3 Areas Where Affiliate Networks Should Invest Resources #pminyc

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Later this afternoon, at inaugural Performance Marketing Insights, there will be a panel devoted to the topic of “Where Should Networks Invest Their Resource in 2013?” Here are my thoughts on the subject:

Tracking

Tracking, in my opinion, is the key expectation of any affiliate network. Of course, there are also affiliate payments, simplifying things on the tax front (merchants/advertisers don’t have to mess with W-9s and 1099s), opportunities for internal recruitment, but tracking, to me, is key.

When it all just started, pure online tracking was able to cut it. Now networks face the challenge of tracking across devices (PCs, mobile, tablets, etc), as well as numerous contexts for offline tracking.

A recent IAB UK research has revealed that “67% of customers have used multiple devices when purchasing online — this may mean that our present cookie based tracking systems need updating to take into account peoples multiple touchpoints to the internet” [more here] while “25% of mobile Internet users made a mobile purchase in 2012″ [more here]. Clearly, the pressure for tracking is heavily on affiliate networks.

A separate, yet clearly closely-related subject is attribution. Very few actively work in this direction, and understandably so. In May 2012 AvantLink made their “click stream intelligence” solution (aka AvantMetrics) available to merchants regardless of network (segmenting affiliates into Introducer, Influencer, Closer “referral groups” based on  affiliates’ “entry points into the customer’s path to purchase” | more here) — either to consider shared commissions, or evaluate things on their end… Google Affiliate Network has been drawing attention to the question of attribution over the past year too. Also, ShareASale has made a few good steps in this direction.

The market (advertisers) should dictate how this develops, giving preference to more attribution-friendly networks (if advertisers find it of value). But it isn’t a surprise that many affiliate networks aren’t digging too deep into it. After all, shared commissions is one thing, while attributing sales to channels other than the affiliate, will ultimately negatively affect their bottom line.

Value & Business Model

There is an inherent conflict of interest when a network manages an affiliate program for their advertiser. It isn’t unusual to also see that an affiliate network owns/operates an affiliate website, which also constitutes a conflict of interest.

Is there value in what affiliate networks offer? I believe so. Tracking, reporting, payments, opportunities for in-network affiliate recruitment… but when as an OPM I get paid 20% of affiliate payouts (on the sales they’ve referred due to my management of the program), while the network gets 25%… I do not know if the value is comparable. But here again, it is up to the market/advertisers/merchants to decide.

Compliance Issues

I don’t expect an affiliate network to police compliance for merchants and/or affiliates, but I would love to see more tools offered by networks (both for advertisers and for publishers) to equip them for compliance monitoring. Especially, on the following three fronts:

  1. Exclusive coupons,
  2. Trademark violations (be they in paid search or URLs, or anywhere else),
  3. FTC-required disclosures (who else is better equipped than the network to put together a tool verifying compliance on this front when a website has a network’s affiliate link(s) up?)

Got something to add? Chime in using the “Comments” area below.

About Geno Prussakov

CEO & Founder of AM Navigator – an award-winning OPM agency. Founder & Chair of Affiliate Management Days conference. Author of bestselling "A Practical Guide to Affiliate Marketing" (2007) and "Affiliate Program Management: An Hour a Day" (2011), speaker, consultant, and affiliate marketing evangelist.

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5 Responses to “3 Areas Where Affiliate Networks Should Invest Resources #pminyc”

  1. Wade Tonkin says:

    Geno, I’d like to see the networks also take a more active role in the gathering and storage of Affiliate Nexus documentation where it’s required. This is absolutely the easiest to do at the network level and I wanted to give a little credit to the teams at ShareASale and PepperJam for addressing this issue in their products.

  2. Matthew says:

    Fascinating at the conference today that regulation and compliance trumped all other areas in an investment session; yet no demographic wants to own this critical function. Surely joined up thinking and analysis will prevail for those that want to protect all stakeholders?

    • One would hope. We’ll see.

      Compliance is a hugely important topic. Having said this, the parties that are compensated based on performance (be it an affiliate network, or an affiliate management agency) would often keep the violator aboard for as long as they can. As Ben Edelman suggested at Affiliate Management Days SF 2012, to encourage compliance policing merchants should be rewarding those affiliate managers who are catching fraudsters (with the performance-based remuneration of the former, catching and banning the latter, often turns into a cut from paycheck), not “penalizing” them.

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