Guest comment: Innovation in affiliate marketing – eBay leading the quality drive

Quality is the topic on the lips of every merchant, affiliate network and agency at the moment. Affiliate marketing is under the microscope, and in an industry obsessed with accountability the pressure is on to justify affiliate’s role. Many questions have been asked about the value of affiliate marketing: did the affiliate play a significant role in the generation of the sale? Does it matter where the traffic and sales come from? Should all sales be seen as and rewarded as of equal value?

eBay has attempted to answer many of these questions and has led the way with a quality drive, first developing and launching a value based ACRU (Active New Registered Users) system in November 2008. The results of the initiative were published in a whitepaper titled “The Coming Evolution in Affiliate Marketing: A Focus on Quality”, which concluded that it was possible to significantly increase ROI by rewarding publishers based on their incremental value. 

Quality Click Pricing (QCP) was subsequently launched a year later in September 2009, paying publishers per click and doing away with the ‘Revshare’ compensation structure. eBay has turned the traditional CPA (cost per acquisition) model on its head - it is no longer a case of driving large volumes to achieve higher payment tiers. The foundations of the programme are built around incremental value, both from a short term and long term perspective. No other affiliate programme looks at “value” at a level that eBay has incorporated into its model. Sales revenue, lifetime value of new customers, user engagement and even ad revenue are all taken into account for calculating the publisher’s EPC (earnings per click). This in turn means that the most incremental publishers are rewarded the highest EPCs.

Rewarding for quality can dramatically change the makeup of the programme; you may find that some of the biggest publishers are delivering the lowest quality leads and sales; whereas some of the smaller publishers may drive the highest quality on the programme. Rewarding publishers for their quality sets different objectives. Instead of driving as much traffic as possible, with the hope that some of the clicks will convert, publishers are streamlining their activity and being selective about only sending traffic they feel is likely to convert into a sale.

It’s this shift in priority which has also helped open up the affiliate channel to non-traditional publishers. Media owners who would have only considered CPM (the amount a merchant will pay an affiliate when their banner has been shown 1000 times) deals twelve months ago are becoming more open to trialling alternative revenue streams if the numbers add up. R.O.EYE has been heavily involved in the development of the existing and potential publisher base - working closely with publishers to optimise their sites for QCP, we have been able to build case studies which have allowed us to go and recruit these traditional media sites.

It is still early days. But it will be difficult for the rest of the industry to put quality objectives into action. There is no ‘one size fits all’ approach to quality as it is a subjective view: definitions will vary by vertical and merchant with totally different objectives. This means it will be challenging for affiliate networks to accommodate their merchants’ needs. How do you report on quality across a universal tracking system? At a basic level there are a few actions we have taken to ensure our clients programmes are quality driven.

These have included reviewing the affiliate business models permitted to promote the programme, the cookie latency (this means cookie length - cookies last for a specific period of time, and affiliates get paid for sales made to users during that time period. Cookies are used to track sales to the original affiliate because users sometimes visit other sites before returning to make a purchase) and activity reviews to ensure the affiliate is being fully transparent about the way they are generating traffic.

When reviewing the publisher base of a programme it is possible to see that not all affiliate business models are appropriate for the programme they promote; for instance it would be questionable whether you require a voucher code publisher on a programme that doesn’t support voucher codes. Many merchants are now also starting to question whether there is value in cookie latencies beyond 24 hours. Obviously this will vary depending on the promoted vertical, but sales that occur immediately after the click are generally going to be providing higher incremental value that one that occurred three months after the initial cookie drop.

Finally there is the question of transparency that eBay is asking of its publisher base. In an industry that is transitioning from a niche sales outlet to a professional performance marketing channel, is it really acceptable for affiliates to hide their promotional methods behind masked URLs. It would be very difficult for merchants to gauge quality if they don’t know how their sales are being generated.    

by

Mark Kuhillow

Managing Director

R.O. Eye

www.ro-eye.co.uk

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