Help Affiliate Managers to Succeed Through Classification

Introduction

The world of affiliate marketing is changing, and with more and more advertisers operating under the affiliate model (being paid a fee based on an action occurring), the role of the affiliate manager is becoming more diverse, and the breadth of knowledge needed to succeed is increasing.

Trying to recruit, onboard, and reward affiliates is not as simple as the diagrams would suggest. A lot can go wrong, and having a solid classification system can go a long way to both protecting the affiliate manager, and rewarding the most valued partners.

What can go wrong for a new affiliate manager?

Wrong rates

Rule of thumb suggests that you should pay 25-30% of your revenue away in marketing fees. Another 30-40% should go in product/opex costs, and what’s left goes into profit.

Offering a flat 25-30% to all affiliate partners will not work. Some affiliates (closers) won’t deserve a fraction of that, and other affiliates (introducers) might need to be paid a lot more for introducing a customer.

By issuing the wrong rates, you risk both wasting your budget, and losing out on high value traffic.

Wasted Time

Affiliates are busy people! The last thing they want when they submit an application is to receive a ton of questions on their business, their history, their traffic volumes etc Likewise, affiliates managers don’t want to waste hours on the phone to affiliates who aren’t going to send new customers.

A few questions should allow the affiliates to be classified appropriately. Knowing the traffic source, the area of the funnel where the affiliate will be involved, and the expected remuneration should go a long way to fine tuning the initial conversation for both parties.

Brand Hijacking

One of the biggest things that a novice affiliate manager might miss is an affiliates ability to make money from brand search. Brand SEO or even worse, brand bidding with brand name utilisation in ad copy are simple ways for affiliates to make money, without adding huge value. Bottom of funnel affiliates are most likely to partake in these activities.

Overpaying on Incent

It’s very easy to be “in the money” on a first transaction with incentivised traffic. However, incentivised traffic must be clearly understood before offering a generous CPA.

What are the classification options?

There are many ways we can bucket affiliates, and affiliates will often fit into multiple classification types.

Channel

The affiliates traffic channel will tell a lot about their traffic. Paid Search, Organic Search, Paid Social, Email/SMS, Push, Display, Hard Incent, Soft Incent are the primary top level channels.

Each channel possesses its own set of questions on remuneration, brand protection, risk, and opportunity.

Funnel Position

Affiliates can introduce customers, they can close out a transaction, or they can sit somewhere in between. They can convert users on a post click basis, or they can convert on a post view basis. They can be a single interaction in the funnel, or be one of two, three, four or even more interactions.

Knowing the affiliates role in the funnel is critical

Value

An affiliate who sends customers with high average order value, or high average month 1 value, or high Lifetime Value needs to be treated differently to one which drives low order value, and low LTV.

While this seems obviously, it’s often not the case that an affiliate manager has access to all this information. It’s also not possible to immediately know the LTV of a new affiliate’s customers, so the onus is on the business intelligence team to predict the value of cohorts of customers by evaluating their early life actions.

What actions do good classifications lead to?

Appropriate rates

By understanding the various classifications of an affiliate, it will help position the affiliate in an appropriate rate bucket. You can be sure that a paid social affiliate, who drives first click conversions, will be a lot more valuable than an organic search affiliate, who drives last click conversions. There could easily be 5x differences in what you should be paying to each partner.

Custom comms

The conversation with first click social and last click organic affiliates need to be completely different. Both affiliates can add value, but it’s understanding how. The introducer may develop content that drives consideration, while the closer might focus on persuasive points that close the sale. It’s important to have the relevant conversation with each party.

Tailored Learning

Something that affiliates love, and is often underestimated by advertisers is an Affiliate Manager really being able to talk the talk with the affiliates. Being in the know on paid social bidding strategies, or being able to talk about e-commerce conversion rates for various keyword types will instil the affiliate with confidence, and make them more likely to push your program.

By classifying affiliates, the affiliate manager can have a more aggregated view on what’s missing from their portfolio, or how it has changed over time. It will become evident if you’re over reliant on closing affiliates, or if you are under represented in paid social. Insights like this will affect recruitment strategy, and should allow for any portfolio inadequacies to be rectified.

Better interaction with other channel owners

It’s often the case that affiliates click is one part of a complex user journey. If other channel owners know about what various affiliate partners do, they will know how to treat this traffic.

All in all, there are many reasons for classifying all affiliates as early as possible. Not doing so will result in a huge amount of wasted spend and missed opportunities.