I know incrementality isn’t a word but it is a suitable title for this blog post.  As the recession bites and merchants look even more closely at ROI, the affiliate channel seems to suffer despite it being touted as the most cost effective.  Whether it be de-duplication policies, questioning of different traffic types or sales validation, affiliates are constantly coming under intense scrutiny.

In particular, I want to tackle the over used argument that affiliates must only deliver “incremental” sales.  We live in an era where customers interact with multiple media channels.  The average consumer may read the newspaper where they are exposed to display advertising, watch the television where they see numerous commercial breaks whilst at the same time browsing the internet on their laptop where affiliate advertising, amongst other methods, is hugely prevalent.

For a large brand it is quite conceivable many channels will have contributed to a customer’s buying decision.  Therefore, tasking affiliates with delivering pure incremental sales is not only an unfair demand but probably a complete impossibility.  This certainly calls into question the de-duplication methods used across channels, an area that definitely requires greater transparency.

In recent years the industry has made great strides in eliminating unethical activity.  There is still some way to go and 24/7 brand and spyware monitoring should now be considered essential tools for any affiliate network.  Certainly at Affiliate Window, whilst we can never eradicate this activity, it is now a much more manageable problem compared to 3-4 years ago.

The recent voucher code initiative by the IAB, where networks collaborated to devise policy, was a pivotal moment in the development of this industry.  Whilst it has certainly created a great deal of controversy, inter network communication has improved and the vast majority of voucher code directories are now compliant with IAB guidelines.  This has enhanced the user experience on these sites and therefore increased the legitimacy of sales from this channel.

I must caveat this by saying it is by no means perfect and ongoing improvements are required, but it has been a positive start.  With all networks fully supportive, I can only see this improving throughout 2009.

It is easy to let the “incremental” argument cloud one’s judgement of voucher and cashback affiliates.  If used correctly however, both channels can be hugely valuable.  Voucher code and cashback sites could no doubt stand accused of being weaker at new customer acquisition and better for customer retention but this shouldn’t be seen as a negative, it just needs to be recognised and considered when deciding on commercials.  Perhaps merchants who place a lower value on the customer retention qualities these sites offer may wish to pay these affiliates an adjusted commission.  Undoubtedly, there is value in these channels, it just varies from sector to sector and needs careful consideration.

The better quality sites already offer merchants excellent ways to direct consumers to specific products and engage them with high quality email creative.  As the industry matures, I have no doubt the innovative affiliate community will devise improved methods to assist merchants in attracting and targeting customers.

What is certain is that traffic to incentive based sites is on the rise.  As the economy worsens, the bargain hunters increase.  Rather than overtly criticising these channels, merchants should see them for what they are and pay them what they deserve, whilst at the same time developing more innovative customer retention strategies of their own.

CPA should be seen as a high one off cost but with better site stickiness, data capture and email campaigns merchants can play their part in encouraging customers to go direct, rather than getting frustrated when customers seek what they are looking for from alternative sources.

Now is the time for a change in mentality so merchants can dismiss concerns about the prevalence of incentive sites and start developing better strategies to capture the customers referred from the affiliate channel for life.

Adam Ross
Client Services Director

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This entry was posted by adamski on Tuesday, February 3rd, 2009 at 11:28 am and is filed under Comment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.