This article was originally published on TotalRetail
Retailers can’t just decide not to pay Google for the people who clicked on their search ads because they don’t feel like it. The same goes for affiliate marketing relationships. Just because they’re paid based on performance, it doesn’t mean they only require seconds of your time and a few dollars every quarter. Like any other business partner, affiliates deserve compensation for their work.
Why Retailers Break Up With Affiliates
Online retailers often break up with affiliates because it’s an easy way to cut costs. Affiliate marketing is one of the few marketing channels in which merchants can decide how much they pay for certain actions.
Merchants determine their own commission and cookie lengths, and by manipulating them they can determine how much affiliates get paid for which actions. It’s tempting for retailers to set low commissions and short cookie lengths, thinking they can cut affiliate payments.
Multichannel attribution also mucks up compensation. When conversions from affiliates overlap with other paid channels, some merchants don’t pay affiliates. However, they can’t decide not to pay Google or Facebook in this situation.
Many merchants still employ a last-click attribution model, but this might disguise the true contributions of the affiliate channel — especially content affiliates who generate interest and bring in new customers but are rarely the last click. Often, merchants implement a punitive affiliate commission structure to more closely align affiliate payouts with their last-click attribution model, even if that model is imperfect.
The Negative Effects of Not Paying Affiliates
Merchants are often so blinded by the money they’ll save in the short term that they don’t consider the long-term costs of failing to compensate affiliates who are helping to drive sales.
Ceasing affiliate payments is riskier than you might think. At the least, affiliates will no longer have a reason to promote your program. In the worst-case scenario, unfair behavior might anger affiliates — some may even speak negatively about your brand online. These are some of the most influential individuals in their industries, and their opinions carry weight with consumers.
A good relationship also gives you some control over how affiliates promote your brand. You can set terms and conditions that ensure their promotions are consistent with your brand guidelines and don’t interfere with other channels. I’ve worked with retailers that didn’t have relationships with one of the major coupon affiliates, so the affiliate was taking offers from other channels and promoting them.
An affiliate program is basically brand licensing, and affiliates are often the most vocal and influential people in their niches. A good relationship and a rewards-based program are long-term investments because they can turn affiliates into brand evangelists.
Use Affiliate Marketing as a Megaphone
The first step to cultivating a mutually beneficial relationship with affiliates is adopting a multitouch attribution model, which recognizes the contributions of channels throughout the funnel, not just at the end.
You should also implement rules that reward high-quality affiliates. This includes paying them fairly for the value they create. Wayfair implemented a system that only rewarded the affiliates who incentivized customers to put items in their carts. This change was designed to reward affiliates who create new customers rather than those who swoop in at the last second.
Look past the dollar signs and invest in helping affiliates promote your brand. Support the development of contests, promotions and newsletters. Answer their questions, and discuss further opportunities for brand integration.
Retailers can’t just decide not to pay Google for clicks that come in through AdWords, so why would it be any different with affiliates who drive value for their businesses? Rather than cut affiliate payouts, figure out how to pay the right affiliates.
To help you figure out how to pay the right affiliates, contact us and speak with one of our affiliate managers.