Better Tracking and Attribution: Understanding the Affiliate Marketing Revolution

1. Typical Customer Journey Online
2. Measurement Systems
3. Difference Attribution & Compensation in Affiliate
4. Static vs. Dynamic Attribution Model
5. Manual Evaluation & Compensation in Affiliate Channel
6. Automated Evaluation & Compensation

Channel-internal optimization with blinkers to the left and right was yesterday! More and more data are available and can be analyzed. Therefore, the terms "Customer Journey Tracking" and attribution are no longer trend terms, but should now be part of the everyday vocabulary of every online marketer. Sina Hammer from xpose360 explains in a guest post what this is all about.

According to the results of the Affiliate Trend Report 2021 by affiliateblog.de the topic of attribution and customer journey tracking with 54 percent is the top affiliate trend of advertisers for 2021.

Source: affiliateblog.de, Trend Report 2021

Accordingly, the topic is becoming more relevant for many and 54 percent of advertisers also state that they already have customer journey tracking in use.

Source: affiliateblog.de, Trend Report 2021

But what exactly can a customer journey look like and what advantages does the use of customer journey tracking bring?

Typical Customer Journey Online

By now, every online marketer is aware that the purchase is not just due to the touch of an online marketing channel, but results from a "journey" of the end customer through different online marketing channels. With this realization, it stands to reason that it is of great interest which "touchpoints" along the path of the end customer to the purchase contribute to the final purchase. A customer journey could, for example, look like this:

Source: Exemplary Customer Journey Flow by Exactag

A customer journey is thus a woven journey through different online marketing channels. An end customer, for example, becomes aware of a product via social media. He then googles it, gets to the advertiser's shop, but doesn't buy in this case. A few days later, he is made aware of the product again through retargeting, which ultimately prompts him to buy. So each of these different touchpoints has contributed more or less to the end customer's purchase.

Measurement Systems

With various "multi-touch attribution" providers on the market such as Easy Marketing, Exactag, intelliAd, or Nielsen the individual journeys can be measured and the different value contributions of the individual touchpoints can be determined. With the use of a customer journey tool, the efficiency and interaction of the individual online marketing channels can thus be viewed and weighted holistically.

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Difference Attribution & Compensation in Affiliate

Attribution fundamentally only refers to the consideration of the different channels, from which conclusions can then be drawn about the value of the individual touchpoints. This means that a company can then determine, based on these insights, which channel to allocate which budget to, or at a more granular level, which static attribution model to implement.

In contrast to the affiliate channel, where compensation is success-based after a purchase, the other channels are for the most part directly billed in connection with an advertising service. For example, in PPC, as the name already suggests, every click on an ad or an advertising medium is compensated for. For this reason, compensation plays a major role in connection with attribution in affiliate, as the success-based commission for the publisher is of course decisive.

The word attribution itself is thus not synonymous with a dynamic compensation in affiliate, but the dynamic compensation is essentially based on the attribution.

Static vs. Dynamic Attribution Model

To this day, "Last Click" is the dominant attribution model in online marketing. This counts as one of the static attribution models, as it is fixed that the full value contribution is assigned to the last touchpoint in the customer journey. In addition to the "Last Click" model, the "First Click" (first touchpoint full amount) and the "Bathtub" model (first and last touchpoint higher value contribution) are also static attribution models. There is also the "Time Course" model, which assigns an increasingly larger value to the different touchpoints from the first to the last, and the "Linear" model, which assigns the same value contribution to all touchpoints.

These models are all static because the allocation of value contributions is determined based on the position of the touchpoints - and the number of total touchpoints is limited. If the value-contributing touchpoints can be roughly assigned to one of these models through a customer journey view, then the introduction of such a static attribution model can certainly make sense. Because here, multiple touchpoints in a sale are taken into account simultaneously, but this still does not represent the actual value contributions of the individual touchpoints.

In the completely dynamic attribution model, also known as "Data Driven" model, the value contribution of the individual touchpoints is determined completely individually and automatically based on previously defined influencing factors. What these influencing factors can look like will be shown later.

Manual Evaluation & Compensation in Affiliate Channel

In affiliate marketing, the value contribution of individual publishers can be determined manually or also automated.

Exactag for example, divides the individual touchpoints into "Introducer, Influencer and Closer" and compares these data with the final "winners" in a classic last click view. If an affiliate, for example, was the winner 584 times according to the last click view, but was the introducer 11,763 times, then it becomes clear that too little value is attributed to the introducers at the beginning of the journey. Here, it can then be checked at the partner level which affiliates deliver initial traffic, but close few conversions. These partners can then be rewarded manually, for example, through special budgets or CPO increases.

In contrast, partners who deliver little initial traffic, but close many conversions, can be compensated less, or even taken out of the program. In addition, Exactag has developed a key figure that determines the value contribution at partner level based on various criteria. The figure is called "Conversions (Attributed to Conversion)" and indicates in total values the number of conversions of a partner that have actually led to a successful purchase. Against this, the figure "Conversions (Commission to Conversion)" indicates the actual conversions according to the set attribution logic. If the figure "Conversions (Attributed to Conversion)" is much smaller than the figure "Conversions (Commission to Conversion)", this indicates that the relevant partner contributes less value than suggested by the applied attribution logic. Here too, conclusions can be drawn for the compensation of individual publishers.

Automated Evaluation & Compensation

In contrast to manual evaluation and compensation, which is certainly associated with ongoing effort and is also very subjective, dynamic attribution only involves an initial effort with system conversion. However, this initial effort should not be underestimated. Different success factors must be determined, based on which it can be calculated automatically which value contribution the individual touchpoint makes. These success factors can be defined individually and include values such as "order of contacts" or "number of contacts". Based on this, a completely dynamic compensation model for the affiliate channel can be implemented, which assigns the partner the commission in the same proportion according to the dynamic attribution and the proportional share of the value contribution of an individual touchpoint.

The advantage of a fair compensation is obvious. However, such a model is only conditionally more attractive for affiliates, as the associated revenues are not plannable and not transparent. Therefore, the compensation models of an advertiser in the same industry could potentially be more attractive.

Source: affiliateblog.de Trend Report 2021

After "Customer Journey Tracking to recognize value-contributing affiliates" is the third largest growth potential for advertisers in 2021 with 46 percent, it is very important that both advertisers and affiliates abandon the silo thinking of individual channels and focus on holistic online marketing.

If that happens, then the affiliate industry could be shaken up once again. Most publisher models are optimized for the last click, as this has so far provided the biggest reward. Especially the publisher models at the beginning of the customer journey like content and influencer could be strengthened by this and the way could be paved for new and innovative publisher models. So out with the silo thinking, into the future!