The performance marketing channel has matured considerably over the past few years. The Internet Advertising Bureau in conjunction with PWC recently released figures on the value of the channel – estimating it to have delivered £8bn in sales revenue to advertisers last year and account for 7-9% of digital marketing spend.
As advertisers increase their spend within the channel, it is inevitable that greater scrutiny will be placed upon it. While sheer volume was once enough to satisfy marketing managers of the value of the channel, this is no longer the case. With the vast amounts of data available to advertisers, agencies and networks, the value of the channel can be analysed in greater detail.
There are a number of metrics that advertisers are able to consider to assess performance and these will vary depending on their KPIs. This post outlines some of the most regular uses of data across the channel.
The role in the customer journey
In order to allocate spend effectively, advertisers are keen to understand the channels that have been interacted with prior to conversion. With the affiliate channel being paid on a last click model, publishers have been effective at ensuring they are the last click prior to the conversion taking place. A number of publisher sites are typically converters and this has been heightened with the growth of cashback and vouchercode sites, but their role as initiators and influencers of sales should not be ignored.
By delving into the data behind customer journeys, advertisers are able to understand the publishers that are adding value beyond simply being the final click. Publishers with content around specific brands or products may get significant traffic volumes and influence the consumer in their decision making process but not be the converting click in the customer journey. By looking at the publishers that are adding value beyond being last click, advertisers are able to look at additional ways to work with them. If a publisher is involved in a number of customer journeys that ultimately convert through another channel/affiliate, it is evident they are adding value to the journey. With the typical last click model they are not being remunerated for the role they are playing so may reduce their coverage of the advertiser. By looking at alternative payment models such as tenancy deals or increasing the CPA to reward value beyond the sales that are being generated, these publishers will be encouraged to increase promotion safe in the knowledge they will not be losing out if they are not the publisher that has ultimately converted the sale.
Additionally, clicks are an arbitrary measure. To understand the value of the click additional data needs to be considered. How long the consumer stayed on the advertiser’s site after clicking through, how many pages were viewed and if products were added to the basket could be considered as adding value beyond the conversion taking place. Sophisticated advertisers are starting to pay more attention to this information when considering the value of their affiliate partners and rewarding them accordingly.
New vs. Existing Customers
Advertisers face the balancing act of trying to recruit new customers while also trying to retain their existing ones. It isn’t uncommon for advertisers to look to the performance marketing channel as a cost effective way to acquire new customers. By providing publishers with the tools to actively recruit new customers (exclusive offers for new customers for example) advertisers can really benefit. Data can also help advertisers uncover the publishers that are able to drive significant volumes of new customers so the focus on new customer acquisition can be focused on these publishers.
Lifetime Value/Customer Churn
As well as acquiring new customers, advertisers want to drive profitable customers that are going to stay with the brand for a long time. Data is readily available to understand the publishers that are generating highly valuable customers. By working closely with these partners, strategies can be developed to ensure that desirable customers continue to be generated. This can be tied into customer retention strategies. For example, cashback publishers have been able to offer increased cashback for customers that renew their insurance policies, or pay an increased commission for an additional purchase within the same month for a particular retailer – as long as a minimum spend threshold is reached.
Focus on individual publishers
It is important that advertisers use this data to look at their publishers on an individual basis. While two voucher code publishers may look similar for example, they are likely to have different users and appeal to different demographics. Rather than consider all publishers with the same promotional methods as having identical audiences, they should be assessed on an individual basis. One may deliver poor quality customers while the other, despite being almost identical on the surface could deliver extremely valuable customers.
With the vast amount of data that is available to advertisers, it is important that publishers are able to demonstrate the value they are able to add. With performance marketing competing for a greater share of online budgets, this is going to become even more important over the next few years. By really getting to grips with the data, advertisers are in a better position to understand the value that is derived from their publishers on an individual basis. By rewarding publishers based on the value they are generating, advertisers can ensure they continue to benefit from this activity.
