Ensuring Incremental Growth in Any Affiliate Program

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This presentation is from Affiliate Summit West 2014 (January 12-14, 2014 in Las Vegas, NV). Session description: Learn specific tips on growing an affiliate program incrementally by empowering high-value affiliates, focusing on the program’s bottom line, removing channel overlap, and monitoring for fraud.

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Ensuring Incremental Growth in Any Affiliate Program

  1. 1. Ensuring Incremental Growth in Any Affiliate Program Affiliate Summit West 2014 January 13th, 2014 | Las Vegas Robert Glazer, Acceleration Partners David Naffziger, BrandVerity
  2. 2. Where Affiliate Programs Have Been @accelerationpar @brandverity
  3. 3. First Generation Affiliate Programs 1. Management: Whoever was available in-house & network based management. <2 years. 2. Metrics & Payout: “Revenue” and number of affiliates. More volume equals more $ and >% 3. Affiliates: 95% loyalty/toolbar and coupon sites 4. Networks: Multiple, often redundant networks 5. Transparency: Little to none, no referring url The result is a expensive retention program masquerading as a new customer acquisition channel. @accelerationpar @brandverity
  4. 4. And Where Affiliate Programs are Going @accelerationpar @brandverity
  5. 5. Second Generation Affiliate Programs 1. Management: Experienced in-house managers or specialized third party firms partnering with in-house 2. Metrics & Payout: Incrementality; new customer acquisition & conversion rate. Pay for quality. 3. Affiliates: Bloggers, platform tools, shopping sites, more relevant content focused sites 4. Networks: Fewer networks, bigger not necessarily better 5. Transparency: Knowing who your affiliates are and how they are promoting @accelerationpar @brandverity
  6. 6. The Result: A smaller, more valuable new customer acquisition program aligned with business development 6 @accelerationpar @brandverity
  7. 7. How Affiliate Program Economics Often Work Acme Corp: • $100M in annual online revenue • “Unhealthy” $15M affiliate program  10% commission to affiliates  3% of affiliate revenue in fees to the network = $1.95M or 13% of revenue • 75% of Acme’s affiliate revenue is non-incremental • Coupon sites/low-value sources targeting existing customers 7 @accelerationpar @brandverity
  8. 8. How Affiliate Program Economics Often Work • Acme is actually paying $1.95M for $3.75M in incremental revenue • 52% of sales (not 13%) Almost $1.47M in costs are being paid out unnecessarily 8 @accelerationpar @brandverity
  9. 9. Last-in Does Not Have The Same Purpose Then: Now: @accelerationpar @brandverity
  10. 10. Cost Center or Revenue Generator? • 80% of the industry’s affiliate revenue is from coupon, incentive and other low-quality sites. • Many convert at 20% or more: 10X+ times a normal site average. These numbers are achieved through targeting customers already committed to buying. • This results in little incremental affiliate revenue to many retailers. However, there are real and significant costs: commissions, network fees, management fees, etc. 10 @accelerationpar @brandverity
  11. 11. How Does Double Counting Happen? You have a lot of players on your marketing team who are working with consultants or employees in each of these areas SEO Affiliates PPC Email /CRM Display & Re-Targeting Social Media @accelerationpar @brandverity
  12. 12. When 1+1+1+1+1+1 = 2 Everyone is taking credit for the same sale, each channel acts like the others do not exist PPC: $1M Email / CRM: $1M Affiliates: $1M Total Company Revenue: SEO: $1M $2M @accelerationpar @brandverity Display & ReTargeting : $1M Social Media: $1M
  13. 13. Creating the Blueprint Identify the channels that influence customer conversion: • SEM, SEO, Social, Affiliate, Email, Retargeting, Display, Direct Links & Unidentified • Even more granularity needed [ex: multiple search engines, multiple retargeting campaigns, web to store, etc] 13 @accelerationpar @brandverity
  14. 14. Creating the Blueprint Verify disparate reporting: Every report gives different results • Google Analytics, Bid Management Systems, ShareaSale, CJ, multiple vendors for re-targeting etc. • Tracking on pixels, third party tags, name value pairs, long cookie durations, session based cookie durations Goal: Dashboard visible to everyone in which ALL agree on the data‟s accuracy 14 @accelerationpar @brandverity
  15. 15. What Analytics Can Uncover Email PPC Social Affiliates Display & Retargeting Incremental Affiliate Sales Organic Search @accelerationpar @brandverity
  16. 16. “Affiliate Revenue” is a Misrepresented Metric • It does not describe revenue solely from affiliates – it counts revenue where an affiliate was involved in the transaction Organic Search Paid Search Affiliate Transaction • Healthy programs try to attribute affiliate revenue appropriately • Unhealthy programs count all revenue touched by affiliates, distorting overall marketing picture 16 @accelerationpar @brandverity
  17. 17. Demand Generation vs. Interception Scenario 1: Customer Buying Commodity Product Customer wants a toaster, they research and look for the best deal for the chosen model. Loyalty/coupon sites can add value by affecting merchant selection. 17 @accelerationpar @brandverity
  18. 18. Demand Generation vs. Interception Customer goes directly to the chosen merchant with Scenario 2: purchase intent. They are either intercepted along the Customer Buying way or hop out of the cart before purchasing to look for Differentiated Product an offer that may or may not exist. For many branded, custom & differentiated products, coupon/loyalty sites likely do not play a role in the purchase decision. • Toolbars • Spyware • Forced Clicks • Incorrect Offers • Cookie Stuffing • SEO or PPO Trademark @accelerationpar @brandverity 18
  19. 19. Valuing The Entire Funnel Multi channel attribution allows for performance pay outs based on the value of each channel in the customer funnel. Introducers: Content Sites Bloggers Shopping Sites Introducing $50 Engaging $25 Engagers: Social Media Closing $25 Closers: Toolbars Coupon sites CRM Sale! ($100) 19 @accelerationpar @brandverity
  20. 20. Overvaluing Last In Is Expensive & Misleading How would it work for a baseball team that only valued a closer? Starting Pitchers • Content Sites • Bloggers • Shopping Sites Jonathan Papelbon Bullpen Closers • Social Media • Toolbars • Coupon Sites • CRM Heath Bell Tyler Clippard Sergio Romo $6,000,000 $1,650,000 $1,570,000 Last Place NL East No Playoffs Most Wins Regular Season World Series Champions Vs. $11,000,000 3rd place NL East No Playoffs @accelerationpar @brandverity 20
  21. 21. Who is a Value Added Affiliate? Ability to affect a purchasing decision or vendor, not after the decision has been made Ability to develop brand loyalty in a new audience They have the traffic or mindshare that you want 75%+ new customer referrals 2%-3% conversion rate Promotion is often at the product level @accelerationpar @brandverity
  22. 22. Best Practices: Finding High Value Affiliates • Who Likes You Already • Customers, partners, social media, and reviewers • Tools: Radian 6, google analytics, CRM • Who Should Like You • Has the traffic you want, potential partners, complimentary products/services • Tools: SEM Rush, Alexa, Group High • Reaching the Affiliate Community • PR announcements, conferences, and competitive research • Tools: abestweb, affiliate summit Run an affiliate program like business development @accelerationpar @brandverity 22
  23. 23. Quality Programs Need Focus & Talent A quality program has a strong, cross-functional team paying attention to both quality growth and expense containment. Affiliate Team Expertise in wide range of areas including program strategy, program operations, value added affiliate recruitment and communications, campaign development, fraud monitoring, and analytics Quality Revenue Growth via content-based affiliates that are highly relevant to the merchant’s product or service Cost Management Limit commissions to low-value affiliates, enforce program terms & conditions, and monitor affiliate fraud 23 @accelerationpar @brandverity
  24. 24. Affiliate Done Right •75% average growth for over 5 years, cost % down •Managed by a four person team each with separate responsibilities. • No loyalty or toolbar affiliates, very limited coupon site participation with tight control and monitoring. • Frequent, quality communications (1:1 with over 100 affiliates each week) • Fresh content and new creative every month 24 @accelerationpar @brandverity
  25. 25. Value the Right Affiliates 1. Affiliates are not all paid equally. Focus on quality not quantity. 2. Make sure affiliates who work hard are paid properly given credit. • A mid-cart checkout overwrite system • Unique portable cookie system. 25 @accelerationpar @brandverity
  26. 26. Aggressive Recruiting & Activation Utilize all tools to attract and activate affiliates: • Constant focus on recruitment including nontraditional affiliates • Conferences: traditional and non-traditional • Competitor recruiting • Network advertising and invitations • Frequent targeted activation campaigns, including use of attractive prizes 26 @accelerationpar @brandverity
  27. 27. Yet Selective in Acceptance We maintain a tight program that allows the most relevant and active partners to thrive: • Decline nearly 50% of applications • Ongoing policing of affiliates whose metrics are not in line with the norm • Monitoring of affiliate marketing practices for violations of terms and/or trademark bidding • Ask questions when don’t understand the affiliates business model 27 @accelerationpar @brandverity
  28. 28. Winning Formula • Individual order based attribution • Lowered commission for partners with high channel overlap and cart based clicks • Overwrite protection for content affiliates from coupon affiliates • Increased commission for affiliates who drive top of funnel and brand awareness • No toolbars = High performance and loyalty from quality affiliates 28 @accelerationpar @brandverity
  29. 29. Understanding Low-Value Affiliate Tactics Affiliates have developed a number of ways to go after a merchant’s existing traffic through demand interception. • • • • • • • Trademark SEO Forced Clicks Trademark Domain Poachers Trademark + Coupon PPC Bidders Trademark PPC Hijackers Loyalty and Affinity Sites ISPs and their Partners 29 @accelerationpar @brandverity
  30. 30. Trademark SEO A significant share of users come to coupon sites through a landing page that is optimized with a merchants trademark + coupon keywords. 30 @accelerationpar @brandverity
  31. 31. Coupon Sites Using Forced Clicks Trademark optimized landing pages use forced clicking tactics to set the affiliate cookie (often for inaccurate offers), forcing a commission. Click to Reveal Code Not a Real Offer Six Month Expired Offer 31 @accelerationpar @brandverity
  32. 32. Coupon Sites Using Prohibited Codes Coupon sites post (or allow users to post) coupon codes that are prohibited for usage by affiliates, typically because they are deeply discounted. Valid code, but usage prevented at checkin @accelerationpar @brandverity
  33. 33. Trademark Domain Poachers Affiliates incorporate the company trademark into their primary URL to target customers who know the brand or are in the cart 33 @accelerationpar @brandverity
  34. 34. Trademark + Bidders Affiliates bid on the trademark plus the word “coupon(s),” targeting existing users and also driving up the company’s branded PPC costs 34 @accelerationpar @brandverity
  35. 35. Trademark Hijackers Affiliates pretend they are the company in PPC, “laundering” the original source of traffic through another thin website or blog This PPC ad is not from Blurb, it is from an affiliate. This turns a high ROI brand PPC campaign into an expensive and unnecessary affiliate payout. 35 @accelerationpar @brandverity
  36. 36. Loyalty & Affinity Sites Large loyalty affiliates offer toolbars that, once installed, override direct visits and some search results, loading an affiliate link instead. This box popped up unsolicited after typing www.homedepot.com in the browser with the Upromise toolbar installed. Clicking it gives Upromise affiliate credit even though we came directly to this site. Over 14M people have used the Upromise toolbar shown above, and millions more use the Ebates and other toolbars. 36 @accelerationpar @brandverity
  37. 37. Facebook Pages Continuing to receive likes; Now 161 All links on this page lead first through a coupon site and then through an affiliate link to walmart.com @accelerationpar @brandverity
  38. 38. Twitter Accounts Account classified by twitter as a spam account; followers still see tweets Active affiliate account. Sends visitors to a coupon website @accelerationpar @brandverity
  39. 39. ISPs and their Partners Popups on all partnered merchants. Only visible to customers of the ISP. Also autoredirects through affiliate link. Nearly impossible to verify. @accelerationpar @brandverity
  40. 40. Methods to Identify Low Value or Fraud Research new affiliates and their promotional methods. Beware of any method you cannot verify. Look for sudden spikes in traffic, transactions or conversions (8%+ is suspicious for non coupon sites) If network displays referring url, check this frequently with new or high volume affiliates. Carefully review referring urls to understand how they are attracting users and how they are adding value Compare first referrer to last referrer cookie Beware of conversions that come through proxies or thin sites with very high Alexa rankings (no human traffic) @accelerationpar @brandverity
  41. 41. Recognizing „Front‟ Websites (Old) @accelerationpar @brandverity
  42. 42. Recognizing „Front‟ Websites (Old) @accelerationpar @brandverity
  43. 43. Recognizing „Front‟ Websites (New) @accelerationpar @brandverity
  44. 44. Recognizing „Front‟ Websites (New) @accelerationpar @brandverity
  45. 45. Questions & Contact Info Robert Glazer | Founder rglazer@acceleration-partners.com www.accelerationpartners.com @affiliatemgr David Naffziger | CEO davenaff@brandverity.com www.brandverity.com @BrandVerity @accelerationpar @brandverity
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