Peak performance: The path to understanding the value of affiliate channels
The A word has been on marketers’ minds for years… but the debate around attribution isn’t going away. As consumer journeys become even more fragmented, now is the time to crack the attribution question once and for all. The Drum takes a look at how unresolved issues around attribution are impacting on the performance marketing channel.
It’s a complex world for marketers trying to navigate multichannel retail. Consumers often interact with several channels on the path to purchase, so traditional attribution models are often no longer useful – not only in terms of adequately rewarding affiliate publishers for the part they have played in the purchase, but to build an accurate understanding of how each online channel impacts the consumer.
While the affiliate industry was founded on the last-click model, and many marketers continue to credit the last-click for their success, retail merchants are increasingly moving away from this simplistic approach. Instead, brands are using data-driven insights and advanced marketing attribution in order to more accurately attribute their affiliate sales from multiple channels. Powered by data, this move is ushering in a new era of transparency and understanding around the value of affiliates. But it’s a complex space and one not without its challenges. Is multi-attribution a pipe dream?
Cross-device tracking and attribution remain key in this discussion. While most networks and tracking platforms offer a variety of options to model performance across devices, there isn’t a perfect solution in “every scenario”, according to eBay Commerce Network head of merchant services Daniel Powel.
“Retailers should be taking a holistic view based upon experience by adjusting attribution remuneration regularly. In the absence of watertight cross-device tracking, it is a fair assumption that ‘assist’ type traffic, such as mobile, will not perform as well. Commission rates could be adjusted to take into account the relatively lower conversion rates.”
Powel says unclear and simplistic attributions are holding the industry back, with partners frequently working in these environments.
“In an environment where only last click activity is rewarded, a nuanced view that takes into account lower conversion up the funnel is in order,” he says. For situations where the attribution/ROI model is unclear, Powel argues more communication is essential for defining what success looks like.
This need for communication is touched upon by Shop Direct head of digital Chris Howard, who is responsible for driving traffic to the group’s brand sites including Littlewoods, Very and Isme. He explains that transparency is a key challenge for the group’s suppliers “because multi-touch attribution models are invariably complex”.
Howard believes it is essential for all stakeholders to “align themselves behind an attribution model as a ‘single view of the truth’ of the performance of marketing channels”.
Shop Direct’s cross-device attribution model joins up journeys across devices on which the same customer is logged in, aiding the brand in optimising its marketing spend more efficiently.
Data continues to be a key driver in setting the pace for multichannel attribution. Seth Richardson, chief technology officer at Rakuten Marketing, describes building confidence in data as the biggest challenge for marketers. “By tracking, collating and joining data relating to all marketing activities it becomes possible to perform attribution analysis to accurately understand the performance of each channel and how they influence and interact with each other. The attributed data should become the single source of truth for media performance.”
It’s the access to this data that’s proving tricky, as for all parts of the affiliate ecosystem – affiliates, advertisers and networks – to understand and reward the channel, multiple sets of data must be pooled. “This isn’t complicated,” says Kevin Edwards, strategy director at Affiliate Window, “but it does rely on momentum, commitment and the ability to invest time and resource in producing the insight.”
Cross-device attribution is the subject of an ongoing project led by the Association of Online Publishers (AOP), with publishers including the Guardian, the Telegraph and Dennis Publishing working with the AOP and Omnicom to take a deep dive into digital display ad effectiveness across tablets, smartphones and desktop. But while attribution is at the fore of the display market, does the affiliate industry need a similar push to identify its role within the overall marketing mix?
Edwards believes the focus should be on ensuring attribution to the channel, rather than “tinkering with multiple commissions within the channel for individual sales”. Such “self-indulgent navel gazing”, he argues, “does little to help advertisers understand the wider contribution of affiliate marketing”, and the industry should worry more about losing commissions to other channels such as search. Affiliate Window recently carried out research for a client which found that affiliates were involved in almost one in five of its online sales, yet rewarded for only half of these.
“That’s a huge chunk of revenue not credited to the channel and due to the commercial model it was essentially ‘free’ unlike upfront marketing channels like display and paid search,” says Edwards.
“The same client found that a tiny fraction of sales that affiliates did close involved multiple affiliate interactions. In fact an affiliate was 16 times more likely to lose a sale to another channel rather than another affiliate. I’m much more interested in ensuring commissions are reflective of this unpaid for traffic and influence. Understanding the value those affiliates offer via the overall ‘halo’ effect of their traffic should help inform more intelligent commission setting.”
It’s clear the path to accurately understanding the role of each online channel is rocky, and the adoption of attribution modelling by retailers far from mainstream. While the industry agrees the path to sale should be better understood, a commitment to better measurement and the resource to invest in deeper insight is essential to building the best possible picture of the marketing mix for brands.
This feature was first published in the 15 October issue of The Drum.