The hidden commission killers

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While the affiliate industry has grown considerably over the past few years, affiliates face an ongoing challenge.

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While the affiliate industry has grown considerably over the past few years, affiliates face an ongoing challenge to ensure both the sales they generate are accurately tracked as well as ensuring they are fairly rewarded for them.

Introduction

While the affiliate industry has grown considerably over the past few years, affiliates face an ongoing challenge to ensure both the sales they generate are accurately tracked as well as ensuring they are fairly rewarded for them.

There are a number of aspects that have an impact on the amount of commission that affiliates earn – the so-called hidden ‘commission killers’ in the title of this document. Whether this is the de-duplication rules that are set up for a programme, the lack of mobile tracking or splitting commission based on whether the customers they are referring are new or existing, there is a variety of factors that may turn a once profitable campaign into a lossmaking one.

The beauty of the affiliate channel has always been the simplicity of the payment for performance model; if an advertiser does not record a sale, they will not pay for it. As historically the only channel where traffic is only rewarded if it converts, it has always been a cost effective channel for advertisers.

This payment on performance model often neglects to take account of additional early funnel traffic that affiliates drive and the halo effect this creates. With affiliates paid on conversions, it is no surprise to see business models evolve that are premised on this fact. For the channel to continue to grow and develop further, and for advertisers to really benefit from engaged content affiliates, their commission structures need to start accounting and potentially rewarding this additional activity.

In this white paper we examine how affiliate commission is eroded and the measures that should be put in place to ensure fair rewards for fair sales. We take a hypothetical look at a fixed commission value an advertiser would be prepared to pay for a sale, and how this may be chipped away at with every condition placed on the transaction.
We will take an illustrative figure of £100 that a fictional advertiser is prepared to pay for a sale and demonstrate the ‘commission killers’ that, one by one, whittle away at potential reward.

Channels that are de-duplicated against

Advertisers will have deduplication policies and there are few that will argue against this; a sensible de-duplication policy will ensure a sale is only paid for once and the correct channel is attributed the credit for delivering the sale. For example a dual network programme or where sales involve multiple affiliates.

Depending on the channels that are being de-duped against, commission can be eroded by anything up to 20%.

Some advertisers will also de-duplicate outside of the channel and where they do it is essential they are providing full transparency on the de-duped activity. For all Awin advertisers this should be clearly set out within the programme terms and conditions.
We would recommend stating what percentage of sales affiliates can expect to lose through a de-duplication policy. It is also worth considering the impact of remarketing and retargeting activity (covered later in this document) and how this can negate the efforts of affiliates to drive consumers close to the point of conversion.

Additionally, advertisers need to decide whether to de-dupe at source (sales are de-duped before they are logged in the interface) or manual de-duplication:

De-dupe at source – this means that the advertiser has an automatic process in place that will de-dupe sales at the point they track. By de-duping at source, these sales will not appear within the interface and will not affect advertiser statistics such as validation rate. This also makes the process of de-duplication more efficient for the advertiser without having to manually decline the duplicate sales within the interface (and leading to a decline rate). The downside of de-duping at source is there is a lack of visibility for publishers. They will not know how many sales they were involved in that were ultimately attributed to another channel on a last click basis, unless this data is passed back via the channel parameter.

Manual de-dupe – this means that all sales where the affiliate was the last affiliate referrer within the path to conversion will track within the interface. It will not automatically take into account the additional channels that were last click (where applicable). This method provides greater visibility for publishers but in order for this to be worthwhile it is vital that full visibility is provided on the channel that was rewarded the sale on a last click. A downside of this method is that programme statistics will be affected with high decline rates. It also can be misleading for affiliates who are arbitrating the cost of the traffic they may be paying for, or comparing the performance of one advertiser against another, only to have a portion of that earning then removed.
Estimated loss of commission: Depending on the channels that are de-duplicated against, commission can be eroded by anything up to 20%.
Commission reduced to: £80