Affiliate Management Days 2015 is just over one month away, and we had the opportunity to interview our keynote speaker, Declan Dunn, CEO of DunnDirectMedia. Learn from Declan’s perspective at the upcoming AM Days conference and in his interview below.
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Since 1995, Declan Dunn has been a pioneering insider in the fields of online education, corporate performance enhancement and affiliate marketing. This unusual skill set allows him to bring people together in business settings, enhance their relationships, and then empower them to monetize those relationships. By simultaneously honoring both the needs of businesses, and the humans who work within them, Declan’s unique systems consistently return mutual rewards to the process of increasing bottom-line profits.
Question: If you were to emphasize one important issue that every affiliate manager should be paying more attention to, what would it be and why?
Dunn: The tracking capability of cookies, or more appropriately web beacons, in a mobile world. Cookies have never been the greatest tracking tool, with some estimates of 30% of them never being tracked. This has always been part of the affiliate landscape, complained about and fixed a bit by the networks, but as an industry, there is still no reliable cookie system, and most mobile systems don’t accept or record the old fashioned cookies.
Meanwhile traffic is tipping to mobile, and while tracking on a mobile browser might be done by certain cookies, there’s going to be more leakage and more affiliates complaining, for good reasons.
Many of the affiliate networks are based on older technology; it will be interesting to see if they can adapt, or if the more recent and agile affiliate networks come up with better tracking.
Not only do you need this tracking for your affiliates, especially your top affiliates – management will be demanding more accurate figures as we transition from the old world of cookies to the new world of beacons, or whatever it becomes.
Question 2: What do you see as the main areas of opportunity for online, in general, and for affiliate marketers, in particular, in 2015 – 2016?
Dunn: Native advertising, with a focus on a monetizable content strategy, will impact online and the affiliate world. Creating ads with direct links to products is nice, and still works for some sites, but for most marketing has become a multi-step process, with content leading the way.
Imagine a combination of Outbrain’s syndicated content, native advertising landing pages that adhere to rules, and affiliates who manage this multi-step process. This often includes opt in emails, search positioning, media buying, and content development on behalf of affiliates.
It’s already being done in the Native Advertising market, and while some affiliates do this, the whole mode will develop another level of creative, with multiple levels (and these are the rare kinds of affiliates you won’t punish with attribution, because this affiliate marketing, content model is based on repeat visits, not one time visits.
Mobile development, in terms of targeting and multi-step funnels, will increase in importance. The ability to connect the mobile user with the PC user is key to monetization. Smart affiliate marketers are beginning to do this, for example buying Facebook ads on mobile only, and working to connect the mobile login to the desktop, where more purchasing is done.
Affiliate marketers have to step up and create new models in this increasingly mobile world, including custom monetization for Super Affiliates, especially social ones who are good at content, but not marketing. Many new affiliates are building loyal audiences, with smart affiliate managers working with them to manage the conversion and promotions. In this affiliate model, distribution is in place in social media, but the knowledge and interest in marketing is not. Several OPMs have jumped into this space, servicing specific affiliates with large and passionate social followings.
Question 3: Between the fact that “affiliates are 7x more likely to be overwritten by another channel than another affiliate” and the fact that “30% of sales start on one device and finish on another” [source] how can an advertiser build a truly affiliate-friendly program, yet one that doesn’t cannibalize the merchant’s own marketing efforts?
Dunn: Longer answer on cookies below, the short answer here.
Affiliate marketing is high cost lead generation, because the real promise is not the first purchase, but the repeat purchase. In order not to cannibalize your own efforts, you have to set boundaries like attribution tracking and payout, but that also doesn’t make it great for affiliates. Merchants should be focusing on the second purchase as a measure of success, not the first, and keep the second for their own efforts.
That means making a program that seriously looks for the best affiliates and works with them on the lead generation portion (even a first purchase in my scenario is considered lead generation, because the cost of acquisition is normally a high cost for the merchant).
The best merchants will integrate multi step, lead to sale programs, and work with their best affiliates to put these in place. For the rest of their affiliates, they will keep the lead generation separate, in terms of tracking, from the follow up sale, and start challenging affiliates to build funnels with them, not just one page sales pages for purchases (where applicable of course).
Cookies still is the issue here, because we still track like it’s 1999, even with improvements.
Short-term, not much, long-term this ties into my cookies answer earlier. Cookies are old-fashioned, and they are what we have, but they don’t work in a mobile world. Many ad networks are developing their own Super Cookies, that supposedly work everywhere, but you have to be part of that network, so the overall value is limited.
In the short-term, merchants should work on their cookies and take a lesson from retargeting. When someone visits a web page, a specific ad is shown to them based on retargeting. When they click that ad, they go to a new page that overwrites the first cookie, and sets up a new one for retargeting.
Start creating a workflow of your cookies, and insure that your affiliates are not overwritten where possible. For example, you retarget a visitor who an affiliate sent to your site:
When that user clicks your retargeting ad, they are sent to a new page, and keep the affiliate cookie, while creating a separate cookie for your company that does not erase the affiliate one.
Ad networks will drop multiple cookies on high traffic content sites and the merchants should have their own cookies for internal tracking. This is likely a band-aid at best.
Question 4: In which ways can affiliates be adding value for the merchants they promote? And where does the “value” reside?
Dunn: The value resides in the second purchase, or if a traffic game, the repeat visit. The only true measure of value is a repeat customer, or repeat visitors. Affiliates and merchants are notorious for being so over-focused on the first sale, pushing it to the limits sometimes, that the blend of quantity and quality is challenged because the affiliate’s incentive is more more more, and the merchant’s true goal is a higher percentage of customers who buy again.
From my own experience, I ran a financial services affiliate program as an OPM. In the first year, we just went out and signed up everybody and, like many initial programs in the early days, more was the goal, to prove the online channel.
So we got tons and tons of new customers, but half didn’t use the credit card. If you don’t use the credit card, it’s sort of a worthless lead in financial services.
Solution: We worked with our affiliates and basically found the usual 95/5 rule – 5% of the affiliates rock most of your sales/leads. So we ran numbers of repeat visitors against all of our data (which became a regular practice, and one I recommend for affiliate managers to do quarterly at least), and we found our 5%.
That core didn’t’ generate the volume, but did generate repeat usage which made it much more profitable.
We eliminated the other affiliates, even some generating volume, because the true value, the true metric, was usage, repeat usage especially, and for me that applies to every program.
It’s all about repeat visitors, repeat buyers, repeat subscribers. That’s the Long Term Value (LTV) of the customer, and the true value of any marketing program.
Question 5: What is the biggest challenge faced by affiliate managers, and advertisers with affiliate programs, today and what would you recommend doing to overcome it?
Dunn: Stereotypes, from those who don’t know affiliate programs, and from the affiliate manager’s perception of who are the best affiliates.
The stigma of the word “affiliate” - many simply don’t understand the term, outside this space, and if they do, it’s because of some nefarious headline they read. When you deal with people, don’t think they have gone to Affiliate Summit, or even understand what affiliate programs are. The true growth is outside the traditional cpa and coupon/reward space, in social. But the old ways won’t work (cookies again a problem here).
Basically most of the world, from Google to Facebook to many unfamiliar with the strength of affiliate programs, stereotype affiliate programs as an expensive, risky cost channel. That stereotype is what you’re working on broadening your base of affiliates.
I’ve seen small OPMs doing this with major social followings, working with them closely and customizing the process for those generating quality, repeat customers. This is only for the top affiliates of course, but the lock in isn’t just what you pay them; it’s how you work with them in social.
With the world going mobile, affiliate programs make sense in the social media that most use when they are mobile. Some smart AM’s jumped on Facebook Pages, which didn’t monetize for people, but with a good affiliate program and hopefully success at driving some traffic off of Facebook, they become affiliate partners.
Except these affiliates aren’t versed in marketing, they are all about communication. You don’t turn them into marketers, you give them the tools to do it with you easily, and you keep in touch. Done right, it’s tapping into revenue streams most affiliate programs are ignoring, because no one gets fired for chasing coupon and reward affiliates…yet.
We have to move affiliate programs beyond this reliance on coupons and reward affiliates. This won’t happen fast, but there’s a whole world happening outside of search, and much of the coupon space is a search game.
Now it’s as much a social game, as a search game, and affiliate programs are pivoting. The new affiliates take a different approach, and while the old affiliates aren’t going away, in 5 years this whole space is going to be mobile and social and connected. You can’t afford to run an affiliate program in the traditional way anymore.
Question 6: Why do you think affiliate managers should attend Affiliate Management Days?
Dunn: Because you get to learn from and interact with speakers who deliver real information, data, and insights based on experience. You can often connect with them as well during the day, because the event is not so big that you get lost in the crowd. Plus the people who attend are top-notch. I spoke a few years ago in San Francisco and met a future client I’d never have run into because the quality of AM Days drew him. This is one of the few events I speak at because of how it’s delivered, the content, and the people who are sharing their insights are seriously good at what they do and must deliver value when they present. AM Days is all about the quality of people and content. I always go away knowing more. I’ve been in this business for 20 years, so the opportunity to learn and implement what is offered here is rare and valuable.
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