Advertisers are missing opportunities for deeper partnership.
Imagine for a second that I’m about to start a one-mile race. Never mind the fact that this is total BS, since running is absolutely the last cardiovascular exercise I would opt for. But picture it: I’m at the starting line with three other people. We run our first three laps and when we start the fourth lap, some random person joins us and starts running. Since this new competitor hasn’t already run three laps, they go much faster and finish first. They win, and the rest of us feel cheated. The scenario is a metaphor: The affiliate marketing industry was built on a similar crediting model, likely with good intentions and limited technology. The problem is that as partnerships have evolved, most brands are trying to evolve their programs with the same archaic construct. They’re trying to work with partners who started the race three laps ago, but they are still giving credit to the one that comes in at the end to win it all. The gap between PR and partnerships in the digital space has considerably narrowed over the last couple of years. PR has many other aspects to it, but digital press is a high-priority component and has developed a sophisticated performance model. Brands want that top of funnel digital press traffic. Driving incremental new traffic to their site is the goal and quality content is the driver. There are so many things you can do to effectively build partnerships in the digital press space. The most important piece of advice is: stop paying your partners on a model based purely around the last click. I know that sounds scary. Though it’s something I hear marketers talk about a lot, it’s rare to come across a program that operates effectively with a different model. In fact, when I spoke with four tracking platforms that provide alternative crediting options, all but one indicated a very small portion of their programs utilize anything other than last click payout logic. The exception was Partnerize, who indicated about 50% of their clients are using alternative compensation logic. In Martech Record’s own survey, 92% of respondents said that over 75% of their payouts across all programs were last click. There are many reasons not to change. You might be thinking:
What about loyalty partners, where the shopper expects a reward?
Won’t that piss off all the partners that increase conversion rate, but don’t drive new traffic?
How do I even technically do that?
What will happen to my P&L? Is my performance going to dip? Is my spend going to be impacted?
These are common questions and issues that require a thoughtfully designed structure meant to address such concerns. First let's illustrate the effects of a last click payout structure versus a more thoughtfully designed payout structure. If your affiliate program is on a last click basis, the below graphic shows a frequent conversion path and result. Let’s say you’re able to effectively get content produced, in this example, from InStyle. If it’s a good article, you’ll see a boatload of traffic from this partner. Still, you’re scratching your head about why it doesn’t drive more revenue. You might say “I guess content doesn’t convert.” But that is simply not the case; it’s just that other partners, who have built their model to increase conversion, are getting the credit for all that gorgeous content.
You can see InStyle makes no money here. Just like the runners who began the race at the start line, InStyle is certainly not interested in running that race again. So why would I — or you — run an unfair race? If you’re anything like me, you don’t even like running to begin with. Kidding aside, these partners have no motive to write more content about your brand unless the editors are genuinely stoked about bringing the brand to their audience (PR).
So what happens if you flip the model? In this scenario, let’s say you put all of your partners on a thoughtfully designed first click payout structure (which is more complex than just having every partner on a first click payout). InStyle brings all of these amazing new people to your brand. If one of the partners does a really good job at the bottom of the funnel and closes that sale, then Instyle gets paid. Boom...who wants to write about your brand again?
This is a high-level example, but there are more robust ways of improving your commissioning logic. Most affiliate programs are operating in a silo. Want paid search or other paid media channels factored in? You need the right technology to tier different types of publishers and other paid channels into groups. This way you can have layers of attribution logic that factor into who should be earning a commission.
Content publications use tools like Trackonomics to understand the revenue driven by each featured brand and article. Publications want to maximize the value of their content. Making money from a featured brand is one way to indicate their audience is interested in that brand. Editors aren't likely to continue featuring something that’s not sparking interest.
Here are the results from one brand that shifted from first click to a more sophisticated payout model, where the pre and post coverage of the brand was pretty similar:
I do want to caution that making this shift is not as easy as flipping a switch. There are many other systems that need to be put in place. For example, you need to find an effective way to measure the value of each partnership. If you’re already compensating partners differently, you likely have a good way to measure results and have that dictating your payout structures. If you make a structural change to your program, you should measure the results because you may need to shift your payouts.
Finally, the key question, “Is my performance going to dip? Is my spend going to be impacted?”
We have made a structural shift for numerous brands and it almost never results in revenue loss. If there is any revenue loss, it’s usually minor and very temporary. Long term, your program is going to grow. That’s because content lives forever and will continue to be updated and optimized. In other words, when you’re running a fair race, everyone wants to run. (Unless it’s a real race with actual running. Then count me out.)
Lacie Thompson has worked in performance marketing for the bulk of her 11 years in digital marketing, having spent half of the time on the brand side. She founded LT Partners two and half years ago and has quickly grown the company to a team of 43, running programs for 67 brands across a variety of verticals. (10/6/22)