Affiliate Marketing and Channel Conflicts

"If you're a loyalty or coupon affiliate, now would be a terrific time to begin diversifying into marketing efforts that will be more highly regarded (and rewarded / paid) in the coming years."

Shoppers always highly regard sites that save them money, so no worries there. This is an old topic and no merchant in their right mind would try to split the commission up but I'm sure their competitors hope they try. Good way to kill a program.

Hi Jonathan,

I deleted the duplicate comment, the ReveNews issues drive everybody nuts, but people are working on it… anyway.

Jonathan said “Shoppers always highly regard sites that save them money, so no worries there. This is an old topic and no merchant in their right mind would try to split the commission up but I’m sure their competitors hope they try. Good way to kill a program.”

The split will become the way to go in the future. I have no doubt about that. The most competitive verticals will adapt to multiple touch-point tracking and analysis earlier than the verticals with big and fat margins, but it will become standard eventually.

Many merchants will kill their program if they don’t do the split. The split is not a loss for all affiliates. It will actually reward those affiliates that actually provide value and cut out or reduce the commission for those who are today primarily enjoying the fruits of another marketing and advertising channels labor without contributing very much themselves.

Pat is right about “Touch point analysis is difficult and prone to misinterpretation”.

It is complicated and a lot of practical experience, measurement and analysis will be necessary to be able to define some sort of standard metrics. Look at online video today. The struggle there gives you a basic idea of what lies ahead.

Thanks for the comments and happy holidays.

Cheers!

Carsten

“A merchant who realizes that 90% of the commission paid every month goes to cookie cutters, parasites and affiliates that jump into the process when the sale is pretty much a done deal already, he will not have a problem to let those affiliates go.”

Is the 90% figure just pulled out of the air or are there some stats out there to back it up?

First, I don’t think cookie cutters make many sales at all. Not sure what type of sites you mean by cookie cutter. We could have different definitions.

Affiliates that jump into the process when the sale is pretty much done. What do you mean by that? There’s done or not done. It’s who closes. The only way a jump in can occur is if the shopper didn’t get what they were looking for and went looking elsewhere and found a closer unless you’re talking about the third thing you mentioned:

Parasites which can jump in and this has to be the first thing addressed before you go any further, the first thing. Because this is what messes up the stats for merchants. Because parasites, adware etc. just basically poach the merchant. And many sales attributed to them are off a merchants direct type ins, natural/free traffic, PPC, other advertising spend, newsletters etc. So if a merchant is really serious about what channel is responsible for the sale, it has to start there. But we are a very long way from that. There are plenty of affiliate managers that realize this kind of stuff just pads their numbers and makes them look like superstars, like the affiliate channel they’re in charge of is bringing in the sales. What needs to happen is the actual merchant (their employer) someone higher up, needs to get a handle on this and I realize there are many good ones out there that really have the merchants best interests at heart but there are many who don’t. And there are many problems with that. Lots of times the affiliate channel is just part an overall marketing channel and the person in charge doesn’t have the time that’s needed to run a very good program. I think any merchant out there that does and devotes somebody/or a team to it, can be very successful with it. The affiliate model is a great one, only pay for performance. Some people have figured it out, many are still learning.

And you can take away the “90%” you’re talking about but ANY affiliate is not going to be ok with their commissions being split. Start a poll Carsten, ask them. People want to know exactly what they’re going to get paid. That won’t change. And again, this has been talked about for years but do you have one example of a merchant doing this? I can’t think of even one.

“Is the 90% figure just pulled out of the air or are there some stats out there to back it up?”

That is no statistical figure, but a hypothetical number, which can actually be replaced by any number that has as the following bottom line: The loss in sales, because of dropping the program or loss of affiliates because of the change to paying commission based on how much the affiliate actually contributed to ANY sale, does not exceed the money saved in commission paid for sales that the merchant would have had without the affiliate in the first place (if the program was intended to increase sales and profits and not just for branding)

“Parasites which can jump in and this has to be the first thing addressed before you go any further, the first thing. Because this is what messes up the stats for merchants. Because parasites, adware etc. just basically poach the merchant.”

Exactly, something that current stats without multiple touch-points don’t show, but stand out like a sore thumb with it.

” but ANY affiliate is not going to be ok with their commissions being split.”

Sure, affiliates that already know that they will see a cut at their bottom line if this is implemented will be against it. However, at that point when merchants actually do this kind of reporting, affiliates who do play an important role in the conversion process overall will see the benefits of it and approve, because they are actually getting more commission than they did before.

That an implementation of such commission structure has still a long way to go before it is realistic (and fair), transparent and trustworthy enough to be matured enough to be up to the task. That does not mean that it will never happen.

There’s even problems with what you just posted.

“If you were part of the conversion process, but your cookie was overwritten by another affiliate or expired by the advertiser triggered by a click on an email or PPC campaign (its not a popular subject, but there are advertisers who do that).”

Right and do you think they want to go back and pay affiliates part of that if they’re not doing it now? Of course not. I’ve even seen (which I knew but was suprised they posted it) that they want to pay out what they can get away with, not anymore. It’s why a lot of merchants also have low cookies, moreso the 0, 1, 2 day cookie merchants and the other ones ridiculously low. They know sales happen later than that and usually the bigger sales. Ever take a look at Linkshare’s Non-Commissionable Sales Report? It’s an eye opener. Search for threads on that. You can see all the sales you would have gotten had the merchant had a decent cookie duration.

And cookie getting overwritten by another affiliate is just part of the business. I don’t have a problem with that because, again it’s who closes.

So we already have many reasons why this isn’t going to happen, let me add just a couple more.

So when an affiliate signs up to a merchant under such a condition, are they supposed to see something like:

Sale: 2%$ – 15%

C’mon now, you know that isn’t going to fly. Floating payouts aren’t going to work. Affiliates are going to want to know exactly what they’re going to get paid for a sale which leads us into the next reason, a big one, trust.

Working online, we really can’t see what’s happening on the other end (besides our stats) so there is a big leap of trust there. I can’t see the shopper going thru checkout, can’t see the merchant/affiliate manager does with the numbers or the network. Some examples. Let’s say there is a reversal. A merchant can reverse a sale and I can’t tell if there was an actual one or not, have to have some trust in the merchant you’re working with. Let’s say somebody is averaging 5 sales a day with a merchant. So getting 6, 7, 8 sales is normal or 4, 3, 2, 1, 0 could be normal. It’s just the business. But on a day when there was 0 sales. It could be a normal affiliate marketing day or maybe there was an issue somewhere. Let’s say there was a tracking issue. I wouldn’t know on my end. So now you want affiliates to take even a bigger leap of faith in that affiliate managers can accurately split up the commission somehow and figure out what channels were responsible for the sale? Again, I will start that poll myself if you want. They won’t. There’s the trust factor, the reality is this would result in lower overall commissions, let’s be real on that one. And then I don’t think networks would even allow a floating payout like that. Leaves way too much room for abuse and manipulation. I think people who think this even has a remote chance of working, really haven’t thought it all the way thru or really don’t have a handle on what affiliates think.

Carsten, many affiliates whose business income is at risk will deny that change is coming (thought they’ve seen it’s start), or seek to mischaracterize those changes – it’s self preservation at work. While asking you to document your numbers, they (and I don’t just mean Trust), they will say a split is a sure way to kill a program… so where’s the proof for that counter argumant? I have seen several merchants remove loyalty and/or couponing from their programs and talk (ans show me numbers) about how their ROI is much improved. The part that is true, is that couponing and loyaltyware isn’t going away, it’s too prevalent and too ingrained into consumer mentality. But it’s value isn’t on par with some other types of affiliate activity, so merchants will (and are starting) to split it off. The trend I predict will come is a simple two channel system, where the main program is available to anyone and everyone and the comm rate is low (and the need to police is also lower, so merchants let it become a free for all, crazy unregulated mess… intentionally, to save time). From this traffic, merchants can find (by measuring!) which affiliates are bringing them mostly incremental traffic. Then taking those affs out of the “main” fold and bringing them into higher paying, closely watched, resource intensive partnerships to maximize both parties productivity.

As it is now, brining incremental traffic to programs with loyalty, coupon and other leaks means there are big gains in sales being missed by merchants because they’re paying to much of their rewards to those affs who deserve it least.

And realize that by “deserve”, I don’t mean anything other than merchants best putting their margins where it will generate the maximum sales volume and income for themselves, as it should be.

Hi Pat,

"While asking you to document your numbers, they (and I don't just mean Trust), they will say a split is a sure way to kill a program… so where's the proof for that counter argumant?"

My numbers were a guess, because I am talking about the future. I am not a fortune teller . I made my arguments against the "killing of programs" who will credit referrers based on contribution to a conversion. Affiliates who claim that they will loose commission as a result of it, either did not understand the concept I was talking about or use methods to promote advertisers that are somewhat questionable.

"I have seen several merchants remove loyalty and/or couponing from their programs and talk (ans show me numbers) about how their ROI is much improved. The part that is true, is that couponing and loyaltyware isn't going away, it's too prevalent and too ingrained into consumer mentality."

Coupon and loyalty sites are not "real affiliates" IMO, because they are not a good vehicle for customer acquisition, but customer retention. Affiliate marketing is supposed to be a strong customer acquisition channel. This is a completely different animal and go beyond the current discussion.

"where the main program is available to anyone and everyone and the comm rate is low" … " From this traffic, merchants can find (by measuring!) which affiliates are bringing them mostly incremental traffic. Then taking those affs out of the "main" fold and bringing them into higher paying, closely watched, resource intensive partnerships to maximize both parties productivity."

This is how most programs work today already. Commission tiers (public and non-public, called "performance incentives" by CJ) are very common for exactly the reasons you stated.

Cheers!

Carsten

Didn't think you could. Because I gave specific reasons why it won't work as well as others and I realize it's hard to debate good points.

Self preservation? You should really take a class, read some marketing books or just Google and learn about consumers and what they like. And you might take that as a put down but I'm serious. I think a lot of affiliates should, not just you. Those type of sites are plentiful and usually top performers for a reason. Because saving people money never goes out of style. Consumers wanting coupons and good deals, will always be around. Been around before the internet existed. They're an important part of the equation. And I do question your knowledge about couponing based on your posts here and your recent ones about coupon links vs. codes. You're not a couponer but like to give advice on it and it's usually off. Stick to what you know. But this one is going into my bookmarks so I can bump in the future.

Trust, I never said consumers don't value coupons or that they would go away, in fact, I said EXACTLY the opposite – they are here to stay. But, as usual, you like to twist what was said into your own agenda. You suggest I should go read a book, while you don't bother to read what I wrote here. You're reactionary and a bit delusional.

"You're not a couponer but like to give advice on it and it's usually off. Stick to what you know."

Affiliate managers and merchants are here that know me, know my websites, know what I do for them and other programs and can see how wrong you are. You are making a glaring idiot of yourself with your declarative false statements.

Bookmark whatever you want, bump it, post it, throw some more trashy lies and crazy conclusions at me and others, I look forward to hearing your narrow minded, uninformed rants as the years pass to the point people realize you've marginalized yourself by loudly demonstrating your own ignorance.

Carsten, that whole response was directed at Pat, not you and his comment directed at coupon sites – “affs who deserve it least.”

Which I’ll be glad to debate because it’s one of the more ridiculous things I’ve read.

“Coupon and loyalty sites are not “real affiliates” IMO, because they are not a good vehicle for customer acquisition, but customer retention. Affiliate marketing is supposed to be a strong customer acquisition channel. This is a completely different animal and go beyond the current discussion.”

I’ve seen you post something along those lines before and would be glad to get into that if you want on a new blog post. It’s what I’m talking about in that there are a lot of people in this Affiliate Marketing business that don’t get the marketing part and their background is more computers or site development. Those that believe in the myth of the acquired customer. It’s not a one shot deal, you have to constantly win them. And that’s what sites like coupon sites do. They are real affiliates because they drive sales. Some of the top affiliates happen to be those kinds of sites. For new customers and recurring. Sales drivers. If anything, you should pay them more, not “the least”.

Right, “you’re not a couponer” out one side of your mouth and then “you just dabble in it” out of the other. You have no idea how much couponing I do or don’t do, you’re just busy squirreling away my private messages from long ago. You’re pathetic.

So go ahead and enlighten us all, how much couponing does it take to be qualified to have this discussion?

Guys, keep it easy. The discussion is not about coupon sites and not about loyalty sites and PPC affiliates either.

Let me give examples where the affiliate would win and loose commission in a multiple touchpoint scenario.

If the customer goes to a coupon site and then to the merchants website, does not buy anything. Sees a product in a print add, walks into the store with a printout of the coupon from earlier and buys the product, the affiliate would get a cut also and not only the direct mail campaign. In this case the affiliate gets commission it did not get before. Change the scenario that the customer saw the flyer first, finds the coupon site and buys the advertised product online. In this case the affiliate would get less commission than it did before, because the direct mail campaign would get credits too.

Does this make sense?

“The second example, the flyer didn’t close the sale, the coupon site did. Maybe the flyer should have had the coupon in the first place.”

Yep, such things would be revealed by this type of analytics.

You are right Jonathan and the analytics I am talking about is improving on the problem of determining what steps lead a customer to the conversion. The goal would be to be able to see and track everything, but that is almost impossible to accomplish IMO.

However, there are already solutions for online/offline tracking scenarios where I did myself believed a few years back that it is impossible to track, which is obviously not the case (see my reference to the ClickPath post of mine). That made me a bit more cautious with the use of words like “never” and “impossible”

"How much couponing does it take to be qualified to have this discussion?

And again, you've chosen to not answer."

Pat, I've asked you 3 times now to say these little words, yes or ok and I will post what you told me. But you haven't and you won't for a reason. How about another way. Between CJ, Linkshare and Performics, how many merchants do you work with and post coupons? You going to avoid that question too?

And why do I think you're not qualified for this discussion?

A. You don't have a competitive coupon site.

B. I base that on your views such as link vs. code. Already went thru that. Bad advice to merchants, not in line with what other couponers think and going backwards.

C. I can post up merchants and ask you if they have coupons available. People who work with them on a daily basis would know right off the bat, you wouldn't.

D. They don't say stuff like:
"Ideally, as an affiliate, I'd prefer that there were no coupons anywhere – I feel it devalues things more than it helps add value and it usually interferes with focusing on incremental sales and value propositions."

Or what you posted above in saying they deserve the least. You saying that alone tells me all I need to know. That you don't get it.

Couponers wouldn't say nonsense like that. It's why I suggested to pick up a book, start here – -http://www.amazon.com/s/ref=nb_ss_b/102-3377461-2618543?url=search-alias%3Dstripbooks&field-keywords=consumer+behavior

Why do you say stuff like that? Would it be because you do more product stuff and you feel the big bad couponers take your sales away somehow?

"How much couponing does it take to be qualified to have this discussion?"

Anybody can talk about it. But people who do it on a daily basis, actually have competitive coupon sites, actually know the value of them to not only the consumer but the merchant are more qualified. I'm talking about people who really know their coupon stuff, that just wouldn't be you.

A. You don't have a competitive coupon site. Check out the other bloggers here who have coupon sites (Connie, Tim, David) . They have what? Merchants from Performics, CJ, Linkshare. Check out any competitive coupon site, they have to have merchants from those networks to be competitive, it's really that simple.

B. Total commissions? That doesn't prove anything, since you post most of what you do is direct to merchant and usually products. Also only a newb is impressed by total sales and commissions. Usually those whose eyes glaze over when someone post screenshots of commissions earned BUT never post screenshots of how much they spent (PPC, other advertising spend) in getting that amount. Wonder why that is? And you also post you do a lot of PPC. So gross is nothing to me, net is. And again, most of your income is products. Glad you're doing great although it has nothing to do with the topic and you continue to skip my questions. And you say you have a coupon site, want to call yourself a couponer but say you wish there were no coupons anywhere. Yeah, that makes a lot of sense, like someone who derives most of their income from coupons (sarcasm).

If you want to challenge anything, challenge yourself. Actually work with some of those merchants who have coupons in various networks. Actually go thru the checkout process with codes links so you don't have to guess if you see the discount at checkout. When you do, you're realize you'll see it about the same amount of code links. And also actually test out the conversion rate between the two methods. That kind of thing.

And Carsten, having lived in Germany myself for about 12 years on and off (Heidelberg) isn't Germany more socialist than capitalist? Not sure if that has anything to do with coupons or not.

blah, blah, blah… more with you don’t compete, you don’t have all of your coupons memorized, i don’t like your views so you’re not worth listening to, you don’t do it on a daily basis, you should read a book…

here’s a challenge for you, let’s get somebody who will maintain the confidentialty of our specific details and let them see our numbers for last month and then let them report the aggregate total sales and commissions here? my coupon site against yours, we can list their domain names and their numbers and you can teach me a lesson and put me to shame.

"You don't have a competitive coupon site. Check out the other bloggers here who have coupon sites (Connie, Tim, David)"

So your position now is that I must be as large as the most prominent couponers in our industry… the bar is raised again.

"And you say you have a coupon site, want to call yourself a couponer but say you wish there were no coupons anywhere."

Yes, I have a coupon site. It's DNS records are public and I've told you it's domain. You, on the other hand, hide your identity and levy accusations and pretend to know all the facets and volume of my business.

Yes, because of I have a coupon site and because it has plenty of sales, I am a couponer, among other things.

No, not quite accurate. I said I wish coupons weren't in the same channel as affiliates who promote a merchants products and I also said that coupons aren't going away from the landscape. As well, I've said they belong in a different channel (for the merchant) because they're of a markedly different value to merchants, a lower value than people promoting the merchant's products who bring mostly new customers.

"only a newb is impressed by total sales and commissions"

So you'd like to Net then, ok, perfectly fine with me. Let's do Net then. And afterwards, you can also explain why Net matters since you first argued that I need volume to understand things… the bar is raised again.

"Actually work with some of those merchants who have coupons in various networks."

So, is there now a minimum number of merchants and a minimum number of networks I must also meet in order to know how a coupon sale works… the bar is raised again.

"you continue to skip my questions"

And you mine. I've allowed you to distract me with inferred questions about my qualifications to answer your questions, seems that argument does come first to me. If your position and arguments here are that I'm not qualified to answer your questions, what's the point? My question for you continues to try to address your arguments about my qualifications – so I am trying to adress your questions… but I know what your plan is there… raise that bar again.

You won't share your numbers, you won't meet and compare, you won't agre to a third party doing it for us, you won't reveal your identity or your website, you won't address where you stand in regards to your imposed levels of qualifications to answer things you've imposed upon me… these positions are of course, constructed to do exactly these things, deflect the conversation from the real topic at hand… like your socialist comment aimed at Carsten.

We know you have no intention of discussing real subjects Jonathan and we can see how adept you've grown at constructing this deflection yet dodging it yourself, which in itself, reveals a lot about you.

Hi Carsten,

Great post – thought provoking and worth discussing.

The channel conflict you describe in your original post has been discussed before but it is still worthy of continued debate whenever practical examples of conflict occur.

I come from the fairly rare perspective of having actually earned online, offline, and phone order revenue from online only marketing campaigns consistently over the past 7+ years. I do know a bit about the real impact of channel conflict.

IMO, unless you are someone like a major retail cataloger who spends a very large share of your operating expenditures on regularly recurring monthly mailings, the percentage of conflict between direct mail and online orders is too small to re-structure your affiliate program. Ultimately, the overlap you describe will be permanently absorbed as a cost of doing business in the offline/mailing channel. This "absorption" must be expected, planned for, and counter-measured prior to the mailing – not afterwards.

Creating unique keycodes or source codes is probably the most successful way I have seen the conflict minimized though there are technical considerations and not all merchants can handle all the codes they need to track all marketing touch points at POS. This is nothing new. Source codes are how direct marketing has been tracked for over 100 years. The system just needs to be updated to include the breadth of marketers that have become available thanks to online affiliate marketing.

The splitting of commissions will not work for the vast majority of programs. There are simply too many hungry eyes on the online sale pie, none of who can claim with any level of certainty that they deserve more credit than the other if they were not the last one connecting to the sale prior to the sale.

I know the direct mailer wants his/her credit for online sales made with the mailings promotional code. But, you know what, I want my share of all the sales I make for hundreds of merchants in store every day because shoppers found sale and product info on my site and decided to go in store to make the sale. The marketing execs "in the know" at the big merchants know it goes both ways. If they were to ever really try to make sale allocation fair, they would find that the big affiliate websites are producing far more sales than they are getting credit for – again I can say this with absolute certainty because I have seen the data. If merchants were to truly split commissions they would ultimately be paying much, much more – not less – due to sales that aren't credited at all to any marketing source – which may have been your point from the beginning.

As for the coupon site value sub-topic, (and I say this as an old school direct mail marketer and not as a coupon site owner), direct marketing requires 3 components: 1.) and audience, 2.) creative, 3.) offer. Affiliate marketing minimizes the importance of the creative and accentuates the importance of the offer and audience. Offers a.k.a. "coupons", "discounts", "sales", "deals", etc. will only disappear when direct marketing does. Offers are the "sales triggers" most programs need to grow market share and provide competitive leverage at key seasonal periods. Bottom line, outside of niche retail categories, coupon sites are here to stay to serve the broader consumer and retail industry needs.

As for PPC direct-to-merchant product search marketing, IMO this is a viable business model because there are merchants who do not have the knowledge, tools, or resources to do an adequate job of search marketing on their own – right now that number is many. PPC search affiliates are fronting money on behalf of the clients they serve to buy terms and placements the merchants should be buying on their own – and making a well deserved margin. We operate in this arena too, but IMO it adds less value to the consumer and the merchant and is therefore more susceptible to long term extinction. It is more about outsourcing than marketing or web publishing – though you have to know a great deal about online marketing, search functionality, and consumer research behavior to be able to provide this service well in the first place.

Hi Kurt,

thanks for your comment. Yes, the subject was already discussed before, but not enough in the spaces where it matters. Most web analytics providers don’t provide multiple touch-point tracking yet and the few who do, see only a small number of their clients actually do something with it and use it for their internal analytics.

Channel conflicts between the online and offline channels and between the online channels itself were not really there in the past, but things are changing and some conflicts are gaining in significance and new conflicts emerge. Paid search is the most prominent one, but it is not the only one.

Regarding the tracking. Did you also read my article about ClickPath I linked to from this article? It’s pretty interesting. ClickPath positioned itself as analytics provider for paid search primarily, but started to expand into other marketing channels as well, when they realized that their solution is actually flexible enough to fulfill the needs of other channels as well.

The commission slit is one option, but advertisers could also average out their figures and adjust commission structures accordingly. That would be the same as a retailer who usually has a revenue share program, but wants to take advantage of lead generation opportunities. Those retailers who know things like the average customer lifetime value etc. can determine what they are able to pay as flat commission (bounty) for a new acquired customer to a lead generation service.

Advertisers should and I am certain will do the actual analytics of incorporating and considering multiple touch-points internally, even if they still pay commissions as they do today. It will have impact on the commission one way or another, because things are getting more and more measurable to allow advertisers to determine much more precisely what works and what not and what is worth how much to them. Behavioral targeting in display advertising is on the same route as the stuff I was talking about here. Behavioral targeting might not change who much advertisers pay on a CPM or CPA basis, but it has impact on the spent on their Ad inventory, what they buy from whom and why.

There’s another intangible (or tangible but delayed) to pushing the rewards to where a merchant values it most… in each channel, there are people or teams of people working towards maximizing their productivity and profit, people whose goals are aligned with the merchant… bringing in more sales. They can be in-house teams like seo or ppc or direct mail and they can be outside teams like affiliates or ad agencies, etc. These folks are all trying to get their own sales-to-cost ratios looking good as well.

It has been my experience, in many facets of marketing and merchanting, that aiming your rewards at the partners you value most, makes those channels more productive for both the people in that channel and for the merchant who benefits from that channel’s work.

And that’s something very few analytics packages even attempt to measure.

If you want to grow sales, put rewards where it’s being best earned.

“I think you are drastically under estimating the number of sales merchants believe occur “naturaly” because of brand recognition or loyalty.”

I do understand your point and there’s validity to it, but the work I’ve done has showed me a different perspective on the magnitudes of channel cannibalization versus your no-brand-loyalty outlook.

For instance, I’ve seen merchants stop their in-house PPC because the “returns” on their affiliate channel were “so high” and the merchant says things like “PPC doesn’t work anymore”. I look into things for them and they’re not monitoring when an affiliate uses adware to take credit for the sale from their PPC, or the BHO overwrites their ppc, or the coupon affiliate who gets tagged as “making” the sale, or the domain name bidding affiliate who grabs those who seek out the merchant by name on return days… same thing for seo, direct mail, brand building etc (not just their ppc)… this article is about channel conflicts, and recognizing those conflicts and dealing with them in a way that’s most productive for the merchant is paramount to their success and their ROI, as well as that of their partners who contribute towards the merchants goals.

Your arguments about ownership of a customer are valid, there’s no such thing as owning them forever or even for very long – but “loyalty” programs that interfere or mask the various bona fide sales producing activites (note i didn’t say customer acquisistion activities) lead merchants to focus on the wrong areas to grow their business.

I’m an affiliate myself and it’s very plain to me that the affiliate channel is highly over rated – because it too often cannibalizes from a merchant’s other channels (and within the aff channel, there’s too often cannibalization as well). For the vast majority of affiliates, it’s not because of what they are doing or even intend to do, but rather because the merchant doesn’t understand what’s happening and they’ve made poor decisions and have otherwise allowed the channel conflicts to remain unexplored and unresolved.

“The reality is that every new sale has to be won. It’s a constant battle for merchants to win over their competitor’s brand loyalists nd their own customers”

I agree, each new sale has to be won. Overall, I’m just saying that if Party A won it for you, paying Party B for winning it, is misplaced. And, I’m also saying determining who won it, when there are multiple touches, isn’t easy, but it’s possible to construct reward systems than are far better than not looking at the issue at all. And lastly, and MOST importantly, well before you even think about splitting channels or figuring out the best way to allocate sales credit or it’s rewards to maximize your results, the hunt for, and elimination of, touches that are of no value must be done. It’s destructive to try to split anything (or alter the split) among parties if some of them are non-contributors. If you start thinking about your aff-coupon sub-channel or aff-ppc sub-channel for instance (both of which have some value), and you’ve got poachers and adware affiliates and bho affiliates, you won’t achieve anything productive at all.

Two hungry cousins…

One guy finds and manages to herd some wild hens onto his uncle’s free range ranch.

His cousin waits and pulls the string on the stick that causes cage to fall and the chicken to be caught in the trap.

Uncle Buck lops it’s head off and ships it out.

A stranger shows up and claims he hypnotized the hen into conceding. The now-dead hen doesn’t deny his influence.

Uncle Buck’s got 3 quarters in his hand as a reward.

There’s no sense at all in Uncle Buck or the cousins having any conversation at all about what’s equitable (or motivating, or good for Uncle Buck’s business) until the stranger gets booted and run out of town.