffs, think again. Back in January 2014, gambling giant William Hill was hammered with a serious penalty thanks to its spammy backlink practices. The penalties sent the gambling site hurtling down the SERPs costing them what must have been hundreds of thousands of pounds in revenue.

How to keep your nose clean and win big

If you’re keen to avoid a future without penalties and want to do things right, it might feel like you’re fighting a losing battle against your less scrupulous contemporaries right now. But the truth is, you don’t have to play dirty to win big. Google may be slowly starting to punish black hat behaviour, but they’re also in the habit of rewarding websites which play by the rules. Increasingly, websites who focus on producing awesome, hyper-relevant content, great user experience and high-quality editorially earned links are starting to win on page one.

I’ve been running content strategy over at Two Little Fleas (a UK based bingo portal) throughout this period and, thanks to some concerted effort and creativity, great content has helped Two Little Fleas make page one for highly competitive terms including the aforementioned “bingo sites”, 100% paid link free.

But cracking content only is not the be all and end all to page one rankings. One of our most successful strategies has been reaching out to affiliate partners to collaborate on and distribute content has been a big contributing factor. We’ve explored ways to work with affiliates, leveraging these relationships to build great, relevant links and some pretty cool stuff.

3 ways you can leverage your affiliate relationships too

Interviews & “Ego Bait”

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Everyone’s a little bit susceptible to flattery and, if asked, we’re all pretty keen to share our wisdom and opinions a lot of the time. It’s normal. But it’s also very helpful if you want to generate content that’s interesting to your readers and highly sharable within your niche. Take some time to build relationships, reach out and ask industry experts and influencers about a topic you’re writing about. When you come to set keyboard to paper, make sure you reference them by name, then let them know once your content is live.

Example:  For Two Little Fleas, we’re currently running a series of interviews with organisations like The UK Bingo Association & Marie Curie Cancer Care who run Tickety Boo Games on their thoughts about the decline & comeback of the Bingo industry.

Awards

Image 2014-08-22 at 12.23.12 pm

Just as we all like flattery, we all like to compete and win. Look into setting up your own awards for your affiliates, rewarding them for providing great user experience for their (and your!) players. This will win you plenty of social media attention and will generate links from all sorts of sources within your niche.

Example:  WhichBingo run an annual awards ceremony for their affiliates – well worth checking out for some inspiration. Their awards event has won them tons of great quality links from affiliates including Gala Bingo.

Reviews

Approved

Build an “operator” review section into your website and hire a journalist quality writer to independently and transparently review site operators. Make sure you also include key facts about each site, alone with the pros and cons to ensure your readers find the reviews really, really helpful. Then take things a step further by encouraging users to add their own reviews and comments into the mix.

Once you’ve collected all of your reviews, you could even consider designing an “Approved by *YOUR NAME*” badge which you can then offer to operators. In many cases these badges will give their brand extra credibility and boost their conversion rate. That makes them even more likely to  display your badge along with a link back to – you guessed it – you!

Example: Two Little Fleas has placed badges on numerous operator sites, as an example though you can take a look at the one on the bottom of http://www.paddybingo.com/. (This site is owned by the same group company as Two Little Fleas)

Your Thoughts?

Have you tried leveraging affiliate relationships to create amazing content and win powerful, natural links? What has worked for you? Where do you stand on the black hat/white hat divide? Share your views, tips and experiences below.

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Geno Prussakov on August 14th, 2014

Affiliate managers focus on affiliate recruitment, and then sweat over affiliate activation; but do you realize that when you, finally, get affiliates to put up your links on their website(s) your conversion is then under scrutiny — their extremely critical scrutiny?

There are very few affiliate programs that I promote on my blog, and when one is yielding a higher-than-average click-through rate it quickly stands out. Then, however, if it yields low or (worse yet) no conversions, it stand out even more! Such has been the case in the situation exemplified by the below-shown donut chart:

Non-converting affiliate clicks

Yes, 2,427 clicks (or 91 percent of all clicks sent to the merchants on this network) were generated since getting active with the program, and… zero of them converted.

I took their links down replacing them with another merchant; yet couldn’t help but wonder how patient affiliates normally are with their non-converting merchants. So, I put together a poll asking affiliates how many no-conversion clicks makes them give up on a merchant. Here are the results so far:

How Many Non-Converting Clicks Are Too Many?

Non-converting affiliate clicks poll

It turns out that very few affiliates will patiently wait on merchants to straighten out their conversion rate issues. Seven out of ten won’t refer more than 500 clicks, and three out ten will give up on a merchant (taking down or swapping their links) within the 100-300 clicks range.

Sobering? It should be.

It is also 100% natural. After all, the rule of this affiliate game is “get paid for each conversion.” Affiliates are rarely being compensated for traffic, “eyeballs,” branding, or anything that cannot be directly expressed in a conversion (most frequently a sale, or a lead). And they will take your links down if you don’t convert. Some earlier, other later… So if, as an affiliate manager, you see clicks but no conversions (or conversion rates substantially lower than the averages), look for an internal problem, and fix it before your affiliates give up on you.

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Earlier this month in her FeedFront Magazine article entitled Six Essentials of Creative From Advertisers, a good friend and a fellow affiliate marketer, Kim Salvino, has mentioned something that has inspired this post.

Mobile banner adsShe underscored the importance of diversifying your creative inventory, and not only in terms of shapes and sizes, but also keeping “promotional methods” in mind as they “vary from content to display, email to mobile,” and beyond.

It then occurred to me that while I have a great number of articles on affiliate banners all of them talk about web banners, and up until today not a single one of them was devoted to mobile-specific affiliate banners. Hence, the birth of the post you’re reading now…

Before we get to the sizes, however, it is important to understand how these banners will be used and viewed.

There are two main phone categories that we should keep in mind here: a feature phone and a smartphone. Here are the definitions:

Feature phone — a cellphone that contains a fixed set of functions beyond voice calling and text messaging, but is not as extensive as a smartphone. For example, feature phones may offer Web browsing and e-mail, but they generally cannot download apps from an online marketplace. [source: PCMag]

Smartphone — a mobile phone with highly advanced features. A typical smartphone has a high-resolution touch screen display, WiFi connectivity, Web browsing capabilities, and the ability to accept sophisticated applications. [source: Techopedia]

Due to screen size differences and functionality limitations, we want to ensure we have two sets of banner available for affiliates to use while marketing us via mobile. Here are these sets and respective banner sizes (and their common names):

Feature Phone Banner Sizes

  • 120×20 (small banner)
  • 168×28 (medium banner)
  • 216×36 (large banner)
  • 120×30 (small high image banner)
  • 168×42 (medium high image banner)
  • 216×54 (large high image banner)

Smartphone Banner Sizes

  • 300×250 (static interstitial)
  • 300×50 (mobile leaderboard)
  • 320×50 (static wide banner)
  • 320×100 (large banner)
  • 300×75 (high image banner)
  • 300×160

The above compilations list standard mobile banner sizes. If, however, you’ve seen other sizes work well for you, I would appreciate you adding them through the “Comments” area below.

For samples of mobile banner ads, take a look at these Google AdSense examples as well as this Mobile Advertising Guidelines [PDF] document from Mobile Marketing Association.

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Geno Prussakov on July 30th, 2014

Earlier this month The Wall Street Journal published an interesting article where Miriam Gottfried drew an analogy between a coupon affiliate and a sandwich shop assistant compensated on performance basis. Here’s how the reporter’s illustration went:

Imagine you own a sandwich shop and want to bring in new customers. You recruit five assistants and give them coupons to distribute, promising to give each credit for sales they generate. Four patrol the neighborhood, distributing coupons door to door. The fifth sits right outside the store, handing them to customers as they walk in.

Predicting who will get the most sales isn’t rocket science. But how much value is that fifth assistant actually providing?

The article then went on into analyzing RetailMeNot, a famous coupon affiliate who went public on July 18 2013 “at $21 per share” and “in its first day of trading its stock gained 32%” [source]. On February 27-28 2014 the price was at its peak ~$47 a share. In early July 2014, however, RMN’s share prices dropped to its lowest point in 12 months [details here]. Hence, the WSJ’s look into the company, and what may have affected the drop.

You may read the full article here, but in my today’s post I’d like to touch upon a few important areas brought up in this article.

Last Click Rule / Attribution

The article described RetailMeNot as an affiliate that “generates the vast majority of its sales from commissions on online transactions on which it receives ‘last-click attribution'” which is “when its site is the last place a shopper clicks before making a purchase.” They are right on the money here.

The “last-click” model which is currently the prevalent rule around the industry is indeed a foundational element which allows coupon affiliates to take advantage of the “last minute coupon search” customer behavior. However, it is important to understand that advertisers do not have to have their affiliate program structured in a way where they would just pay any affiliate that drives that last click. To avoid the above-referenced last-minute coupon search problem, merchants can set attribution rules of their own, whereby affiliates who drive the customer “back” to the shopping cart after he/she has gone to a search engine to look for a coupon, do not get credit (or get only a portion of the full commission, whereas the rest goes to affiliate who originally influenced the buying decision, or introduced the customer to the brand). If you are not familiar with how this works, take a couple of minutes to view ShareASale’s video on their “Tags & Rules” solution which allows advertisers to tie affiliate commissions to time-frames as well as click behaviors and patterns (pay special attention to the “1 Minute Rule” described there).

Other Solutions

Many of the larger (and smaller but sophisticated) advertisers with affiliate programs are already also employing other technologies to avoid the “assistant outside the store handing coupons to customers as they walk in” situation described by The Wall Street Journal.

Some suppress the coupon/promo code field altogether (unless the customer originated from a site like RetailMeNot and other coupon affiliate), others display coupons right on their own site (like Macy’s does), others also create dedicated “coupons” pages to outrank coupon affiliates on “TM + coupon” type of search phrases (see JCPenney’s example below), yet others offer no coupons altogether, and/or keep coupon affiliates out of their affiliate programs.

JCPenney coupons

There are also some merchants that would drop coupon affiliates’ commission three- or four-fold. However, this does not really resolve the problem of the last-minute coupon search, as similarly to this situation the affiliate cookie still gets set. And while there may/will be financial benefits for the merchant, it will hurt other affiliates — those who may have influenced the purchaser earlier in the clickstream.

Shopping Cart Abandonment

Finally, I cannot omit this important area which is brought up towards the end of the Wall Street Journal article in question. The “so-called shopping-cart abandonment” is a serious problem faced by every single online merchant. According to today’s Fireclick Index data it exceeds 69% (see the below chart) which matches Vibetrace’s estimates which say that in 2014 the shopping cart abandonment rate reaches 69.50% [source].

Shopping cart abandonment rates

This phenomenon is, actually, much more complex than consumers simply giving up “on purchases once they see the total.” Beyond the totals as well as shipping costs and/or taxes, some are comparison shopping, others get uncomfortable with the checkout process, the website’s navigation, or face payment-related difficulties, and then there are also those who find the delivery options unsuitable, or are influenced by one (or several) of the 14 factors ranked on the below-displayed Statistia’s chart:

Reasons for shopping cart abandonment

If and when a coupon affiliate, or a retargeting affiliate, or a remarketing affiliate brings back that customer hours or days later (with a help of a coupon, banner ad, email, or something else), there frequently is value in that, and they are worth compensating.

Conclusion

To make the most of your affiliate program and the different types of affiliates in it, manage it!! Don’t let it fly on its own relying on the last-click-wins or some other preset/default rule. Measure it and manage it. Only then it will yield incremental fruit. If you need external help with it, email me.

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