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It's well known that the affiliate channel works on a cost per acquisition (CPA) model, meaning that when the desired action is completed, be it a sale, lead or quote, the affiliate is paid.
To be able to attribute the sale to an affiliate there needs to be an agreed metric by which a sale can be attributed.
Typically this is a 'last click wins' model: if the last click is attributed to a particular publisher then they receive the commission.
The problem with last click
There isn't necessarily anything wrong with this and I am an advocate of this model, which has worked for 15+ years. After all, it is the same approach that is widely used to attribute sales across all digital marketing channels.
However, such a model presents unique challenges to the affiliate channel, as unlike other disciplines, affiliates (and the network) are only ever paid once a last click sale has been made.
At first glance this might seem fair enough and it would be if all digital disciplines were held to the same rules. But they're not. Other channels such as display and search are paid up-front.
So whilst they might be judged on the same criteria to assess the effectiveness of their activity, other digital channels are rewarded regardless of the outcome. To underline the point, the affiliate channel is not.
I am increasingly starting to think that by working to a pay per performance model over the years we may have created a rod for our own backs.
Advertisers want sales, therefore they try and drive their channels to acquire those sales, so everyone, not just the affiliate channel, is pushing to be able to deliver that 'last click'.
The 'last click' therefore is becoming increasingly squeezed and the emergence of more sophisticated targeting and retargeting is threatening the affiliate channel's ability to secure the much sought after 'last click.'
In fact our share is in danger of shrinking as other disciplines, especially retargeting, seek to recapture customers that have already been directed to the advertiser by a digital channel, thereby winning the last click and despite the affiliate’s involvement in that customer journey, they end up with zero.
Revenue not attributed to the affiliate channel
So, the difficulty occurs when the affiliate channel is assisting the sale but isn't the last click. In this instance affiliates aren't being rewarded for their contribution to that sale - whereas other digital channels would have been.
When I worked advertiser side the data I looked at showed that 70% of times the affiliate channel would win on a last click basis, but there was an additional 30% of times where the channel contributed but didn’t win the last click 'race'.
That is almost a third and represents a significant amount of revenue that is not attributed to the channel but also recognition of the wider role that affiliates have to play in digital marketing also goes unrecognised.
Whilst you could argue that the affiliate channel has also benefitted due to the growth of voucher and cashback activity, which as a rule of thumb will win last click the majority of times, it is the affiliates not in this space that are losing out.
Cashback and voucher sites have a key role to play in driving successful affiliate programmes, but perhaps their success has meant that we haven't been as quick to notice that as a whole the affiliate industry is feeling the pinch when it comes to winning that last click.
So, what's the answer?
The last click for me is still the right attribution model to use and is still the best way in my opinion of assigning a sale to a channel most accurately.
There is talk of 'cutting up commission payments' and attributing them according to where the affiliate contributed within a sale. This for me is a lot of work for little return.
Rather than complicating matters, I think we need to simplify them. To ensure that affiliates are getting the recognition they deserve we need to help advertisers look beyond the last click and understand the role that affiliates play higher up the path to purchase funnel.
This potentially also means considering different payment models, outside of cost per sale, like other channels currently do. We often say that affiliate marketing is a microcosm of online, in that it crosses all disciplines of digital marketing, yet it doesn’t share the same payment models.
The data for this unfortunately sits outside the affiliate channel, so in many ways it is in the hands of the advertisers and how they want their affiliate programme to develop.
Influencing consumers further up the purchasing funnel
Increasingly, more advertisers want to engage affiliates that influence consumers further up the purchasing funnel. To do this they need to start looking at all of the touch points where different affiliates are adding value.
Advertisers then need to share that information with their affiliate network and work together to define new payment models that will benefit all parties and ultimately increase ROI, drive more sales and have more eggs in many more different baskets.
This for me is where affiliate marketing should already be going. However, it can't simply be about obtaining more money within the channel (even if this is fairer); it has to be about using different payment models to drive more sales for advertisers and ultimately increase ROI.
The channel is built on the ability for advertisers to have reach across rich, content driven sites but the last click model no longer supports that. For our industry to grow, we need to start thinking about and proactively pushing forward alternatives.