Advertisers: Why Commission Segmentation Matters to You


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This presentation is from Affiliate Summit East 2014 (August 10-12, 2014 New York City).
Session Description: Attribution analytics have made it possible to design commission segmentation strategies that cut costs while rewarding publishers who drive quality results.

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Advertisers: Why Commission Segmentation Matters to You

  1. 1. Advertisers: Why Commission Segmentation Matters to You Affiliate Summit East 2014 Aug. 11, 2014 New York City
  2. 2. Presented by Brook Schaaf CEO and Co-Founder Schaaf-PartnerCentric Affiliate Program Management Agency Twitter: @schaafpc If you’re live-tweeting about this presentation be sure to use hashtag #ase14.
  3. 3. Agenda • Background • What is Commission Segmentation • Why We Use It; How It Helps • Case Studies • Summary • Questions and Answers
  4. 4. Commission Segmentation Is … • Using attribution tools / analytics to design custom commissions for specific affiliates or types of affiliates in order to reward based upon performance.
  5. 5. Why We Use It • The more we learn about who’s driving results, the more advertisers want to focus on top performers … … and dangle the proverbial carrot.
  6. 6. The Benefits • Allows for a strategy- driven approach to commissions that goes beyond trying to pay more than competitors • Rewards affiliates who are driving desired outcomes • Reduces amount spent on results of lesser quality
  7. 7. Case Study – Coupon / Loyalty • After analyzing program performance we began segmenting coupon and loyalty publishers for a retail client. • Value was lower for these “introducers” than it was for other publishers who were “closers.” • Coupon/loyalty publishers commissions were lowered from 8% to 5% What was the outcome?
  8. 8. Case Study – Coupon / Loyalty • Revenue for coupon/loyalty publishers saw a modest year- over-year decrease (6.66%) while the commissions paid to those publishers dropped by 49.95%.
  9. 9. Revenue Over Time
  10. 10. Cost of Sale Over Time
  11. 11. Cost of Sale – Vertical Spread
  12. 12. Case Study – Midline Commissions • A new client had been paying coupon publishers a 5% commission and non-coupon publishers a 20% commission. However, many non-coupon publishers were still promoting coupons. What was the solution?
  13. 13. Case Study – Midline Commissions • We established a midline commission rate and based a tiered commission structure on that. Commission payouts and the cost of sale remained steady during this period of adjustment.
  14. 14. Monthly Data Table
  15. 15. Revenue Over Time
  16. 16. Publisher Commissions Over Time
  17. 17. Cost of Sale Over Time
  18. 18. Commission Rate Tiers
  19. 19. Case Study – Lowering Commissions • An advertiser was offering a default 8% commission rate that we lowered to 5% for most publishers (allowing two top performers to remain at 8%). Commission payouts fell from an average 6 - 6.5% to 5 – 5.5%. Click throughs and revenue remained consistent with advertiser’s historical data.
  20. 20. Monthly Data Table
  21. 21. Revenue Over Time
  22. 22. Publisher Commissions Over Time
  23. 23. Cost of Sale Over Time
  24. 24. Case Study – Lowering Commissions • A top coupon publisher was earning a 10% commission rate at initial takeover. This was lowered to 5% and then 1%, dramatically reducing the cost of sale. Revenue remained consistent with past performance.
  25. 25. Top Coupon Publisher Revenue & Commissions
  26. 26. Top Coupon Publisher Cost of Sale
  27. 27. Case Studies – Elasticity • We implemented a Q4 growth plan for a fashion retailer whose affiliate program saw YoY growth each week in November/December between 42% and 65%. • We grew year-over-year revenue for a lead gen client's mature program by 84% in one month. • Our affiliate recruitment efforts for a new client brought 118 new affiliates by our second month managing the program, and by that time the program saw a 135% year-over-year increase in revenue.
  28. 28. Case Studies – Elasticity • We grew a retail program 20% year- over-year in the first six months. In our second year of management, it grew 60% year-over-year. Now, two years later, the program is pacing to hit a 175% year-over-year increase for July 2014. • We grew the program for an online business solutions client by 20% year-over-year in the first quarter. In Q1 2014 the client's program experienced 41% year-over-year growth.
  29. 29. Non-Traditional Opportunities • ArkNet owns, which drives $5 - 10k daily but with only a 2 - 4% re-order rate. • Wants to optimize email list by targeting those consumers with Quidsi offers • Goal: develop traditional merchant/ publisher relationship
  30. 30. Non-Traditional Opportunities • InnerVid is a collection of daily and weekly newspapers • Wants to monetize papers by joining affiliate programs • Will advertise in print editions and track via unique URLs or coupon codes
  31. 31. Summary • Use your analytics to identify your top performers. • Create a commission structure in which the rewards are tied to performance. • Don’t be afraid to lower commissions when performance isn’t there. By the same token, don’t be afraid to pay higher commissions for top performing publishers.
  32. 32. Thank You