Why Simple Is Better When It Comes to Affiliate Programs and Attribution

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A few years ago, assigning credit to a marketing touchpoint (attribution) was a fairly simple process. But as new marketing channels and technologies emerged, determining the value of each touchpoint became more complicated.

Today, marketing involves multiple digital channels, including search, display, social, mobile, video, and affiliate. Most companies understand the need for some sort of multitouch attribution and have settled on an internal model that helps them assign credit to each channel and make informed decisions about their marketing strategy.

In the affiliate space, issues can arise when there’s a discrepancy between a company’s internal attribution model (how the company internally decides which marketing channels are producing results and which aren’t) and the external rules that govern how they pay affiliates. Sometimes it can appear that payouts to affiliates are disproportionally larger than the value the affiliate channel is creating according to the internal attribution model.

To try and reconcile affiliate payouts with their internal attribution model, some companies roll out new, external attribution rules to change which affiliates get paid and how much. Done properly, and in conjunction with an effective internal attribution model, this can be a great boon to the profitability of the affiliate program.

However, if the new external rules are too complex, they can confuse and alienate affiliates instead of strengthening your program. In short, when it comes to affiliate attribution, simpler is better.

Complex external attribution could be a mistake

Here’s an example of a site that ended up shooting itself in the foot with unnecessarily complex external rules.

Internally this company used a last-click attribution model, which meant the last marketing touchpoint received 100 percent of the credit for a sale.

Initially their affiliate attribution model looked something like this:

  • 30% commission on services
  • 10% commission on products
  • 30 day cookie

The problem was, the external rules governing affiliate payouts didn’t line up with how their internal last-click attribution model acknowledged value.

To try and align affiliate payouts with their internal attribution, the company shifted to a new system of external affiliate attribution with complex rules, a much shorter cookie length, and flat fee commissions for products and services:

  • 7 day cookie for new customers
    • $25 flat fee on services
    • $12.50 flat fee on products
  • 1 day cookie length for existing customers
    • 30% commission on services
    • 10% commission on products

While understandable in theory, in practice, this type of change meant that a lot of affiliates no longer got paid for their efforts. It was also confusing for affiliates to work out which promotional activities were valuable, which led to frustration.

Upsetting affiliates can have larger ramifications than merely losing the revenue they would have brought in. It can also damage the company’s brand image with some of the most influential people in the space.

To prevent this kind of turmoil, the company could have created an average commission level across new and returning customers. Better yet, it could have explored other internal attribution models that would have more accurately valued the affiliate channel and the individual content affiliates within it.

Keep It Simple

The key to success with external rules of affiliate attribution is to keep it simple and avoid complicated new structures.

For merchants the golden rule of attribution is to settle on a satisfactory, multitouch internal model first. Then, once that’s in place, slowly roll out external rules to affiliates in a way that maintains clarity.

Last year, Wayfair offered a great example of how to do this.

Wayfair made a simple, yet significant, change to their affiliate attribution model. Instead of paying a commission to the last affiliate a visitor clicks on before making a purchase, they changed their rules so that the last affiliate site a visitor clicks on before adding something to the cart would get paid.

This impactful change enabled Wayfair to drive more incremental affiliate revenue, avoid paying for “last-in” affiliate traffic, and reward the affiliates that created value by doing the hard work of convincing a customer to buy.

Before making changes to your affiliate attribution model, it’s imperative that your internal marketing attribution model accounts for every channel associated with a sale. A multitouch approach to attribution ensures that no channel is taking credit for too much of a sale and that proper weight is assigned to each touch based on how it impacted a final sale.

Once you’ve implemented an intelligent internal attribution model, then it’s important to establish an external affiliate attribution model that is straightforward, sufficiently rewards affiliates who are adding value, and will grow the affiliate program in a way that is best for both customers and affiliate partners.

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