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The Metrics Diamond – The 4C’s of Affiliate Revenue

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This presentation is from Affiliate Summit West 2017 (January 15-17, 2017 in Las Vegas, Nevada). Session description: For bottom line clarity, learn the hidden internal metrics of the 4C’s – Clickthrough, Conversion, Cancellation and Commission – that can produce flawless results.

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The Metrics Diamond – The 4C’s of Affiliate Revenue

  1. 1. The Metrics Diamond THE 4C’S OF AFFILIATE REVENUE Click through Conversions Cancelations Commissions
  2. 2. Introductions 52 Years of Combined Experience! Click through Conversions Cancelations Commissions John LoBrutto Director of Affiliate Solutions & Partnerships, Liquid Web, LLC 16 years experience in affiliate & online marketing Mike Allen Affiliate Solutions Provider, Businesswright Consulting LLC 18 years experience in affiliate marketing & management Jeannine Crooks Client Services Manager, Affiliate Window 18 years experience in affiliate marketing
  3. 3. Overview High Volume Affiliate campaigns are strategic partnerships between Advertisers and Publishers, managed within an Affiliate Network. Publishers need to maximize the cost of traffic and Advertisers need to manage the cost of sales – both needing to develop a favorable ROI. A question of cost vs. revenue Maximize the program revenue Partner with profitable campaigns It’s not just the commission rate Understanding the metrics Click through Conversions Cancelations Commissions Why is this topic important?
  4. 4. 4C’s of Affiliate Marketing Exercise A: High Volume (Optimized) Click through Conversions Cancelations Commissions Impressions 25,000 Results CTR - Click Through Rate 4% 1000 CR - Conversion Rate 3% 30 CX - Cancelation Rate 10% -3 CPA - Cost Per Action $200 27 x 200 Publisher Revenue $5,400 Impressions 25,000 Results CTR - Click Through Rate 4% 1000 CR - Conversion Rate 1% 10 CX - Cancelation Rate 20% -2 CPA - Cost Per Action $200 8 x 200 Publisher Revenue $1,600 Exercise B: Low Volume Performance dramatically effects Publisher’s Revenue
  5. 5. 4C’s of Affiliate Marketing Exercise A: High Volume (Optimized) Click through Conversions Cancelations Commissions Impressions 25,000 Results CTR - Click Through Rate 4% 1000 CR - Conversion Rate 3% 30 CX - Cancelation Rate 10% -3 CPA - Cost Per Action $200 27 x 200 Publisher Revenue $5,400 Impressions 25,000 Results CTR - Click Through Rate 4% 1000 CR - Conversion Rate 1% 10 CX - Cancelation Rate 20% -2 CPA - Cost Per Action $675 8 x 675 Publisher Revenue $5,400 Exercise C: Low Volume (High Commission) Performance dramatically effects Advertiser’s Commission (Payout)
  6. 6. Click through Publisher: Volume traffic is expensive and prime ad locations need Advertisers who can perform. Testing multiple ads and Advertisers is essential to maximize site revenue. Are Impressions clicking through? Positioning of Product/Services/Special offers Site organization above/below the fold Cost of Traffic Paid Traffic vs. SEO New or Existing Window Click through Conversions Cancelations Commissions Is testing ads important?
  7. 7. Click through Advertiser: High Volume campaigns begin with traffic volume and quality. First step is to get customers to the offer, the next step is to have a great offer! Are Impressions matching traffic volume? Is the Traffic Qualified Appeal of offer Exclusive offers Coupons Do the links work? Click through Conversions Cancelations Commissions Is my ad getting any attention?
  8. 8. Click through Network: Tracking and reporting each phase of the click path is the network’s primary role. Sharing the information with both the merchant and affiliate ensures both can optimize the shopper’s path for maximum results. Are Impressions tracked? Tracking & Reporting value First or last click Use of sub id Product level tracking Can Google Analytics help? Click through Conversions Cancelations Commissions Do I need a Network for Tracking?
  9. 9. Conversions Publisher: Traffic is expensive and if it doesn’t convert, there is no ROI. Publishers must compare advertisers and know what works best for their site. Is the Product or Service accurately described? What is the Advertiser Value Proposition? Is the Landing Page Co-Branded? Can I get an Exclusive offer? EPC (Earning Per Click) Testing…Testing…Testing! Click through Conversions Cancelations Commissions How can I help maximize conversions?
  10. 10. Conversions Advertiser: Effectively monitoring the conversion metrics is an important focus in optimizing campaigns. Advertisers hold the responsibility of providing a product or service that sells to the Publisher’s audience. Is the offer compelling and converting Is pricing competitive? Advertiser Landing Page Optimization Does Deep Linking help? How many clicks to purchase/ Cart Optimization Are Add On Items commissionable? Click through Conversions Cancelations Commissions Why are conversions so important?
  11. 11. Conversions Network: Capturing the conversion data is critical for everyone. While the information involved is basically the same, each network processes the data differently, making the choice of the network/merchant pairing vital. What constitutes a conversion? Can I manually update an untracked sale and does it report? Reporting, Attribution and Recording assists Pixels, Cross Device and other tracking methods How does ad blocking affect the tracking? Click through Conversions Cancelations Commissions Am I getting paid for all the sales I generate?
  12. 12. Cancelations Publisher: Cancelations are the least controllable metric for Publishers. It is important to understand their impact to the campaign and net commission. Is the offer “too good to be true”? Is the Product/Offer positioning accurate? How do cancelations affect my Revenue? Net vs. Gross Commission payments What are the Lock periods? Is there coupon tracking & attribution? What is the Return Policy or Free Trial timeframe? Click through Conversions Cancelations Commissions Does the sales volume offset cancelations?
  13. 13. Cancelations Advertiser: Even if everything goes as planned through the sales funnel, a customer cancelation or return negates everything! Is the traffic generating a large volume of Fraud? Is the Traffic Quality a good fit for my product or service? Can the Product Positioning be improved? Are customers canceling after a Free Trial period? Is my Support & Response time effective? Is there an issue with Product Quality? Click through Conversions Cancelations Commissions Are my cancelations controllable?
  14. 14. Cancelations Network: Controlling cancelations is vital. Both affiliates and merchants should study available data to identify and remove cancelation triggers. Tracking, trends and granularity of reporting Detailing cancel codes and understanding the reasons Manual updates and partial commissions Lock Periods Industry standards and recommendations Click through Conversions Cancelations Commissions Cancelations affect Networks too!
  15. 15. Commissions Publisher: It’s not just about commission, it’s about what gets commissioned. Negotiate based on revenue expectations and work with the Advertiser dynamically as a partner. What is the EPC? Net vs. Gross commission and Lock Period Evaluate Investment recovery and Maximize Revenue Work with Multiple partners Are there commission deductions for coupons? Is the advertiser slow to pay? Click through Conversions Cancelations Commissions Are my Revenue expectations being met?
  16. 16. Commissions Advertiser: The question is… Can I maximize performance to minimize the commission amount per sale? Optimize…Optimize…Optimize! Different Commission Terms for different Publishers Do I have a Fraud protection policy? What is the overall Rev Share strategy? Evaluating Commissions vs. Marketing spend Am I constrained by a Budget? Percent vs. Flat Rate vs. Volume tiers Attribution of New vs. Existing customers Click through Conversions Cancelations Commissions How do I manage costs while increasing sales?
  17. 17. Commissions Network: A network’s job is to ensure that merchants pay the right commission to affiliates. Comprehensive tracking and reporting is mandatory to confirm this for all parties. How can the Networks set up Commissions? Problem Resolution / Untracked or Disputed Sales Advertiser accountability / Funding Status Ability to expire Publisher as fraud prevention Reporting of all metrics Payment timeframe & methods Click through Conversions Cancelations Commissions Does the network meet my needs?
  18. 18. Let’s Review: 4C’s of Affiliate Marketing Click through Conversions Cancelations Commissions Optimizing a High Volume Campaign by working through the Sales Funnel Impressions 25,000 Results CTR - Click Through Rate 4% 1000 CR - Conversion Rate 3% 30 CX - Cancelation Rate 10% -3 CPA - Cost Per Action $200 27 x 200 Publisher Revenue $5,400  Advertiser Branding / Publisher Traffic Volume  Appeal of Offer & Landing Page Optimization  Stickiness of the Sale / Support of Product  Negotiate the bottom line
  19. 19. Maximize Revenue Opportunities Click through Conversions Cancelations Commissions Open Discussion Consistent Testing and Optimization of the diamond metrics will yield the best possible results for your campaigns. Publishers, Advertisers and Networks must work closely together to find out what works and what doesn’t. Each campaign is unique and sometimes you need to walk away and try again with another partner or partners. Once a working model is developed, it can then be duplicated. Just like cutting a Diamond, the results take time to shape, form and polish… until the perfect gem is created!
  20. 20. Q&A Time Thank you! Click through Conversions Cancelations Commissions John LoBrutto jlobrutto@liquidweb.com Mike Allen mike@businesswright.com Jeannine Crooks jeannine.crooks@affiliatewindow.com

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