July 7th 2014
A Watershed Moment in Affiliate Attribution

A largely unnoticed, yet important event in affiliate attribution occurred a few weeks ago and may set the stage for larger industry changes.

The change was made by our friends at Wayfair.com, a major online home store for furniture and decor, which significantly altered how it will compensate and value the affiliates in its program.

In a notice sent to all affiliates (included below), Wayfair announced it was moving to a system whereby it would pay the last affiliate site that a visitor clicks on before adding something to the cart, rather than the more standard policy of  paying a commission to the last affiliate a visitor clicks on before making a purchase.

This may seem like a subtle change, but for an affiliate program it has huge implications. It will help Wayfair drive more incremental affiliate revenue and avoid paying for “last in” affiliate traffic that has dominated the majority of affiliate programs for many years.

Currently, affiliates that get paid for a cookie set after the item(s) are already in the cart but before the point of purchase tend to lure existing customers away from the shopping cart with the promise of a deal that may or may not be real. Often they are taking full credit for customers that were really brought to the site by other affiliates or other channels - and getting paid a commission for it.

By paying affiliates based on who was able to get the customer to put something in the shopping cart, Wayfair is making sure the affiliates that do the hard work of bringing people to the site are the ones that get rewarded.

This way, the money spent on the affiliate program is more likely being spent on new customers or new demand, not just cannibalizing sales to existing customers.

The Acceleration Partners team commends Wayfair for taking such a big step. The company has an extremely smart management team and a data-driven culture and has always been ahead of the industry with respect to attribution.

While many companies have been talking about attribution, very few have done anything about it, at least publicly. To date, the majority of the focus on attribution has been on internal attribution for purposes of allocating marketing dollars, but this is one of the first examples we've seen of a company using the data to change how they pay their partners and communicating it very clearly.

Our guess is that Wayfair’s bold move will inspire other merchants to take a closer look at attribution and hopefully we will see attribution become more about action than talk.

If this change is copied by other retailers, it is going to put pressure on the low quality affiliate sites who have plagued the early days of affiliate marketing and would go a long way toward cleaning up the industry and increasing transparency and value-added activity.

Coupon sites in particular will have to do more to drive customer engagement and top of funnel awareness, rather than being able to simply swoop in at the end.

Wayfair’s action aligns with the changes we’ve been advocating for across the industry and the work we’ve been doing for our clients. In partnership with ShareASale and other progressive affiliate networks, we have been actively using dynamic attribution in our affiliate programs for over two years, well before any other agency even began discussing the topic.

We are also excited to see the progressive affiliate networks and Software as a Service (SaaS) companies increasingly adding these capabilities to their platforms.

Attribution helps our clients determine and pay commissions in real time based on the behaviors and actions that they deem valuable and protects the affiliates who are creating demand earlier in the process. This creates a lot of loyalty from the types of sites merchants want to work with the most as they will perform much better under these rules.

By looking closely at the data we’re able to determine where money is most effectively spent and create different rules for different affiliates based on their type, overlap with other affiliates, content, etc.

Here is an example of a leapfrog transaction using technology from ShareASale that is able to compensate a content affiliate who was earlier in the funnel rather than all of the coupon sites that jumped in at the last minute. Leapfrog Transactions allow merchants to set up rules that look beyond the last click and reward content affiliates farther back in the clickstream.

Here's what Wayfair had to say about the changes:

Under the current structure, we pay a personalized commission on the last click before an order is placed on Wayfair.com. For example, if a customer were to come to Wayfair through multiple affiliate sites, Google, Facebook, and a display ad, we would pay out an affiliate commission on the affiliate click closest to the time of purchase, regardless of other channel activity.

The new structure will simply modify the placement of the commissioned click in the clickstream. Instead of paying out a varied commission by category on the last affiliate click before an order, we will pay out a flat 5% commission on the last affiliate click before the customer adds to cart. In other words, we are shifting the point of payment from “before the order” to “before add to cart”, and simplifying our commission structure for all affiliates. This change will allow us to continue to grow the affiliate program in a way that is best for our customers and our affiliate partners.

Learn more about how to use attribution to optimize your affiliate program by reaching out to our team!
Author: Acceleration Partners