Loss Of Sales - Brand Bidding - Cash Back
Brand bidding has long been a bug bear of many affiliates, not only due to the fact that some see it as an “old boys network” but also the fact that content and generic PPC affiliates are likely to lose sales off the back of it.
The usual buying cycle in terms of search runs from top level generics to products specific generics to brand, so from “CD” to “Chas and Dave CD” to “HMV”, it is not difficult to prove that generic searches often result in a sale via a brand keyword.
So where do Cash Back sites sit in the mix? I have spoken to a few affiliates who have noticed that clients who don’t work with the large cash back sites tend to convert much better than ones which do. There have long been these thoughts in the industry, but to my knowledge no accurate analysis has been done.
We are in the middle of doing some data mining with a client who we do some consultancy for to investigate how many content affiliate sales are lost to PPC and how many of the over all sales are lost to cash back sites. For ease of management we are going to take one large specific content site, the clients search and their largest cash back site to see what percentage of sales are lost down the chain.
I will let you know more once we have
It would be interesting to know if anyone has done this before, do you think it is right that only the last click gets the sale? Do
If you enjoyed this post, make sure you subscribe to my RSS feed!
If
Fraser Edwards
Adii
Paul Wheatley
January 2nd, 2008 at 1:27 pm
Hi Rob - I’d second claims by others that the CR is much higher with shops that do not work with cashback sites. Our stats work out at 2.2% for shops with cashback and 12.5% with non cashback shops.
January 2nd, 2008 at 1:47 pm
Great project Rob!
I’d be very interested to see the results too.
I’m also concerned with teh attrition rate due to merchants offering discount codes and sales being lost to them.
It seems these days that you HAVE TO place discount codes on your content sites to limit the risk of D.C. loss!
January 3rd, 2008 at 10:35 am
Cheers Rick, Lee
I have been discussing with the client this morning possible ways to renumerate all affiliates, or at least the last, say, 3 affiliates.
Wouldn’t be hugely difficult to do, though do you think it is a good idea? Does it over complicate the situation? Is the usual last click wins scenario the best?
Would it make life difficult to cashback sites? Any Cash back sites care to get involved?
January 3rd, 2008 at 11:09 am
If I was running a cash back site and knew this was the situation I’d have a pretty big notice that said “Clear your cookies before clicking” but I guess some people would not know how to do this or forget.
January 3rd, 2008 at 11:15 am
Agree that this is a very interesting debate and I personally feel that the future of affiliate marketing (and online marketing in general) will be paying out more than one affiliate per sale.
With the increase in sophistication of tracking I don’t see how we can continue with the simplistic last click wins situation going forward. I think that all channels will have to come together and work to an effective CPA for the client with the bounty being split based on business rules decided by the client.
The technology now available should allow merchants to track the entire user journey for a sale, so it logically follows that the bounty can be awarded based on the part that each contributor has had to the sale.
For example, a consumer sees a Company X banner, doesn’t click through but gets interested. They then go on to an affiliate comparison/content site where they weigh up their options, before typing the company name direct into Google and hitting the company’s own paid search listing.
Now display and the affiliate have both played a part in the sale, probably a bigger part than search, yet in the current situation search will take all the money and the client will end up paying out on display and maybe affiliate also, if not deduped properly.
Looking at the affiliate channel alone, a consumer may go through a content site, a comparison site, a brand bidder and a cashback site in the course o the same sale. Chances are the last click will be brand bidder or cashback which negates all the good work that the content sites have done.
Obviously there are problems in that inevitably cashback and brand bidders will suffer. However I think that 2008 will see a move away from the last click wins situation and on to a more equitable solution.
January 3rd, 2008 at 11:36 am
Matt - I agree that spliting the commision between all affilaites involved in the sale is fair, but if we are going to rely on cookies to track this information then the commission is likely to go to the savvy cashback site user who clears their cookies before clicking.
January 3rd, 2008 at 2:12 pm
Hi Rob,
Interesting post.
The initial thing that springs to mind is you mention ‘losing’ sales to cashback, thus implying they shouldn’t be rewarded in the first place.
Obviously 2007 saw a huge increase in cashback, both the number of sites out there and the amounts of commissions paid out, so inevitably this had an impact on the finite amount of commissions that are paid.
In terms of Affiliate Window, there has been a shift from the PPC stranglehold that existed for many years as the big cashback portals and voucher coding sites have emerged into big revenue generators.
As they incentivise traffic they tend to convert better than the wider affiliate base thus having a generally positive affect on the programme as a whole so it’s inevitable an account manager will be keen to get those affiliates on board who not only convert but pull in the sales.
Generally a lack of good quality content affiliates results in these affiliates having less prominence in many advertisers top ten or twenty affiliate lists (not true for all sectors) so I doubt much work has been done on the issue you’re highlighting Rob.
On PPC there has recently been the debate around whether those advertisers who bid on their own brand should duplicate sales from their affiliate channel. And this is a whole different situation that can be discussed at length…
I believe cashback and voucher code sites have sprung up largely as a result of a change in consumer attitudes to shopping online. It’s also probably true that they in turn increasingly fuel this demand.
Whichever, they are reacting to demand in an industry that is largely entrepreneurial, just as PPC affiliates did back in the day and content sites before them.
This industry is all about adapting and reacting to that change and part of that adaptation is an onus on networks to improve the sophistication of the tools they have available so every affiliate can ensure that their focus is as well honed and optimised as possible.
And as affiliates have proved in the past those that react to demand, change or adapt technology to create something new or innovative stand to gain the most.
I think at present there’s no particular feeling for an end to last click as the recipient of the commission or sale but perhaps there will be more hybrid models that reward on traffic with further rewards for conversion. As advertisers dissect their stats and invest greater resource in finding their way through the murk of their online traffic and sales’ paths so they should ensure valued partners are rewarded, regardless of how they drive their traffic.
January 3rd, 2008 at 2:19 pm
Hi,
I wrote this response before seeing Matt’s comments, so it shouldn’t be seen as a reply to Matt’s.
Cheers,
Kevin
January 4th, 2008 at 9:25 am
Hi Rob,
Been reading your blog on the way to work for a while now. Great work by the way!
This is a really interesting topic and I agree with Matt, above, that this is going to be a hot topic in 2008.
As has been mentioned above, I think the issue goes beyond the affiliate landscape and into the larger realm of digital marketing. With the focus on response from all online channels increasing, all players (branding teams, ad-networks, search, affiliate activity etc) are jockeying to make sure they all get their share.
I agree that a sales attribution model that divides up and awards the CPA across the various active components is the future but it also raises massive challenges.
At the moment many online marketing channels are treated in isolation. For example, Rob, you query what will the impact be on affiliates with this type of model, but this extends beyond affiliate activity. Surely if display advertising is brought into the attribution model it will further diminish the CPA paid out to both the affiliate landscape as a whole and the individual publishers within it?
Also, standardization will be a massive issue. How do we structure the attribution model not just in a specific affiliate program on a network but across industry verticals and multiple networks and the overall digital marketing mix?
I look forward to seeing how this pans out over the year across the different sectors!
Rob, keep us up to date with how you move forward with your client on the back of your research. I think this is increasingly going to be a challenge for merchants, affiliate and network alike.
Cheers,
Ray
January 4th, 2008 at 4:59 pm
Judging by the number of new cashback and discount code sites appearing, its going to be a very crowded marketplace in 2008. (Probably as a result of so much press - its given the impression of a gravy-train)
However, with them all competing and nearly all of them offering little in the way of content, perhaps in the end creating sticky content will win out, especially for the sites who add decent content as well. The end in internet terms isn’t 5 years out either.
I would expect merchants to start coming down quite hard on sites that list them with their own affiliate.co.uk/merchantspage.html when the merchant doesn’t actually have any discount codes. That’s pretty close to misrepresentation of the merchant or ‘passing off’.
Anyone fancy a ‘campaign for sticky content’
January 4th, 2008 at 5:09 pm
PS
For merchants who have a particular type of customer in mind, the logical path would be to reward best those sites that deliver that type of customer. As merchants become more savvy, I’m sure they’ll start looking through affiliate sites to identify the best matches.
As with traditional media, different publishers will get identified and rewarded in different ways I’m sure.
Plan for the next 2 years: guess which merchants are going to break ranks to look seriously for content sites first and build some sites to collect their customers now, so they’re all ready and waiting…?
Perhaps like Google, commissions will split into search and content ?
So in your merchant network interface, you can segregate affiliates quickly into different commission rates for search and content.
January 31st, 2008 at 12:23 pm
Hi Rob,
Did you complete this research? Be interesting to know what the findings were.
Matt
February 1st, 2008 at 2:53 pm
Still working on it, the client is being very slow with the stats.
I will give them a kick