This article was originally published on performancein.com
The Spanish-American philosopher George Santayana famously said, “Those who cannot remember the past are condemned to repeat it.”
With that in mind, it’s fair to say that those who don’t learn from the past are also doomed to repeat it — an aphorism that applies to attribution in affiliate marketing.
There’s little question that the companies, CMOs, and marketers who will reap the most rewards from the affiliate model in coming years will do so because they remember — and learned from — the industry’s attribution history.
The Amazon Influence
The affiliate marketing we know today is mainly an outgrowth of Amazon. While the online bookseller wasn’t the first merchant to launch an affiliate program, it became the most influential — especially on a global scale — after it launched Amazon Associates in 1996.
In the early days, affiliates linked their websites to Amazon books and received commissions when their website visitors made purchases. The budding affiliate program created a flood of sales for Amazon, leading the bookseller and other merchants to embrace this model and start drawing conclusions around volume, such as the more affiliates in the program, the more revenue.
Affiliates started realizing that volume was key to generating a steady revenue stream from this new model. Unfortunately, this mentality led to some low-value activity and a misaligned reward system, especially regarding attribution.
An Account of Last-Click Attribution
In Generation One of the affiliate industry (1996–2007) and for most of Generation Two (2008–2014), attribution was generally determined by the “last-click.” The industry assumed that the touchpoint closest to the transaction was the most valuable. It’s also important to note the industry made this assumption when there were far fewer paid online marketing channels.
Retailers chose last click over “first click” because they feared that affiliates would focus on driving clicks instead of value and then claim credit at a later date for sales closed by other publishers or through other channels. Ironically, last-click attribution ultimately made cookie stuffing, forced clicks, and fraudulent tactics appealing to many online marketers.
These tactics discouraged affiliates who connected with customers at the top of the funnel. By focusing on offering valuable, brand-aligned content, these affiliates risked losing their commissions to affiliates who engaged in lower-value tactics. For example, Affiliate X would create high-value content that engaged customers and helped move them closer to a making a purchase. Then Affiliate Y would swoop in with a special offer and claim full credit for the transaction even though it did little to initiate it.
Because this type of behavior was consistently incentivized, many publishers became experts at “demand interception,” which included tactics like buying domains containing common typos of merchants’ names and redirecting them to merchant sites via an affiliate link. This behavior wasn’t brand-aligned and contributed heavily to skyrocketing affiliate commissions that weren’t even tied to performance or meaningful results.
An Attribution Awakening
While most advertisers are waking up to the inequities of last-click affiliation, it’ll take an industrywide change to better understand attribution and select a model that best reflects their products/services, affiliate makeup, customer journey, goals, etc. Fortunately, this appears to be happening, according to a 2016 survey by IAB and the Winterberry Group.
This survey found that cross-channel measurement and attribution were expected to occupy more marketing resources than any other subject in the near future. In fact, of U.S. companies with more than 100 employees, more than half expect to leverage multichannel attribution for digital marketing efforts in 2017. In this context, figuring out a system for crediting and compensating affiliates is more than key; it’s critical.
No one attribution model is right for every merchant. To determine which model is right for your company’s affiliate program, look at your unique data and apply it to different models. Treat affiliate revenue figures the same way as raw data coming from other online marketing channels. Evaluate and review it for overlap in user interactions before attributing the credit earned by each channel. That said, don’t assume your internal attribution model can simply be applied to your affiliate program — it often shouldn’t be.
Analyze your affiliate program data to better determine how much value partners who regularly receive credit for the last click really provide so that payments reflect this. There’s no reason to pay an affiliate a commission based on $150 of credited revenue when its attributed revenue was only $75.
Many affiliate programs use the last-click model as a default. By taking a closer look at the history of attribution in affiliate marketing, you can better understand why it may not be the best model for every company — especially as the industry, partnerships, and performance goals evolve.
If affiliate attribution history teaches us anything, it’s that a customer’s purchase decision rarely results from one interaction with your brand, but rather from multiple interactions. Along the way, customers are likely to encounter an affiliate who contributes to a behavior you deem valuable, be it lead, sale, engagement, or simply brand awareness. Whatever the desired behavior, it’s important to recognize the role your affiliate partners play and attribute and reward them in kind.
For a more comprehensive look at attribution and how it relates to affiliate marketing, get our guide to Marketing Attribution in a Multi-Touch World.