Increasing sales volumes is a critical task for affiliate managers, but is a simple increase in commission the best way of achieving that goal? Traditionally, the commission structure offered by an advertiser has been the main lever to engaging publishers and rewarding them for their levels of activity. Typically a program will offer a standard commission rate together with higher rates for selected partners that may be necessary to ensure the program is competitive for those key people. Putting a custom commission structure in place is almost mandatory for advertisers in these cases and it may buy them placement on a large publisher site, but the incrementality of these sales is more difficult to ascertain.
In cases where an advertiser offers an increase in commission as a temporary tactical measure, they will often receive additional exposure, perhaps to a particular audience upon which the publisher has influence. While commission increases across the largest partners may secure additional exposure, promotions can also be targeted at longtail publishers to provide them with an incentive to increase their activity. For example, ‘each publisher that
generates x sales this month will receive a higher commission next month’ may motivate the longtail to put more effort into the promotion of a campaign. These kind of promotional bonuses encourage affiliates to continue promoting the campaign and driving additional sales throughout the month they receive the bonus. Success breeds success.
Whether working with large publishers to increase volumes, or trying to motivate the longtail, it is important that advertisers are able to make educated decisions. They need to be confident that the increase in spend on these kinds of promotions actually drive additional sales, rather than simply paying more for the same sales volume.
Advertisers can also use tactical commission increases to stimulate publisher activity and competition. For example, running commission increases across cashback sites is often thought of as being very effective. It seems logical to assume that higher cashback rates will result in increased sales. However, if increased commissions are offered too regularly, shoppers become savvy and learn to avoid purchasing until there is a strong rate of cashback on offer during a promotional period. This effect can be compounded by competitors increasing their own cashback offers, turning the situation into a ‘race to
the top’ from which it is hard to return. Customers who are loyal to the concept of cashback rather than to the brands themselves will purchase from whoever offers the best deal and the value and incrementality of these customers comes into question.
Advertisers can avoid this by arranging tactical commission increases to fi t in with their KPIs. For example, brands that are running mature and well managed campaigns will not simply base their commission promotions on sales uplift. They will use data to understand which publisher partners are best able to drive profitable customers for them based on their target actions, and will reward them with increased commissions accordingly. For instance, if the primary objective for an advertiser is to create new customers, higher commissions can be targeted at publishers best able to generate new customers
rather than just increased sales from an existing customer base.
It is important during this process for advertisers to treat their publisher base as individuals and assess the quality of their traffi c on a case-by-case basis so they can be rewarded accordingly. Trying to create “categories” of publishers and setting commission rates based on those categories is a mistake. No two publishers are exactly alike, and the quality of traffic and type of customer generated through one coupon site will not be the same as another. Despite looking superficially similar on the surface, two different couponing sites will have completely different audiences.
Advertisers should avoid assuming that increased commission is a surefi re tactic to increase sales. It is important to understand publisher partners individually. That will then provide the insights into which levers to pull to not only drive higher sales, but also to ensure that other goals and KPIs are met too.
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