What the Future Holds for Affiliate Commissions

What the Future Holds for Affiliate Commissions

If our 2017 affiliate program analytics, client feedback and benchmark reports have taught us anything it’s that commissions to affiliates are rapidly moving away from Last Touch attribution. We’re seeing this in the largest global affiliate programs to smaller, more moderately-scaled ones.

So, what’s driving this shift away from that antiquated, winner-takes-all approach to compensation? Technology – specifically platforms that allow marketing departments to gain more visibility into the multiple touchpoints along the customer journey.

The most forward-thinking merchants, affiliate networks and Software as a Service (SaaS) companies bolstered such service offerings in 2017, to much acclaim. As such, it’s likely that we’ll see even more platform providers jump on this data-driven bandwagon this year.

Continued improvements in data acquisition and attribution modeling means that affiliate programs will be better able to align their commission structures based on a variety of factors, including the types of affiliates in their program, how they influence other marketing channels and other performance goals.

For example, if a brand values the top-of-funnel traffic driven by content creators (bloggers, influencers, etc.), we’ll likely start to see more situational rules applied when they’re active along the clickstream, such as preventing more bottom-of-funnel-focused affiliates (e.g. coupon, deal, loyalty, etc.) from being paid a full commission. Similar commissioning options that are becoming more common include:

  • Triggering payouts for customer type: Payout is triggered and varied based on “new customer” and “existing customer” actions.
  • Splitting commissions: For example, a coupon publisher will receive 20% of total commission while a first click partner receives 80% of total commission.
  • Use of a coupon code: A blogger only receives commission on items added to the cart after their code is entered.
  • Adding an item to the cart: An action will be considered complete and exclude any clicks once an item is added to the cart
  • Separating partners’ traffic sources into different channels: Group affiliates and segregate their traffic so they will be eligible for payout only if no other affiliate types are involved.

Advanced technology platforms that can provide this kind of situational and segmented commissioning are already becoming the preferred technology for large scale and prestigious brands.

As the future unfolds, nuances such as tracking gaps and enigmas along the customer journey will become a thing of the past, no longer obscuring the activities of affiliate partners. Rather, new technology advances will provide complete transparency into which partners are producing what traffic and their value to the program.

The best analysts and affiliate managers will be able to interpret this data and use it to their advantage. For instance, lower-value partners –those who are commonly credited for driving actions when high buyer intent already exists (e.g. at the point of check-out) or who poach traffic from other channels—can expect to see their payouts adjusted accordingly.

Conversely, the early awareness, top-of-funnel affiliates who have long cried foul when their cookies are overwritten further down the conversion process, will increasingly be recognized and incentivized.

Demand for these insights and the flexibility to use them will soon become the expectation rather than the exception. What’s more is that these critical tools will ultimately help further allocate marketing budgets towards truly incremental partners. Without them, brands will be hamstrung and will struggle to fully leverage the potential of the affiliate marketing model.

In a true performance partnership®, compensation is awarded for driving a desired outcome. As data, attribution and tracking become further intertwined, merchants will be able to pinpoint those partners who are driving specific outcomes at a very granular level, allowing the highest-value partners to be appropriately rewarded and incentivized.

Determining what commission amount to pay which partners is both an art and a science. Learn how we helped one client adjust their commission payouts and increase profitability in the process.

Questions about how to ensure you’re paying the right partners the right commissions to achieve your goals? Reach out to our team. We’re happy to answer your question and help you optimize your affiliate program and partnerships.