Do affiliates really deliver incremental sales? How to measure that impact?

I have written about affiliate marketing several months ago. I wanted to revisit the topic having recently worked with a client who is just starting an affiliate program. They raised a number of good questions. I had to answer the following:

  1. How to determine, who gets the credit for purchase?
  2. Coupon site affiliates – do they add value or are they a threat?

Before I share my discoveries, here’s my primer on affiliate marketing.

In a nutshell, affiliates are third party websites or channels who earn a commission by promoting your products. There are different compensation models in place. A common one is based on clicks they drive to your website. The issue I have with this method is that a lot of click traffic may be fraudulent or just useless. It is quite possible for the affiliate to use clickbait – cute images (like of a red panda) or salacious content or some unbelievable headlines that drive clicks but deliver no meaningful site traffic. So the question arises – What are the affiliates really delivering to your business, and how to measure that? 

Who gets credit for the purchase? 

In all this multichannel environment, who gets the credit for the purchase? Imagine this scenario – a visitor (potential customer) came searching for some “how to” online and clicked on your ad at the top of the search results. They just entered the awareness stage. Next, they returned through organic search (Familiarity), then they saw the affiliate ad (conversation), clicked on it and finally made a purchase (shopping). See the Polytab screengrab to illustrate different channel contribution.

affiliate marketing

The graphic above shows how shoppers move through different stages on their path to purchase. The snake-lines show the path of shoppers across different touchpoints. The big cyan bar in the “shopping” stage was the affiliate I had to assess. The visual gave me a perspective on how shoppers were using the affiliate. There are three attribution methods you could use to assess the impact of the affiliate channel

  • First touch attribution
  • Last touch attribution
  • Multi-touch attribution

I like first touch attribution for affiliates because it gives insight on the NEW shoppers driven into the mix. I also like to look at multi-touch attribution because it gives insight on the shopping journey. Mostly, you should use multi-touch attribution to weight your spend on the affiliate versus the revenues achieved.

I look at two metrics

  • % Purchasers in the awareness stage: This is the % of shoppers in the awareness stage who made a purchase later in the journey
  • Time to first purchase from the awareness stage: This is the quality of shopper traffic. This metric is embedded in multi-touch attribution metric..
  • # shoppers in the awareness stage: This is the absolute volume of shoppers acquired through the affiliate.

In my case I did not put much value to the affiliate for the last-clicks. But notably, most of these purchasers traced their path to the affiliate as the first click as well. All in all, the revenues attributed to this affiliate (as a % of total revenues) indexed well relative to the spend. That was my recommendation. 

Coupon site – friend or enemy? How to contain fraud?

I have a short answer here. Coupon site affiliate is your frenemy. You must select the affiliates carefully in general but regarding coupon site guru’s I would advise to be extra careful. There are many articles like this, warning about risks that come with coupon site affiliates. Generally, a good practice is to contact the affiliate before letting them in on your program and asking to give a more detailed picture of their strategy. There is a well known threat of fake coupons floating around the web and potentially damaging your company’s name. Controlling coupon site affiliates is like herding cats. One thing you can do is filter them out and remove the bad boys from your affiliate program. To illustrate this, I use Polytab, to extract the false performers.  First, this type of clicks distort the understanding of traffic volume at different stages of shopping journey, second, you most likely pay for these useless (unintentional) clicks from your pocket. What you can do, is filter them out (see the crossed out URL’s in the legend on the right) first in order to clearly see the channels that are delivering value, and then kick them out by tracing the URL within your affiliate network. For instance, the example below shows that the twitter feed delivered some traffic, but none of them made purchases.

affiliate marketing

 

Get the complete view of your marketing

Affiliate marketing can be very powerful if done with strong program supervision. But it’s critical to look at the complete view across all marketing touchpoints. You can either collect the pieces from the different reports or just use a tool like Polytab, but this is the essential part of effectively controlling your affiliates (as well as other channels). I invite you to test the Polytab in the guest environment to get a first hand experience. Click the button below.

polytab

Photo courtesy of Mathias Appel, CC0 1.0 Universal (CC0 1.0)

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