Many merchants and affiliate program managers do not know what incentive affiliates (aka loyalty affiliates) are. This, in some cases, results in low-quality affiliate program performance, whereas in others, ignorance regarding the essence of incentive affiliate marketing may bring about unwanted customer activity.
Incentive/loyalty affiliates are affiliates that facilitate the desired end-user action by offering them an incentive. Cashback offers, donations to charitable organizations, and contributions to scholarship funds are by far the most popular forms of incentives used by this type of affiliates. FatWallet.com, BigCrumbs.com and CashBaq.com would be classic examples of incentive affiliate websites.
Here’s how it works when it does work for the merchant:
- Merchant A pays 10% commission on all orders
- Incentive affiliate offers their visitors 5%
- Everyone (customer, merchant, affiliate) is happy
However, there are instances when partnerships with incentive affiliates do not work (and cannot work) for the advertiser/merchant. Let me model three contexts to illustrate such situations. If one of the below-described performance-based payment models describes your affiliate program, you better screen affiliate applications carefully to look for incentive affiliates.
- Merchant B (hosting company) pays 50% or $25 (whichever is greater)
- Incentive affiliate offers $15 cashback on all orders
- Problem: customer signs up for 1 month of hosting at $6.95
- Merchant C (diet supplements merchant) pays $35/sale (including orders for free trials)
- Incentive affiliate offers $20 cashback on all order (including free trials)
- Problem: customer orders a free trial
- Merchant D (credit relief company) runs a PPL affiliate program paying $20/lead
- Incentive affiliate offers $10 cashback to everyone who fills out the form on the merchant’s website
- Problem: obvious
The marketing model used by incentive/loyalty affiliates can work for you when your affiliate program’s specifics allow for such type of online marketing. In certain contexts — like the three scenarios that I have modeled above — affiliate program managers should keep the incentive affiliates out of their programs.
Additionally, let me emphasize that in cases when there is room for merchant partnerships with incentive affiliates, affiliate program managers should regularly monitor their behavior. Many incentive/loyalty affiliates are known for using cookie-overwriting toolbars, forcing clicks, and engaging in other unethical behavior. If you run a managed affiliate program, and your program manager takes his/her job seriously, devoting time to policing, and staying on top of all relevant news, you should be okay. Partnerships with kosher incentive affiliates can bring additional sales to your affiliate program (the question of value added deserves a discussion of its own, and I will not touch upon it in this post). Conversely, partnerships with the wrong types of incentive affiliates (for example, OneCause.com and We-Care.com) can do your program much damage (it will simply not grow beyond the level of sales that a handful of unethical affiliates can refer to you, interfering with the performance of your other online marketing channels; and no decent affiliate will want to work with you).