I stumbled across an old forum thread from March 2006 that was started in response to the request for comments on a post that Linda Buquet from 5 Star Affiliate Program Forums made about how an affiliate manager should deal with a channel conflicts with direct mail marketing (and other marketing channels).

Linda received a message that stated the following:

"..., I found you on the XYZ forum and hope you're well. Not sure if you can help, but I'm trying to do some research to understand a problem that's come up for a client. I'm particularly ignorant about affiliate marketing and I'm really hoping that you might be able to direct me towards some resources that could help me. Basically, the problem is that my client sends out direct mail and each piece of mail has a code that the prospect enters on the home page when they come to purchase/apply. However, the company also has an affiliate program. What seems to be happening is that people receive the direct mail piece, go online and either with a basic search to find the site, or if they're searching and trying to do some research, they end up on an affiliates site. They then click through to the company site and sign up with the direct mail code. Essentially, my client then ends up paying both the DM and affiliate costs for the same prospect. Do you know if this problem is endemic and if so, what are others doing about it?"

There was by coincidence a discussion going on at the non-public affiliate manager forum at ABestWeb.com just around the same time where I and several AMs discussed the issue. It concluded the following:

The Fact

It is impossible to determine for sure who is responsible for a sale, the merchant who has an AdWords campaign running where the customer clicked on or the affiliate site the same customer clicked through earlier. There were many arguments, which did and who did not and how much percent etc. etc. but at the end remains the fact, it cannot be determined conclusively. *

This is an important fact!

The Decision

If the merchant decides to kill an affiliates cookie or not to pay commission or revert commission when the customer is clicking a merchants Ad somewhere else or a link in the merchants newsletter (Welcome email, follow up email etc. does not matter). The merchant must make this decision. All kind of reasons must be considered like marketing cost, margins and the merchant's opinion or policy.

The Must Do

If the merchant decides not to pay commission, then it is absolutely crucial, that this is spelled out in the affiliate program agreement between the merchant and affiliate. Not in legal gibberish, but in plain and clear language, that an affiliate can understand this restriction / policy and make an educated decision, if it wants to partner with this merchant under those conditions or not. It should also be mentioned outside the agreement from time to time, such as affiliate newsletters and Forums or direct communication with the affiliate.

The Do not Ever Do

Not doing so could mean, correction, will mean serious trouble when affiliates find out about it somewhere else. One merchant in the discussion was able to experience first-hand the result of this. It caused serious damage to his Program and if the merchant's AM would not have been a trusted authority for his affiliates and other AM's for years, the whole program could have fallen apart in a matter of days. That is it and there is not much to argue about it, except the details of the "decision" - do it or do not do it and the "how" of the "must do" part.

With regards to the exact example of direct mail scenario I did state the following:

How does the merchant know for sure that the affiliate was not the trigger to actually get the customer to the site, then remember the direct mail, look for it and enter the code? On the other hand, how can he be 100% sure that it was the direct mail alone that made the customer go to the site and sign-up? Maybe he saw another offer at an affiliate site which finally convinced the customer to go and signup, meaning both the affiliate and the direct mail are responsible for the conversion. How does the merchant know if the affiliate cookie was set before the customer read the direct mail or after?

In affiliate marketing is the rule that the last clicked affiliate link, before the action occurred, is the one that gets the commission, because all previous affiliate cookies are overwritten by that click.

That is how it was defined, an agreement so to speak where everybody, especially the affiliates agrees to it. The affiliate that gets the commission can thank all other affiliates and the merchant for the help to make the sale happen. It is rarely the case, that the one affiliate can be credited to 100% for the sale. To make somebody buy is not that easy and many factors play a role in the process.

However, in the case of BHO's / parasite ware, which jumps into the process at the end (almost) with the lowest probability to have contributed anything to the sale, pretty much all affiliates and most merchants do disagree with the rule that the last affiliate click/cookie gets the commission. You do not have to be a marketing expert to know that what the "parasites" do is wrong. Common sense is enough to figure-out that one.

Time-warp to the Present

This was the summary of the original conclusion from early 2006. Two years have passed and think it is getting time to discuss the issue once more and include changes and improvements in areas that are relevant as well.

*Note to: "It is impossible to determine for sure who is responsible for a sale".

This statement was in early 2006, almost two years ago. It is still holding true generally speaking, but there have been improvements in the area of web analytics over the years. Those improvements do not solve the problem in the previous example with the direct mail campaign, but there are also other channel conflicts between marketing campaigns online that can be tracked.

Some analytics providers are offering features that allow the analysis of multiple touch-points a user might had have with other campaigns from different marketing and advertising channels, in addition to the traditional "last one".

Multiple Touch-Points Scenarios

For example is it possible to see for a user who came to the site and purchased something after he clicked on an Ad of a paid search campaign, that the same user responded prior to that to a display Ad that was part of an Ad-buy by the department that manages the display advertising campaigns.

In traditional web analytics are all credits for a referred sale assigned to the last "touch-point". With multiple touch-point analysis is it possible to give credit to campaigns and exposures of the user to the ads and offers of another campaign where the user reacted to, but did not convert.

Offline scenarios are unfortunately not covered yet.**

The Actual Buying Process of People

It is known for a long time already that people usually go through different stages before they purchase a product. "Impulse purchases" happen, but are more the exception than the norm.

People usually do some research to determine what product the need and what the options are. Then they might do some price comparison or look for available deals for the products they consider to purchase. Next to price of the products play factors like additional order cost like tax, shipping and handling cost or the trustworthiness and ease of the ordering and checkout process of a merchants website a role that finally result in a completed and final sale.

Who Should Get the Credits?

If the person who responded to a paid search ad that advertises a current promotion for a product also responded to display ad on a web portal site that introduced the product and/or came earlier in time to the site from an affiliate's web site that provides product reviews, credits for the sale should not to hundred percent go to the paid search campaign. The display ad campaign and the affiliate site should also receive credits, because of their impact on the buying decision of the customer that finally lead to the purchase of the product.

Back to Reality

The determination process of how much earlier touch-points should get credit for a sale is still in its infancy. There are no standards yet. Practical studies and internal tests of merchants show that the removal of a touch-point of one marketing and advertising channel also impacted the response to other campaigns. This is not new and known for a long time that an aggressive TV ad campaign for example increases responses to campaigns of other channels, such as paid search ads as well.

As you can see, the problem of proper determination of how much credits each touch-point should get who was part of a customer's buying decision and conversion process is not easy. This type of tracking and analysis is far away from becoming a standard in web analytics; however, most web analytics providers look or already work on the implementation of such features into their line of products.

Current affiliate tracking solutions are also not up to this task yet at all and I am unaware of people at the networks discussing it. At least I have not encountered anybody who is publically or unofficially talking to me about this.

The Future

This will eventually become a priority when advertisers become sophisticated enough and demand solutions to this problem. This would have a huge impact on the current affiliate tracking infrastructure and technologies, but it will be the way to go. It will also require some re-thinking of current ways of doing things for affiliates who will suddenly not get 100% credit for a conversion anymore, but in return should get a small cut on transactions where they played a small part in it and don't get any credits today.

The perfect solution would also include offline tracking of in-store purchases, because studies show that online advertising drives in-store sales at a 6:1 ratio to online sales. Customers spent in average $16 offline to every $1 spent online***. It would be nice as affiliate to get some credits for those indirect conversions one day.

**On a note to offline conversion tracking of online campaign: There are some solutions available today, which are specifically designed to allow offline tracking (at least orders made via phone) after an exposure to an online campaign. To read more about this subject, see my post from September this year, titled: "Multichannel Offline and Online Conversion Tracking".

*** Numbers were taken from this Yahoo! Study from 2007 (the result of the study in PDF format for download).

If you have any thoughts or comments on the issues and possible solutions for the future, feel free to post them below. Cheers and Happy Holidays!

Carsten Cumbrowski