This presentation is from Affiliate Summit East 2013 (August 18-20, 2013) in Philadelphia, PA). Session Description: Successful affiliate programs create incremental revenue and don’t cannibalize other channels. Presenters will show case studies of how top merchants focus on quality affiliates who enhance the brand.

1. How Top Brands Ensure
Affiliate Revenue is Incremental
Affiliate Summit East 2013
August 19, 2013 | Philadelphia, PA
Robert Glazer, Acceleration Partners
Wesley Brandi, Ipensatori
David Naffziger, Brand Verity

2. Where Affiliate Programs Have
Been

3. 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
First Generation Affiliate Programs
The result is a expensive retention program
masquerading as a new customer acquisition channel.

4. And Where Affiliate Programs are
Going

5. 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, big not necessarily better
5. Transparency: Knowing who your affiliates are and how
they are promoting
Second Generation Affiliate Programs
The result is a smaller new customer acquisition
program organized in business development

6. How Affiliate Program Economics Often Work
• Acme Corp has $100M in annual online revenue and an
“unhealthy” $15M affiliate program. They pay a 10%
commission to affiliates plus 3% of affiliate revenue in fees to
the network, totaling $1.95M or 13% of revenue.
• However, 75% of their affiliate revenue is non-
incremental, from coupon sites and other low-value sources
targeting existing customers.
• Acme is actually paying $1.95M for $3.75M in incremental
revenue or 52% of sales, not 13%. Almost $1.47M in costs
are being paid out unnecessarily.
6

7. Cost Center or Revenue Generator?
• 80% of affiliate revenue across the industry is from
coupon, incentive, and other low-quality sites.
• Many of these affiliates 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.
7

8. Total
Company
Revenue:
$2MSEO: $1M
Affiliates: $1M
PPC:
$1M
Email / CRM:
$1M
Display & Re-
Targeting :
$1M
Social Media:
$1M
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

9. Email PPC
Affiliates
Organic
Search
Display &
Retargeting
Social
Incremental Affiliate Sales
See What Analytics Can Show You

10. “Affiliate Revenue” is a Misrepresented Metric
10
• It does not describe revenue solely from affiliates – it counts
revenue where an affiliate was involved in the transaction
• Healthy programs try to attribute affiliate revenue
appropriately
• Unhealthy programs count all revenue touched by
affiliates, distorting overall marketing picture
Organic search Paid search Affiliate Transaction

11. Demand Generation vs. Interception
11
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.

12. Demand Generation vs. Interception
12
Scenario 2:
Customer Buying
Differentiated Product
Customer goes directly to the chosen merchant with
purchase intent. They are either intercepted along the
way or hop out of the cart before purchasing to look for
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.
• Forced Clicks
• Cookie Stuffing
• Incorrect Offers
• SEO or PPO Trademark
• Toolbars • Spyware

13. Multi channel attribution allows
for performance pay outs based
on the value of each channel in
the customer funnel.
Valuing The Entire Funnel
13
Sale! ($100)
Closing
$25
Engaging
$25
Introducing
$50
Introducers: Content Sites
Bloggers
Shopping Sites
Engagers: Social Media
Closers: Toolbars
Coupon sites
CRM

14. How would it work for a baseball team that only valued a closer?
Overvaluing Last In Is Expensive & Misleading
14
Starting Pitchers
• Content Sites
• Bloggers
• Shopping Sites
Bullpen
• Social Media
Closers
• Toolbars
• Coupon Sites
• CRM
$6,000,000
Last Place NL East
No Playoffs
Heath Bell
$11,000,000
3rd place NL East
No Playoffs
Jonathan Papelbon
$1,650,000
Most Wins
Regular Season
Tyler Clippard
$1,570,000
World Series
Champions
Sergio Romo
Vs.

15. • Trademark SEO
• Forced Clicks
• Trademark Poachers
• Trademark + Coupon PPC Bidders
• Trademark PPC Hijackers
• Loyalty and Affinity Sites
Understanding Low-Value Affiliate Tactics
15
Affiliates have developed a number of ways to go after a merchant’s
existing traffic through demand interception.

16. Trademark SEO
16
80% – 90% of users come to coupon sites through a landing page that is
optimized with a merchants trademark + coupon keywords.

17. 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.
17
Click to Reveal
Code
Not a Real Offer
Six Month Expired
Offer

18. Trademark Poachers
18
Affiliates incorporate the company trademark into their primary URL to
target customers who know the brand or are in the cart

19. Trademark + Bidders
19
Affiliates bid on the trademark plus the word “coupon(s),” targeting
existing users and also driving up the company’s branded PPC costs

20. This PPC ad is not from
Blurb, it is from an
affiliate. It is impossible
to detect without
advanced software that
most merchants don’t
use.
This turns a high ROI
brand PPC campaign into
an expensive and
unnecessary affiliate
payout.
Trademark Hijackers
20
Affiliates pretend they are the company in PPC, “laundering” the original
source of traffic through another thin website or blog

21. 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.
Loyalty & Affinity Sites
Large loyalty affiliates offer toolbars that, once installed, override direct
visits and some search results, loading an affiliate link instead.
21

22. Methods to Identify Low Value or Fraud
Research new affiliates and their promotional methods
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
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)
Use resources like BrandVerity, AffiliateFairPlay, RiskIQ, and
Fraudlogix

23. 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

24. Tiny Prints Example
24
• 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

25. 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
• Reaching the Affiliate Community
• PR announcements, conferences, and competitive research
• Tools: syntryx, abestweb, affiliate summit
Run your affiliate program like business development
25

27. • Force themselves into potential transactions between a buyer
and a merchant
• If the buyer happens to make a purchase within a certain period
of time, rogue affiliate is paid an unearned commission
• Merchants lose
• Honest affiliates ALWAYS lose
• Buyers don’t know it, but they lose too
Rogue Affiliates

28. • Three techniques are covered fairly regularly: Cookie-
stuffing, Adware & Typosquatting
• Cookie-stuffing: trend on the rise is to defraud merchants
through advertising networks. Google ads has a flaw here that
allows for third party pixel tracking. Very large adult advertising
network has the same problem
• Adware: use PPV to force a cookie onto the machine. It’s
easy, and cheap too
• Typosquatting: launder typosquatter traffic before sending it to
the merchant
• Technique seldom mentioned: attacking other affiliates in an
effort to hijack their traffic and steal their leads
Techniques

29. • When was the last time you shared intricate details on a
fraudster that burnt you?
Collaboration

30. Collaboration

31. Example 1 – PPV displays twizio.info, cookie-stuffs an
Amazon Associate cookie then tries to collect email

32. Example 2 – ad on merchant site stuffs cookie from
merchant’s affiliate program. No click required!

33. • Your affiliate program is in an arms race against
unscrupulous, sophisticated and motivated
individuals
• Unsure of where you stand: query.ipensatori.com

34. Robert Glazer | Founder
rglazer@acceleration-partners.com
www.acceleration-partners.com
@affiliatemgr
Wesley Brandi | Founder
wesleyb@ipensatori.com
www.ipensatori.com
David Naffziger | CEO
davenaff@brandverity.com
www.brandverity.com
@BrandVerity
Questions & Contact Info