There are already a lot of articles about affiliate marketing, primarily focused on the basic concepts, how to get into it, and how to make money as an affiliate. They tend to be broad brush and don’t dig deep into the many opportunities and challenges faced, particularly from an advertiser perspective.

So, we have tried to outline below some of the key considerations for both advertisers and affiliates - if you wish to discuss any of the challenges you are facing in your specific scenario, please do get in touch with us.

Advertisers v Affiliates

Before we delve into the detail, and to avoid confusion from the start, it’s worth quickly explaining the main participants involved in the affiliate marketing ecosystem - these include advertisers, affiliates / publishers, affiliate networks, and of course customers:

What is an affiliate advertiser?

Also referred to as merchants or retailers, advertisers are typically businesses that sell products or services online. These span a whole host of sectors, including travel, retail, financial services, and telecommunications. Advertisers look to utilise affiliate marketing to help sell their products or services, and remunerate the publisher solely based on performance. Examples of advertisers in the UK include Amazon, Sky, Vodafone, M&S, and Asos.

What is an affiliate / publisher?

Affiliates are also referred to as publishers, because as the name suggests, they typically publish content, so that’s the term we’ll use from hereon. They contain a broad range of website types and promotional models, from editorial content and blogs to price comparison, voucher code, and cashback sites. Influencers on social media can also operate as publishers, as can those running direct paid search or email marketing campaigns. Publishers are looking to promote an advertiser’s products or services to their own audience, in return for remuneration based on achieving a valid purchase or action such as an email sign up. Examples of publishers in the UK include, The Independent, Quidco, Vouchercodes.co.uk, Blue Light Card and RedBrain.

What does an affiliate network do?

Affiliate networks track the customer journey from publisher to advertiser, and record if a purchase (or other set action) is made. Affiliate networks provide an interface for advertisers to view and validate any sales generated by each publisher and give publishers the ability to view sales they've generated for advertisers. The affiliate networks will send payments to publishers, as well as facilitating relationships between advertisers and publishers. Examples of networks operating in the UK include Awin, TradeDoubler, CJ, Impact, and Partnerize.

Customers

Anyone looking to buy a product or service from an advertiser.

So, what is affiliate marketing?

Affiliate marketing is a performance-based marketing channel, where advertisers partner with publishers to get their products or services marketed to a wider audience, compensating the publisher if they generate a sale or action.

Simple right?  Well, not quite… affiliate marketing is far more complex and nuanced than this. From understanding the terminology and the different types of participants, to knowing how best to promote and run an affiliate program, there is a lot of detail to get your head around.

Whether you’re an advertiser or publisher, once you scratch beneath the surface, there is a lot to consider and plan for. So, here at EngageMore we’ve attempted to create our own affiliate marketing flow chart/diagram, with a few more details on the considerations for advertisers and the considerations for publishers.

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Continuing relationship

In the world of affiliate marketing, advertiser – publisher relationships are ongoing as long as both parties are getting what they perceive is value from the partnership. Below are the considerations:

Advertiser considerations

• Am I getting a return on my investment or is the publisher helping me to meet our strategy goals?
• Is the publisher adding value?
• Is the publisher responsive?
• Can the publisher react swiftly to a change in marketing requirements?
• What additional promotion can the publisher provide and will it cost me extra?

Publisher considerations

• Am I getting a return on my investment?
• What’s the conversion rate like?
• Are my customers engaging with this brand?
• Is the advertiser providing the marketing material I need to increase exposure?
• Does the advertiser have any additional incentives that will enable me to prioritise them over a competitor?

Wow, a lot of information to consider and we are only just scratching the surface! If you are reading through this and feeling a little overwhelmed, then don’t panic, we are here to help. If you are an advertiser, you need to ensure you have a specific strategy and the resources to follow that through. Each business is different, and the aims and objectives of your affiliate program need to be tailored to your specific business needs. We are here to help explore and create the right structure for your program, so do get in touch if you need any support in this area.

What does an advertiser need to consider when setting up their affiliate programme?‍

• How affiliate marketing will fit into their wider digital marketing mix (SEO, PPC, email marketing and so on)
• How they are going to fund their affiliate program - yes, in theory if an advertiser is only paying when a sale happens, we would assume it is self-funding. However, many advertisers need to plan budgets in advance and consider cash flow, so will often set a budget for their marketing channels in advance.
• What their objectives are - is it sales volume, brand awareness, shifting older stock, incremental sales, etc.
• What type of publishers do they want to work with - bloggers & content publishers, voucher code sites, cashback, review/price comparison, social media influencers, etc?
• How are they going to make their affiliate program attractive/competitive to the right publishers - so what is going to be their commission model (a percentage of the sale value or a set amount?  Different commissions for different product categories?), what level should they set their commission, how do they want to attribute commission (last click or another model), what other incentives can they put in place, what marketing collateral do they need to provide (banners, product feeds, etc).
• How are they going to resource the set up and management of their program internally - technical set up, program set up, recruitment and management of affiliates, validation of transactions, managing compliance, and so on?
• Why is a publisher going to promote them and maximise exposure?
  - Strength of brand
  - Price competitiveness
  - Trusted brand
  - Competitive renumeration
  - Exclusive offers, discounts for customers
  - Incentives for publishers
• What restrictions do they need / want to put into place that affiliates need to adhere to?
  - PPC restrictions
  - Restrictions on working with certain affiliate types.
• Can they provide the relevant tools the publishers need to promote the program: content, details about new products, promotions, product feed, banners, and other marketing collateral?
• Do they opt for their own affiliate platform or use a network, and if the latter which one?
• Do they utilise network account management or an agency to help run the program?

What does a publisher need to consider when setting up their affiliate program?

• If starting out, what type of publisher are they going to be - blogger, review site, etc?
• What tech resource/knowledge do they require, if any?
• How are they going to grow their audience - SEO, PPC, Social?
• Which networks, and which advertisers should they work with?
• What are the steps to getting approved to promote an advertiser:
  1. Apply to the affiliate network if required – without an existing website or affiliate business it might be a challenge.
  2. Apply to the advertiser program.
  3. Get approved.
• Why is an advertiser going to want to partner with them?
  - Strong publisher brand
  - Existing audience
  - Relevant niche
  - Expertise in a particular promotional area (e.g. google shopping or PPC)
• How do they secure incentive increases, exclusive codes, etc?
• How do they promote advertisers' products or offers, and give them the best opportunity to convert?  
• Do advertisers provide the relevant promotional tools required e.g, content, details about new products, promotions etc, product feed, banners, and other marketing collateral.
• How long does it take for them to receive their commission?  Important if they are looking to reinvest back into their affiliate business.
• How do they ensure compliance with current regulations (PECR, GDPR).
• Are their affiliate links formatted correctly?

How do affiliate networks track sales?

Conventional affiliate tracking employs cookies: pieces of technology that interact with a web browser to collect and store various data, including user preferences, login details and shopping cart contents.

Specifically, in the domain of affiliate marketing, first-party cookies are used. These first-party cookies are placed on a user’s browser, tracking their click journey and enabling identification of the advertiser, publisher, sale amount, and the corresponding commission.

Whether the sale is tracked, and the publisher allocated the commission is dependent on several factors and with increased privacy regulation (PECR) and Consent Management Platforms (CMP), traditional network tracking has become less reliable.

What causes affiliate tracking issues?

1. Poor implementation of network tracking by the advertiser. For example:
   • Some landing pages may be overlooked during implementation.
   • The pixel might be placed sub-optimally on the shop page.
   • A network’s MasterTag may be displayed conditionally with incorrect logic.
2. Customer journeys may be on multiple devices such as phones and laptops when in research and purchase phases. Traditional tracking can have issues tracking cross device, particularly if the purchase happens in-app where the advertiser hasn’t set up app tracking.
3. Broken affiliate links - caused by publishers not configuring or placing them correctly
4. Intelligent Tracking Prevention (ITP) - cookies only being set for 7 days, with the purchase potentially happening outside of the cookie window.
5. Browsers like Safari completely blocking 3rd-party cookies

Advertisers should consider upgrading to server-to-server tracking, making the tracking and allocation of affiliate sales on their program more accurate.

What is ‘attribution’ in affiliate marketing?

There are a few circumstances where the attribution of commission to a publisher is dependent on certain factors, including:

1. Was the customer journey multi-touchpoint and if so, did they click on another publisher’s affiliate link after yours? Most affiliate programs are still set up to reward commission to the last recorded referrer, although some advertisers will attribute commission, or a share of it, based on where you sit in the customer journey and the value they attribute to the influence provided.
2. Exclusions.  Some advertisers will:
   1. Automatically dedupe affiliate sales against some of their own direct marketing activities
   2. Automatically allocate a sale to another publisher if a discount code is used that was allocated specifically to that publisher.

Payment of valid sales

Assuming sales are valid the referring publisher will be paid commission, however only after:

Firstly, the transaction has been validated - some advertisers or sectors have a long validation period - for example, some travel companies will only validate a transaction once a customer has travelled, which could be several months after the booking is made.

Secondly, the Network has invoiced the advertiser - they normally invoice an advertiser once a month for all validated commissions that have accrued.

Thirdly, the Advertiser has paid the network - whilst many payment terms may be 30 days, some advertisers may take significantly longer to pay, with publishers only being paid once the network has received the monies.

Finally, only once the publisher’s accrued commission has met the required affiliate network payment threshold will payments be made to the publisher.

Why is affiliate commission sometimes declined?

Assuming a publisher refers a paying customer to the advertiser, with the affiliate network successfully tracking the sale as such, there are still several processes that need to take place before a publisher can be guaranteed the commission.

A commission can be declined for the following reasons:

1. Customer returns product within returns policy period
2. A discount code was used by the customer that wasn’t issued to the affiliate channel. It might be an advertiser’s own marketing campaign that they deduplicate against - however in some cases they don’t deduplicate at source, so the sale is tracked by the network and subsequently declined.
3. An exclusive discount code was used that has been allocated to a different publisher (voucher code tracking may not have been implemented, so instead of tracking automatically to the correct publisher, it may have tracked to the incorrect last referrer and be subsequently declined)
4. The publisher has broken the terms and conditions of the program - the sale may have been generated from activity banned in the terms - for example, a publisher bidding on the advertiser’s brand terms on Google to generate the traffic.