Value of Click and Quest for Perfect Attribution Model

Fred Wilson has tweeted:

Affiliate marketing undervalues the link

I’ve just finished reading his “Affiliate Marketing Undervalues The Link” post. In essense, he argues that the 535 clickthroughs he sent to Amazon were worth much more than the money he received in commission (a total of $25.20, or less than $0.05 per click). Linking to a specific book title on Amazon, he generated 40 orders for that book, and 78 more orders for other items.

First of all, let’s give Amazon credit for a noteworthy click-to-sale conversion. 118 purchases on 535 affiliates clicks is a 22% conversion, which in itself is pretty amazing.

Fred writes:

comScore once did a panel-based survey of people who saw a banner ad. Very few of them actually clicked on the banner ad and transacted. But many who saw the banner ad eventually searched on the item they initially saw in the banner and transacted later. comScore has also observed that many products that are initially found and/or researched online end up being purchased offline.

Now we’re talking banner/link views, but this is a totally different subject. It gets us into the question of a perfect attribution model, which, as far as I know, simply does not exist (yet). A good read on the subject is Richard Hartigan’s “Attribution modeling: the value of a view” post.

But, I believe, that talking about impressions/views we’re deviating from the main subject, and that is the value of a click. Rewinding back to Fred’s original concern, are “bloggers and other users of affiliate services are getting under compensated for the value they are providing”? I don’t believe there is a simple answer. On the one hand, one could argue that had it not been for the Amazon’s lower-than-competitors’ commission rate and shorter cookie life, affiliates could’ve been earning much more on the clicks they refer. But on the other hand, the amazing conversion that Amazon is showing is frequently more than making up for the short cookie life and low commission.

We all remember the eBay’s recent introduction of the Quality Click Pricing model which, to put it mildly, wasn’t unanimously welcomed by affiliates [see this discussion and this post and comments under it].

While I would definitely love to see more synergistic all-encompassing payment models (where all value-adding conversion-influencing factors are taken into account), one is yet to be introduced; and when/if developed, unless it is accepted universally, it’ll be really hard to keep all parties happy. Would certainly love to hear what my readers think. Feel free to post your own thoughts in the “Comments” area below.

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