Thoughts on Affiliate Marketing Commission Structures
We've been using Link Connector for a while, but they really only have coupon sites in their network and 90% of the traffic they direct to us is dominated by RetailMeNot. We are thinking about re-negotiating with Link Connector or dropping affiliate marketing all together or maybe trying out another network. What's your feeling on affiliate marketing?
What are your thoughts on commission structures? We are thinking of excluding commissions depending on how close to conversion the affiliate touch is i.e. if it comes within 24 hours then we exclude that touch from getting any commission. Any insights you can share are appreciated Roy.
Most coupon sites are a scam. There are probably only a handful of good ones to work with. I've setup programs where we have a pretty low hurdle for our affiliates to get over. We'd do a monthly check for how many customers are "new" visitors. That is, if they were already on our site before the affiliate click, then they're not "new". We require something like 5% new customers for our normal commission, and 1% for our lower tier commission. Less than 1%, and we just drop you. It's an almost laughably low bar, but it filters the scumbags out like crazy.
I wouldn't worry too much about the near-checkout touches, as a good content affiliate that lands a qualified visitor could get caught in that trap. Rather, keep an eye on the coupons being used, and regularly rotate and police them. You'll detect weak affiliates based on their average discount rates, new customer rates, and similar metrics.
I've used an attribution model to police the affiliates, too. On average, the channel only holds about 60% of touched orders. For comparison, retargeting display is 45-50%, and AdWords is 80-85%. In addition, when you audit orders you should stay pretty solidly above 65%. When we get lazy, it drops quickly. In Google Analytics, you can tell where the channel is playing by comparing an even split with a last-touch. If last touch rewards the channel a TON, then you have a couponer problem. Content affiliates would normally be a shred higher in the funnel, and thus do well under either model, so the relative model performance can be used like a litmus test.
I've also run two networks at a time, for most of the history. That's just because some quality participants can sometimes be found on different networks. First it was GAN and CJ, then CJ and LinkShare after GAN shut down. The problem is...most good bloggers can make more money with Amazon links than they can off of specialty retailers, as their visitors are probably going to buy something from Amazon in the next 24 hours. With us, they'd have to buy something related to what they were reading. Our conversion rates just aren't what Amazon can offer, even if our rates are competitive. Still, with the small handful of good bloggers out there affiliate marketing can produce enough of a positive contribution that it's worth having the channel live.
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