This presentation is from Affiliate Summit West 2014 (January 12-14, 2014 in Las Vegas, NV). Session description: Learn specific tips on growing an affiliate program incrementally by empowering high-value affiliates, focusing on the program’s bottom line, removing channel overlap, and monitoring for fraud.

1. Ensuring Incremental Growth in
Any Affiliate Program
Affiliate Summit West 2014
January 13th, 2014 | Las Vegas
Robert Glazer, Acceleration Partners
David Naffziger, BrandVerity

2. Where Affiliate Programs Have
Been
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3. First Generation Affiliate Programs
1. Management: Whoever was available in-house &
network based management. <2 years.
2. Metrics & Payout: “Revenue” and number of affiliates.
More volume equals more $ and >%
3. Affiliates: 95% loyalty/toolbar and coupon sites
4. Networks: Multiple, often redundant networks
5. Transparency: Little to none, no referring url
The result is a expensive retention program
masquerading as a new customer acquisition channel.
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4. And Where Affiliate Programs are
Going
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5. Second Generation Affiliate Programs
1. Management: Experienced in-house managers or
specialized third party firms partnering with in-house
2. Metrics & Payout: Incrementality; new customer
acquisition & conversion rate. Pay for quality.
3. Affiliates: Bloggers, platform tools, shopping sites, more
relevant content focused sites
4. Networks: Fewer networks, bigger not necessarily better
5. Transparency: Knowing who your affiliates are and how
they are promoting
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6. The Result:
A smaller, more valuable
new customer acquisition program
aligned with business development
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7. How Affiliate Program Economics Often Work
Acme Corp:
• $100M in annual online revenue
• “Unhealthy” $15M affiliate program
 10% commission to affiliates
 3% of affiliate revenue in fees to the network
= $1.95M or 13% of revenue
• 75% of Acme’s affiliate revenue is non-incremental
• Coupon sites/low-value sources targeting existing
customers
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8. How Affiliate Program Economics Often Work
• Acme is actually paying $1.95M for $3.75M in
incremental revenue
• 52% of sales (not 13%)
Almost $1.47M in costs
are being paid out unnecessarily
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9. Last-in Does Not Have The Same Purpose
Then:
Now:
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10. Cost Center or Revenue Generator?
• 80% of the industry’s affiliate revenue is from coupon,
incentive and other low-quality sites.
• Many convert at 20% or more: 10X+ times a normal site
average. These numbers are achieved through
targeting customers already committed to buying.
• This results in little incremental affiliate revenue to
many retailers. However, there are real and significant
costs: commissions, network fees, management fees,
etc.
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11. How Does Double Counting Happen?
You have a lot of players on your marketing team who are working
with consultants or employees in each of these areas
SEO
Affiliates
PPC
Email /CRM
Display & Re-Targeting
Social Media
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12. When 1+1+1+1+1+1 = 2
Everyone is taking credit for the same sale, each channel
acts like the others do not exist
PPC:
$1M
Email / CRM:
$1M
Affiliates: $1M
Total
Company
Revenue:
SEO: $1M
$2M
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Display & ReTargeting :
$1M
Social Media:
$1M

13. Creating the Blueprint
Identify the channels that influence customer conversion:
• SEM, SEO, Social, Affiliate, Email, Retargeting, Display,
Direct Links & Unidentified
• Even more granularity needed [ex: multiple search
engines, multiple retargeting campaigns, web to store, etc]
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14. Creating the Blueprint
Verify disparate reporting: Every report gives different results
• Google Analytics, Bid Management Systems, ShareaSale,
CJ, multiple vendors for re-targeting etc.
• Tracking on pixels, third party tags, name value pairs, long
cookie durations, session based cookie durations
Goal: Dashboard visible to everyone in which
ALL agree on the data‟s accuracy
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15. What Analytics Can Uncover
Email
PPC
Social
Affiliates
Display &
Retargeting
Incremental Affiliate Sales
Organic
Search
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16. “Affiliate Revenue” is a Misrepresented Metric
• It does not describe revenue solely from affiliates – it counts
revenue where an affiliate was involved in the transaction
Organic
Search
Paid Search
Affiliate
Transaction
• Healthy programs try to attribute affiliate revenue
appropriately
• Unhealthy programs count all revenue touched by affiliates,
distorting overall marketing picture
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17. Demand Generation vs. Interception
Scenario 1:
Customer Buying
Commodity Product
Customer wants a toaster, they research and
look for the best deal for the chosen model.
Loyalty/coupon sites can add value by
affecting merchant selection.
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18. Demand Generation vs. Interception
Customer goes directly to the chosen merchant with
Scenario 2:
purchase intent. They are either intercepted along the
Customer Buying
way or hop out of the cart before purchasing to look for
Differentiated Product an offer that may or may not exist.
For many branded, custom & differentiated
products, coupon/loyalty sites likely do not play a
role in the purchase decision.
• Toolbars • Spyware
• Forced Clicks • Incorrect Offers
• Cookie Stuffing • SEO or PPO Trademark
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19. Valuing The Entire Funnel
Multi channel attribution allows
for performance pay outs based
on the value of each channel in
the customer funnel.
Introducers:
Content Sites
Bloggers
Shopping Sites
Introducing
$50
Engaging
$25
Engagers:
Social Media
Closing
$25
Closers:
Toolbars
Coupon sites
CRM
Sale! ($100)
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20. Overvaluing Last In Is Expensive & Misleading
How would it work for a baseball team that only valued a closer?
Starting Pitchers
• Content Sites
• Bloggers
• Shopping Sites
Jonathan Papelbon
Bullpen
Closers
• Social Media
• Toolbars
• Coupon Sites
• CRM
Heath Bell
Tyler Clippard
Sergio Romo
$6,000,000
$1,650,000
$1,570,000
Last Place NL East
No Playoffs
Most Wins
Regular Season
World Series
Champions
Vs.
$11,000,000
3rd
place NL East
No Playoffs
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@brandverity
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21. Who is a Value Added Affiliate?
Ability to affect a purchasing decision or vendor, not after
the decision has been made
Ability to develop brand loyalty in a new audience
They have the traffic or mindshare that you want
75%+ new customer referrals
2%-3% conversion rate
Promotion is often at the product level
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22. Best Practices: Finding High Value Affiliates
• Who Likes You Already
• Customers, partners, social media, and reviewers
• Tools: Radian 6, google analytics, CRM
•
Who Should Like You
• Has the traffic you want, potential partners, complimentary
products/services
• Tools: SEM Rush, Alexa, Group High
•
Reaching the Affiliate Community
• PR announcements, conferences, and competitive research
• Tools: abestweb, affiliate summit
Run an affiliate program
like business development
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23. Quality Programs Need Focus & Talent
A quality program has a strong, cross-functional team paying
attention to both quality growth and expense containment.
Affiliate Team
Expertise in wide range of areas including program
strategy, program operations, value added affiliate
recruitment and communications, campaign
development, fraud monitoring, and analytics
Quality Revenue
Growth via content-based affiliates that are highly
relevant to the merchant’s product or service
Cost
Management
Limit commissions to low-value affiliates,
enforce program terms & conditions, and
monitor affiliate fraud
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24. Affiliate Done Right
•75% average growth for over 5 years, cost % down
•Managed by a four person team each with separate
responsibilities.
• No loyalty or toolbar affiliates, very limited coupon site
participation with tight control and monitoring.
• Frequent, quality communications (1:1 with over 100
affiliates each week)
• Fresh content and new creative every month
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25. Value the Right Affiliates
1. Affiliates are not all paid equally. Focus on quality
not quantity.
2. Make sure affiliates who work hard are paid
properly given credit.
• A mid-cart checkout overwrite system
• Unique portable cookie system.
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26. Aggressive Recruiting & Activation
Utilize all tools to attract and activate affiliates:
• Constant focus on recruitment including nontraditional affiliates
• Conferences: traditional and non-traditional
• Competitor recruiting
• Network advertising and invitations
• Frequent targeted activation campaigns, including
use of attractive prizes
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27. Yet Selective in Acceptance
We maintain a tight program that allows the most
relevant and active partners to thrive:
• Decline nearly 50% of applications
• Ongoing policing of affiliates whose metrics are not in line
with the norm
• Monitoring of affiliate marketing practices for violations of
terms and/or trademark bidding
• Ask questions when don’t understand the affiliates business
model
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28. Winning Formula
• Individual order based attribution
• Lowered commission for partners with high channel
overlap and cart based clicks
• Overwrite protection for content affiliates from coupon
affiliates
• Increased commission for affiliates who drive top of funnel
and brand awareness
• No toolbars
= High performance and loyalty from quality affiliates
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29. Understanding Low-Value Affiliate Tactics
Affiliates have developed a number of ways to go after a merchant’s
existing traffic through demand interception.
•
•
•
•
•
•
•
Trademark SEO
Forced Clicks
Trademark Domain Poachers
Trademark + Coupon PPC Bidders
Trademark PPC Hijackers
Loyalty and Affinity Sites
ISPs and their Partners
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30. Trademark SEO
A significant share of users come to coupon sites through a landing page
that is optimized with a merchants trademark + coupon keywords.
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31. Coupon Sites Using Forced Clicks
Trademark optimized landing pages use forced clicking tactics to set the
affiliate cookie (often for inaccurate offers), forcing a commission.
Click to Reveal
Code
Not a Real Offer
Six Month Expired
Offer
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32. Coupon Sites Using Prohibited Codes
Coupon sites post (or allow users to post) coupon codes that are
prohibited for usage by affiliates, typically because they are deeply
discounted.
Valid code, but
usage prevented
at checkin
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33. Trademark Domain Poachers
Affiliates incorporate the company trademark into their primary URL to
target customers who know the brand or are in the cart
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34. Trademark + Bidders
Affiliates bid on the trademark plus the word “coupon(s),” targeting
existing users and also driving up the company’s branded PPC costs
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35. Trademark Hijackers
Affiliates pretend they are the company in PPC, “laundering” the original
source of traffic through another thin website or blog
This PPC ad is not from
Blurb, it is from an
affiliate.
This turns a high ROI
brand PPC campaign into
an expensive and
unnecessary affiliate
payout.
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36. Loyalty & Affinity Sites
Large loyalty affiliates offer toolbars that, once installed, override direct
visits and some search results, loading an affiliate link instead.
This box popped up
unsolicited after typing
www.homedepot.com in
the browser with the
Upromise toolbar installed.
Clicking it gives Upromise
affiliate credit even though
we came directly to this
site.
Over 14M people have used the Upromise toolbar shown above, and
millions more use the Ebates and other toolbars.
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37. Facebook Pages
Continuing
to receive
likes; Now
161
All links on this page lead
first through a coupon
site and then through an
affiliate link to
walmart.com
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38. Twitter Accounts
Account classified by
twitter as a spam
account; followers still
see tweets
Active affiliate account.
Sends visitors to a
coupon website
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39. ISPs and their Partners
Popups on all partnered
merchants.
Only visible to customers
of the ISP.
Also autoredirects
through affiliate link.
Nearly impossible to
verify.
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40. Methods to Identify Low Value or Fraud
Research new affiliates and their promotional methods.
Beware of any method you cannot verify.
Look for sudden spikes in traffic, transactions or conversions
(8%+ is suspicious for non coupon sites)
If network displays referring url, check this frequently with new
or high volume affiliates.
Carefully review referring urls to understand how they are
attracting users and how they are adding value
Compare first referrer to last referrer cookie
Beware of conversions that come through proxies or thin sites
with very high Alexa rankings (no human traffic)
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41. Recognizing „Front‟ Websites (Old)
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42. Recognizing „Front‟ Websites (Old)
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43. Recognizing „Front‟ Websites (New)
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44. Recognizing „Front‟ Websites (New)
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45. Questions & Contact Info
Robert Glazer | Founder
rglazer@acceleration-partners.com
www.accelerationpartners.com
@affiliatemgr
David Naffziger | CEO
davenaff@brandverity.com
www.brandverity.com
@BrandVerity
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