Affiliate Marketing is NOT …

I am not participating in discussions like this one at ABestWeb.com, even if I am contacted directly with the request to comment.

The debate whether or not publisher A is legitimate or not, if his business model is based on incentivized traffic, is irrelevant in my opinion. If the publisher uses desktop software or browser plug-ins does also not matter to me, regardless if that publisher honors the “affsrc=1” URL parameter or not.

Technical Fit <> Business Fit

I stated repeatedly in comments and blog posts of mine that I do not consider publishers who are using any type of incentive to drive business to an advertiser to be an affiliate. This includes coupon sites.

Those publishers are using the affiliate tracking technology for their purposes, because the existing technology does everything they need to run their business. That the technology works does not mean that the business model fits too.

The Purpose of your Affiliate Program

It is not what advertisers are being sold about affiliate marketing and what it can do for them. Most advertisers launch their affiliate program with goals in mind like customer acquisition, pre-sale and moving potential customers a step forward in the buying process, extension of reach and branding.

Incentivized traffic on the other hand fits more the purpose of customer retention and increase of customer loyalty overall. This is a perfectly valid and good purpose, but it is not what advertisers have in mind when it comes to the marketing channel “affiliate marketing”. This difference in types of traffic and referred business is often ignored or not understood. Advertisers allow incentive publishers and coupon sites into their program and eventually find out that a lot of their existing traffic is diverted as a result of it. Then they talk about how affiliate marketing does not work and that it cannibalizes their other marketing efforts and eventually shut the whole program down, because it “failed” to deliver what was promised.

Like Membership Rewards Programs

The incentive traffic has to be viewed like a membership rewards program that many retailers already have in place. That traffic would be an extension of this type of promotional vehicle. As the in-house membership program is tracked and measured independently from the affiliate program, so should the incentivized traffic.

Affiliates are being paid commission on top of any rewards of any membership system that the retailers might have in place. The cost of an in-house membership and rewards program does usually have its own budget and its effectiveness is reviewed independently and not as part of the affiliate program, search marketing campaigns and display advertising activities. Maybe email marketing is included sometimes, especially if special mailers are sent to existing customers promoting the membership program.

Suggestions

Incentive publishers, like cash back shopping portals such as eBates.com and FatWallet.com, charity sites like and uPromise.comSchoolPop.com, as well as coupon sites should be tracked and reviewed outside of the regular affiliate program. The same platform might be used, but it must be ensured that tracking of those traffic sources does not interfere with the tracking of the core affiliate program.

Conclusion

The effectiveness of those methods have to be reviewed independently and decisions about whether to continue a partnership with a publisher or not also needs to be done separately. You cannot do that if you are using one tracking system for both of them. You are also not tracking your PPC or Email marketing campaigns via affiliate tracking links for the same reasons, right?

Not separating the two channels blurs the numbers and makes it impossible to gauge the effectiveness or ineffectiveness of each of them, resulting in decisions that are made based on wrong assumptions and misinterpretation of existing data.

The two channels overlap a little bit, as virtually all other marketing and advertising channels do today. If you do advanced web analytics already, and even consider multiple touch-points with a customer in the entire conversion path, then you probably already separate the different types of traffic by the different types of  affiliates, even if you use the same tracking platform for both of them. The separation of the two would end the debate about parasites and how they steal commissions of regular affiliates – because you track them independent from each other.

You then can make much more educated decisions about the value of individual incentive publishers and the cannibalization of your other channels, including your affiliate program, your search marketing campaigns, your email newsletters to existing customers, your social media and viral marketing activities and your display advertising campaigns.

Cheers!

Carsten Cumbrowski

Internet Marketer, Blogger and Entrepreneur
Internet Marketing Resources Portal at Cumbrowski.com

About Carsten Cumbrowski

Internet Marketer, Entrepreneur and Blogger. To learn more about me and what I am doing, visit my website and check out the “about” section.

Twitter: ccumbrowski
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Internet Marketer, Entrepreneur and Blogger. To learn more about me and what I am doing, visit my website and check out the "about" section.

7 Responses to Affiliate Marketing is NOT …

  1. Pat Grady says:

    Great observations. Well constructed arguments and advice here. Love it.

    One typical strategy might be to open an unpoliced free-for-all program at some catch-all mega network like CJ, and pay a commission rate that fits this particular traffic’s value. Measure which affiliates within this population are ethically bringing a majority of new prospects and customers, then offer to pull them out of the general population, into a well-policed separate program at ShareASale and pay a comm rate there, that’s also commensurate with its value (which is much higher). Don’t have a switch that de-dupes these two separate programs during checkout – pay them both when both have touched the sale. If you dedupe, you’ll demotivate the new customer producing affiliates. View your free-for-all channel as a time saving move, spend far less time and resources on it. Be public about your approach, so affiliates bent on providing value to you, know they just have to cut their teeth in the free-for-all, demonstrating they’re bringing you new buyers, then they get plucked into the high value program. Key an eye on the high value program and provide individualized resources and time to work in synergy with your high value providing affiliate partners.

  2. Hi Pat,

    yeah, as I implied in my post, networks would not have to fear to loose much, if any business, because their technological platform fits both needs, the affiliate marketing and the incentivized traffic. They should re-brand one of the two though to avoid confusion.

    The only problem the networks with pixel-tracking might have, is the issue with tracking code being twice on one page. I know that it isn’t a problem for CJ, since it can happen today already that an advertiser has multiple 1 pixel images on his confirmation page, if the advertiser employs multiple actions.

  3. Pat Grady says:

    the pixel "problem" isn't. technologically speaking, tracking two channels with the same pixel (or with two separate pixels), within the same network is a very easy task. so let's not water this down with imagined difficulties.

    waiting for, or even expecting, today's large trusted third parties to develop technological answers to the real needs of merchants is however, foolish. being unwilling to police bad, i'm quite certain they won't step up with tools that allow the merchant to measure, stratify and classify the various shades. which is why i suggested making the best of what exists, as it is, and as it will be.

    "opportunistic clever pragmatism", my buzz phrase for the coming new year.

  4. So you are basically saying that affiliates should be the ones pushing advertisers to move forward and use the existing technology to implement what I proposed, even if it would require from the advertiser some extra administration and management work, to then pressure the large "trusted" third parties to implement tools that would eliminate those extra work, right?

    The problem is that this never worked, except once (CJ LMI), because it requires that affiliates stick together and organize and put they money where their mouth is, which would be literally the case in this instance and thus unlikely to happen.

    Affiliates (at large) tend to have a big mouth in public, but are reluctant to back it up, especially if they do behind closed doors what they publicly denounce, because money does not smell like shit, even if was shit that was making them that money*

    *rough translation of a German saying, which is rooted in Roman history, when Emperor Vespasian illustrated to his son Titus that a taxation of public lavatories generates money that does not smell like a lavatory :)

    Well, back to square one, I guess. It doesn't get any easier anytime soon, doesn't it? :(

  5. Pat Grady says:

    Nope, you didn't understand my post at all, please re-read it. I agree that most affiliates don't put their money where there mouth often is. I advocated a method that's efficient for the merchants, for their own sake. One that properly rewards those adding the most value, again, because it's of prime interest to the merchant themself. Further, my suggestion requires less work and resources, because it only "spends" them where it matters – anyone involved in managing programs (whether inhouse or contracted) knows that an aff program improperly stratified is a huge time suck. and lastly, i said that trying to pressure the large networks to change or provide tools is pointless and will fail, as it has for years – the merchant however, can use what exists today in an optimum way, without needing anybody to change, or wasting time trying to effect the same.

    I look forward to seeing you in Vegas at Affiliate Summit next month.

  6. Nicely said Pat. I agree with you, but you overestimate the sophistication of the average merchant a little bit. Its up to the affiliates to educate the merchants, because nobody else does it, including the trusted third parties.

    See you in Vegas.

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