As we move into another year, what is the true legacy of affiliate marketing? Mark Kuhillow, founder at R.O.EYE argues that the biggest challenge is sales attribution… and why brands, media owners and agencies need to get smarter with tracking technology.
Performance based marketing has been around for many years. In the world of traditional media, it was traded on a ‘per inquiry’ (PI) basis and was loosely tracked through phone calls and postal coupons.
A combination of tracking technology and supply of targeted relevant inventory led to the birth of the affiliate channel. Fifteen years later, affiliate is no longer the rogue teenager of the digital marketing family. The sector has consolidated with publishers being acquisitive or acquired, while the same can be said for networks and related technology partners.
So as we move into another year, what is the true legacy of affiliate marketing? The channel has given us two things. Firstly we have robust tracking solutions, which, with a high level of accuracy, can track where a sale came from, started off and the journey it took across a variety of media and device platforms. For the record, that is an awesome achievement, as no other medium could claim such a level of reporting accuracy. So much so, we are now seeing standards the affiliate sector drove being adopted for other programmatically traded media – with broadcast being the obvious exception.
The affiliate discipline also brought us trading, creating the incredibly stable trading currencies of cost per sale, enquiry, revenue share, call…the list goes on and on. Billions of dollars are tracked through affiliate links, which reward businesses for the traffic they drive, and retailers pay them based on performance.
In this sector, the areas for innovation are plentiful.
Applying the tracking and trading principles we have learned, any entities with remnant inventory, that is publishers who haven’t sold all of their stock, can now enter into the fray on a pay per performance basis. 2014 saw certain sectors capitalise on this, the most notable being performance display. However, the value of this is still open for much debate subject to whether or not performance entities have the right to claim post view sales -where someone has been exposed to an ad but not clicked on it. In old money, it’s direct response vs broadcast. This then leads us back to online advertising’s old friend, attribution, which will continue to be a hot topic in 2015. Who assisted with each sale, helped consumers to navigate the plethora of online outlets and incentivised them to make a purchase? With huge budgets now flowing towards display advertising with a focus on performance trading, the attribution argument is sure to rage well into the New Year.
Commercially, affiliate networks continue to demonstrate a value-proposition of a technology and service hybrid as tracking solutions become further commoditised. But if networks are offering tracking services, why do they not operate a SaaS model like other technology vendors? Operating a percentage of sale override model will become more and more difficult with the combination of external and in-house affiliate management resource along with widely available robust tracking tools in the market. With bandwidth costs – largely tracked as opposed to served – for affiliate programmes being so low, maybe adopting a service based trading model is the last, and possibly greatest threat for the network trading model.
The question will be this: whose job is it to solve the problem of sales attribution? Brands, media owners and agencies already have the tools to identify every aspect of the customer journey, but will they take the opportunity to get better at it as technology gets cleverer?
Well, we’re in a bit of a bubble at the moment, but there will be a correction at some point. Affiliate marketing’s legacy will see to it.
By Mark Kuhillow