Affiliate marketing is still an attractive and profitable marketing channel. With commission groups you can increase profit from your affiliate campaigns by at least 50%. The key is that you need to know the real contribution of every affiliate behind the network.
Webshops can easily promote their products on hundreds of blogs, portals and comparison shopping engines without any risk because they only pay a commission on the actual sale. There are many reasons why affiliate marketing has become less popular. One of the reasons is the dubious contribution of many of the connected affiliates such as coupon sites and sweepstake games. It’s time for affiliate marketing 2.0!
What are great affiliates?
A great affiliate is an affiliate that returns more than you pay. But how do you know? Many analytics systems such as Google Analytics attribute orders to the last click. This last click are often discount affiliates, but rarely the blogs that initiated the first visit.
The customer journey is the process from the first contact to the purchase (and thereafter). A buyer must first be aware of the product to get interested. Then arises the desire to purchase after which the product is actually purchased.
Blogs and information sites contribute mainly to the Awareness and Interest phase but rarely lead directly to a purchase. After the Awareness and Interest phase customers are often visiting price comparison sites or discount affiliates. A customer journey has on average of 5 visits from multiple online and offline channels.
To measure the actual profitability of an affiliate you need to have a “algorithm based attribution tool” like Google 360 or AdCurve. These attribution tools attribute the order value to each touch-point based in the actual contribution.
AdCurve measures the advertising cost of each order, the margin, and the actual contribution of each affiliate. You can see directly the actual profitability of each affiliate.
How do you get profitable affiliates?
Most Web shops are using Google Analytics that attributes orders to the last click or affiliate. That last click affiliate seems profitable, but they are often not. The most valuable affiliates in the beginning of the sales funnel are poorly rewarded. With an attribution tool like AdCurve you can easily organize your affiliates in commission groups to reward your most profitable affiliates better than your competitors do while your commission for others decreases.
As a result your top affiliates will promote you more while the total costs decreases. Our experience is that webshops with contribution-based commission groups are 50% more profitable with affiliate marketing.
How do you determine the optimal Commission structure?
Affiliates get a percentage of the sales revenue. That percentage may vary per product group or per affiliate.
At first a commission per product group may seem logical because the margins per product vary. In practice, affiliates don’t have a lot of influence on the purchased products. An electronics affiliate promotes electronics and does not promote fashion because of the higher commission on fashion. So an average commission per affiliate will work as well.
However, the quality difference between affiliates is huge. And as a result a commission model per affiliate is way more profitable: the best affiliates will promote you more while you save on the others!
AdCurve shows the maximum commission per affiliate. This is the commission where the cost are just as high as the return (similar to the maximum cpc in AdWords)
The optimal commission is a commission that is just a bit higher than your competitors commission but lower than the maximum commission. Your affiliate network can tell you exactly what commission you should offer to each affiliate to beat your competition.
Commission groups based on the added value of affiliates could boost your profit with 50%. Make sure that your attribution tools provides the proper max commission. offer your affiliates a commission just above your competitor but below the max commission. Enjoy the results!
Want to know how you can do this yourself? We can show you in only 30 minutes!
Subscribe to our free webinar “Case: Optimize your affiliate network” on 25 april and learn how you can easily increase profit from your affiliate network by 50%.
During this webinar you’ll see:
- how to determine the real contribution of every publisher behind the affiliate network
- what the maximum commission is you should pay to individual publishers
- how you can automatically group publishers into commission groups
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