In 2008, the affiliate industry’s first ever deduplication rules were introduced. They were created and implemented as a means of ensuring that the promotions of affiliates and the promotions of other channels were rewarded based on who could get the last click and was therefore ‘responsible’ for securing a sale. Conceptually, this makes sense as there has to be some way of reconciling who should be paid/recognised as the final influence in converting a customer but the question of how far these policies go and how big an impact they have on affiliate earnings is a hotly debated topic.
Around a similar time (fast forwarding six months), tenancy payments were being introduced to advertisers by some of the most prominent and influential publishers at the time. Some may say it was a reaction to the first ever deduping rules and some masterful clairvoyance on behalf of these publishers but in truth, it was likely a happy coincidence. There is undoubtedly a direct correlation between the growth of tenancy payments and the extensiveness of deduping policies. The more difficult it became for publishers to make money from CPA based activity on a last click model, the higher these tenancy fees grew. The extent to which they grew is not generally publicised, but it is believed that circa 20% of most major affiliate programmes’ spend now goes on tenancy based activity.
Looking at the perspectives of both publishers and advertisers, it’s fair to say that tenancy prices and deduping policies are arbitrarily applied. When quizzed on how the pricing of tenancy packages changes from retailer to retailer, many publishers (anonymously) commented that it was down to personal relationships and retailer seasonality. Not a single publisher referred to the tracking setup of a retailer (and by consequence the aggression of their deduping policies) and yet this is the single biggest commission killer. One might argue that the reason commission killers are increasingly prevalent is that there is rarely a consequence for implementing them and more commonly, publishers and networks aren’t even told they’re happening.
We’ve spent a lot of time helping publishers and one of the first things we talk about is the notion of having dynamic pricing which is aligned to how a retailer sets up the tracking of their affiliate programme. It’s a new concept to many publishers but it’s refreshing to see that eureka moment when they better understand how impactful commission killers can be and how easy it is to counteract unhelpful practices.
Whilst these suggestions are not entirely data led, they are shaped by ten years at affiliate networks and seeing the impact of these commission killers first-hand:
Commission Killer 1: De-duping against branded paid search
Justification: Deduping against branded paid search cuts the amount of affiliate tracked sales in half
Cost: An increase of 50% on tenancy fees
Commission Killer 2: Using outdated network tracking versions
Justification: Between the various version of ITP and ad blocking, the estimated loss can reach 10%
Cost: An increase of 10% on tenancy fees
Commission Killer 3: Forcing mobile traffic into an app (when the user has the app)
Justification: This activity kills affiliate tracking in almost every case as the checkout on an app is different to the checkout on mobile web.
Cost: An increase of 5% on tenancy fees
Commission Killer 4: Aggressively promotes vouchers and declines affiliate sales when they’re used
Justification: This activity kills the chance of affiliates tracking sales as the vouchers are promoted through so many channels.
Cost: An increase of 15% on tenancy fees (rising to 50% if the codes are promoted on the retailers own site)
Commission Killer 5: Paying only for new customers
Justification: Most publishers are unable to influence the type of customer they attract and yet moves of this nature kill publisher earnings by a third if not more.
Cost: An increase of 33% on tenancy fees
It’s not a commonly held view but it’s easy to understand why some publishers might adopt a pricing model like this. The current eco-system enables arbitrary rules to be set by advertisers (often severely hurting publisher earnings) with very little consequence. Creating a correlation between the cost of doing business with any of these practices occurring, can only be a positive for the prospect of publisher earnings. A system of this nature also has the potential to actively incentivise advertisers to re-assess their current setups and means it’s far easier to create a financial business case as to why upgrading their tracking or changing their deduping rules could be in their best interests. Ultimately, until there is some sort of movement towards a cause-consequence dynamic, retailers will always be free to move the goal posts without rhyme or reason.
15 July 2019Advertisers, Affiliate Marketing, Attribution, Tracking
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