Affiliate Marketing and Media Attribution Models — How to Optimize Your Model

The online environment has brought about a change in the dynamics of brand-consumer relationships. People have become active and are sharing their stories about consumer experiences. The content they produce is gaining as much, if not more, relevance than the information released via marketing communication. Proof of this was the survey conducted by Nielsen in 2015, where 92% of consumers said that they had confidence in third party recommendations and comments.

The strategy of affiliate marketing was created in this scenario. Companies realized that they could count on “brand advocates,” which was Jeff Bezos’s first initiative in Amazon’s 1996 affiliate program. Today, affiliate marketing is a form of online advertising where an affiliate advertises a company’s products and services in exchange for a commission for a specific sale, click volume, or action.

This is how an interesting alternative to the online sales funnel arose, one that didn’t rely on unilateral brand communication, relying instead on different channels (websites, blogs and social networks). Since then, the way we look at conversions has constantly evolved and the wealth of data has enabled us to visualize user behavior using different attribution models, not just last click before conversion.

We have already written some interesting posts about media attribution models, such as: “The First Steps For Media Attribution” and “What Is Google’s Data-Driven Attribution?”. These texts help us to understand models that aim to look at the consumer journey in a more assertive and less linear way.

However, there is an important point that needs extra attention regarding the commissioning of affiliates. Is there any reason to pay an affiliate a commission based on credited revenue of $100 when their attributed revenue was only $60? In order to capitalize on the insights generated using attribution models and ensure that marketing budgets are invested effectively in order to generate a higher return on investment (ROI), the payment model needs to be rethought. But how do you make this change and pay commissions on the attributed amount and not on the direct revenue from the last click?

Many affiliate platforms are already doing their homework and starting the attribution process right in their own environment and have developed different models for internal commissioning. Rakuten, for example, allows the affiliate to choose how to deal with commissioning. Generally the attribution options are as follows:

● First click: where the first affiliate in the sales funnel receives 100% of the attribution.

● Last click: where the last affiliate in the sales funnel receives 100% of the attribution.

● Attribution via coupon code: A unique coupon code is linked to a specific affiliate. The unique code will assign 100% of sales to the affiliate based on this coupon code.

● Preferred affiliate: The contracting e-commerce chooses the affiliate, or preferred affiliates. From then on, regardless of how many other points of contact are in the sales funnel, if a preferred affiliate is among them, they will receive 100% of the attribution.

● Custom attribution: exclusive attribution configuration that could be any combination of the other models or something new entirely.

● Linear: where each point of contact on the conversion path (multiple affiliates or sources such as Paid Search, Social Media, Email or Direct Channels) share equal credit for the sale.

● “Time decay”: where the nearest points of contact at the time of sale or conversion are credited.

It is important to note that the move towards the adoption of attribution models must be carried out in a structured and integrated manner throughout the company’s marketing and business department. At the start you need to understand the role that affiliates play in your marketing strategy and then determine their commissioning model.

If the main objective is gaining new users and potential consumers, for example, it’s possible to apply a value to each new user generated by the affiliate. On the other hand, if the affiliate placement is located at the “mouth of the funnel” to encourage the continuity of the journey of those closer to conversion, there is the possibility of following the attribution model used by the company to pay the lead using the value assigned to the point of contact.

There are formulas being used to soften the transition of payment phases from where the conversion history is analyzed by converting last click to the custom attribution model in order to view the value of a lead in a new parameter without discouraging the affiliates. Similarly there are e-commerce sites that continue to pay affiliates using last click even though they have good data on the attribution. There are even those who have coupons applied to the cart to distinguish which affiliate the conversion should be assigned to.

The program must be properly configured to meet the business objectives defined at the beginning. This is only possible if the user journey and marketing performance are measured using the appropriate multichannel attribution, regardless of the channels and devices customers use or in which environment the conversion has taken place. Just as there is no recipe to define the best attribution model for all businesses, the payment of affiliate commissions should be evaluated and studied on a case-by-case basis.

We at DP6 are constantly exploring the subject and looking for the best solution for our customers. If you have any questions or need help, please contact us!

Profile of the author: Natália Biagio | With a Bachelor’s in International Relations, she has worked in the Marketing and Data Analysis market for 5 years. At DP6, she has worked on Paid Media, Digital Analytics and DataViz projects.