Most affiliate programmes are based on a cost per action/acquisition or CPA model, which many advertisers argue is the ‘holy grail’ of online advertising. Why? Simply because the CPA model in itself is a direct indicator of ROI. No matter how many impressions or clicks a campaign generates, the advertiser only pays for the sales. Now what can be more performance-driven than that?
Due to the nature of CPA (virtually risk free, highly measurable, and extremely cost effective), it is a favourite with our clients. However, it is important to look at all sides of the coin, and there are some concerns with the CPA model that advertisers and publishers need to be aware of in order to maximise their returns:
The reality is that most advertisers still work on a last-click basis (as it is the easiest option), which means that affiliates higher up in the funnel lose out as earlier customer interactions upon the purchase path are ignored. However, as a client it is worth incentivising these ‘long-tail’ affiliates for their efforts in the sales cycle too, a must if you want to keep these players on your side – they did after all bear the risk by providing free exposure for your brand. This is something that your network can easily assist with.
Programmatic and real-time optimisation
We all imagine a world where we can optimise our affiliate campaigns in real time as programmatic does, but the truth is that we are still negotiating CPA increases with publishers on the phone and working out the commission changes manually. In the fast-paced environment that is digital marketing, advertisers are getting used to the dynamic world of programmatic and as a channel affiliate marketing needs to move forward in order to keep up.
Branding, engagement and brand loyalty
Although many retailers are developing strong content strategies within their affiliate programmes, the industry is quite discount and sale-oriented. When clients decide to work with affiliate marketing their main KPI’s are usually ROI and sales. Nevertheless, it is also our role and responsibility to advise brands on allocating part of their affiliate budget on branding and other upper funnel activities, as ultimately a coherent online strategy across all channels is the foundation for success.
In conclusion, look at the whole conversion funnel and reward your publishers as they deserve, automate where possible and invest some of your budget in branding. And finally, don’t forget to reward affiliates on a more equitable basis by looking at all the touchpoints of a customer’s purchase journey.
Daniel Gross – CEO