The Value Of A Strong Conversion Rate Within The Performance Marketing Channel
As competition grows in the affiliate marketplace, advertisers must optimize their campaigns wherever possible. Â Â It is all too easy for affiliate managers to recommend an increase in commission to boost affiliate activity. While not discounting this as an option, a more long term, cost effective approach is to improve onsite conversion rates.
Conversion rates impact Earnings per Click (EPC), which is a key metric assessed by affiliates when considering whether a program is worth promoting. The example below investigates how EPC changes based on two factors: 1) an increase in commission, and then 2) an improvement in the conversion rate.
Looking at an advertiser that converts at 2 percent with a commission of $25 per sale, an affiliate could expect to earn an EPC of $0.50:
1000 clicks = 20 sales @ $25 = $500 commission = $0.50 EPC
If the commission is increased by $5 they can expect to earn $0.60 EPC:
1000 clicks = 20 sales @ $30 = $600 commission = $0.60 EPC
If the conversion rate is improved by 1 percent, affiliates could expect to earn an EPC of $0.75 at the original $25 commission.
1000 clicks = 30 sales @ $25 = $750 commission = $0.75 EPC
With an improvement in the onsite conversion, affiliates can earn more from the traffic sent to an advertiser’s site, proving that throwing money at a problem doesn’t necessarily generate the greatest result.
Different affiliate types will see varying conversion rates depending on the traffic they receive and whether or not the traffic is pre-qualified prior to reaching the landing page. Incentivized traffic (coupon, loyalty and reward sites) will, by their very nature, boost conversions and therefore EPC.
However, providing affiliates with an EPC figure without context has limited value. Instead, offer EPCs according to the type of promotion, so you can give accurate metrics when an affiliate asks what they can expect to earn.
So, how can advertisers help to increase the conversion rate?
Share knowledge with affiliates
Affiliates should be seen as an extension of an advertiser’s marketing team – arming them with the correct tools to help convert their traffic to sales. For example, if particular products are converting well, encourage affiliates to focus their promotional efforts accordingly. Similarly, if specific ad copy is performing well as part of a PPC campaign, notify affiliates so they are able to tweak their own promotion.
Work closely with individual affiliates
Affiliates should be looked upon as individuals. Categorizing affiliates is difficult as no two affiliates are the same and there can be a big difference with regards to how they drive traffic to their site. By working closely with key publishers, they can essentially become brand partners. Understand how they drive their traffic and the type of users they attract, then adjust promotions to improve conversion rates.
This is easier than it sounds and requires long term investment to understand how an individual affiliate’s traffic behaves. That said, it is a logical step for brands with mature programs.
Affiliate specific landing page
Advertisers design landing pages to convert traffic. Regardless of whether the conversion happens online or offline, they still receive the sale. As such, advertisers often include a phone number to give customers the opportunity to call if they need assistance before completing their purchase. Including a phone number may increase conversion rates as customers can receive support from a sales representative if they experience any problems.
However, affiliates require the transaction to convert online. A telephone number is seen as leakage and likely to impact the conversion rate seen through the affiliate channel. To address this, advertisers can remove the phone number completely for all affiliate traffic or set up an affiliate call tracking solution. This method ensures affiliates are rewarded for any sales generated from traffic they drove but then converted offline. A travel merchant in the UK (Sunshine.co.uk) took this idea a step further by explaining why they don’t provide a telephone number on their site – it helps to keep costs down to ensure they are able to offer the most competitive prices.
Alternatively, investigate phone tracking solutions that enable you to reward affiliates (typically with a lower CPA) a sale that starts online but completes offline. This is a hugely underused but an entirely workable solution.
Advertisers can take the affiliate friendly landing page idea one step further by collaborating with individual partners to develop custom, co-branded landing pages. This develops trust for the user, as they see a landing page that demonstrates a relationship between the site they visited and the merchant they are purchasing from.
Encourage users to purchase online through online discount and offers
In order to convert users online there needs to be a reason to purchase online, and discounts can be one way to achieve this. This is typically seen in insurance markets where there is x percent off if you sign up for a policy online, or 12 months for the price of ten.
Another reason people shop online is convenience. A reliable delivery service at no extra cost is an added incentive for consumers to purchase online rather than shopping in-store. Combined with an easy return process, this can increase the propensity to purchase online. In fact, research indicates consumers prefer free delivery to coupons.
Smooth transaction process
When affiliates spend time, effort and money generating visitors to an advertiser’s site, they want them to convert. The transaction process should be as smooth as possible, minimizing the number of clicks required to check out. By providing deep links to relevant product pages or a data feed containing these deep links, affiliates can send their visitors straight through to the product they are interested in.
Similarly, dynamic searchable banners, often seen in the travel vertical, allow a visitor to conduct their search on the affiliate site prior to clicking through to the merchant. With this route, only the last step of completing the transaction is required – the purchasing decision was made on the affiliate site, resulting in further qualified traffic for the advertiser and an increase in conversions.
In Summary
A strong conversion rate is an extremely important factor in affiliate program performance. If advertisers are able to convert a high proportion of their affiliate traffic, both parties benefit – affiliate revenue will increase while the advertiser’s cost per acquisition decreases.
If a website does not convert, an affiliate campaign is unlikely to provide the answer. Affiliates won’t be inclined to drive traffic to a website that is unable to convert site visitors to sales and will instead opt to promote a competitor that does.
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