The power of a merchant validation strategy

The ability for advertisers to decline publisher transactions has been both a blessing and a curse for the affiliate industry. The ‘risk free’ USP merchant validations have provided has drawn retailer spend away from the effective CPA offered by other digital performance channels. It has helped grow the affiliate channel by attracting increased levels of spend by brands seeing strong ROI, and has cemented the channel as a primary digital sales driver for many SMEs.

However, as affiliate marketing continues to mature, it’s important to take a step back and ask ourselves, “What are we trying to achieve? Are the methods that initially helped secure merchant interest still appropriate for today’s complex digital ecosystem?”

Performance marketing has changed beyond recognition over the past 15 years. Retailers aiming to maximize the revenue opportunity from across the publisher landscape must compliment last-click CPA with tenancy, revenue share and influence payments. Similarly, they must apply fair and transparent de-duping practices: 

• Not de-dupe against direct type-ins
• Not decline for code usage when the code is promoted on the merchant’s own site

This list is not exhaustive, but carrying out any of the actions above either ignores the complex way users shop, renders cookie periods obsolete, or penalizes affiliates for circumstances beyond their control. This is a surefire way to cause concern among the publisher community, harming a merchant’s reputation and growth potential within the channel.

Affiliates are starting to take action. They will no longer be taken for granted. Merchants only paying on last-click CPA while declining large percentages of tracked sales will see their affiliate dreams fade. In the last year, affiliates have started imposing minimum CPAs, minimum approval rates, and leaving programs that don’t meet their demands. Brands continuing with aggressive validation processes will lose affiliates to other channels and, worst of all, hinder the potential for attracting new affiliates to the industry.

While the above can be attributed to just a few merchants not following best practices, it’s also interesting to review the practice of declining sales when products are returned or services not connected. This has been standard practice within the channel for years and has been a key attraction to the affiliate channel vs. other areas of digital. However, it’s this channel ‘USP’ that, by its very uniqueness, reminds us that no other channel offers this privilege.

As we look outside of the affiliate industry and to how we can attract more affiliates to drive the next phase of growth, we must be seen by affiliates as an equal (or better) revenue stream when compared to other digital channels and monetization methods. This growth will ensure merchants continue to see strong results from the channel.

What are the options for brands?

1. Set commissions that allow auto validation, approving all sales quickly while ensuring an ROI comparable to other channels
2. Review your EPC in comparison to your key competitors, Amazon and display activity (which are still the most common monetization methods for content sites) and adjust your validation practices accordingly
3. Review validation processes and remove anything overly aggressive
4. Pay on influence across all sales (approved or declined) to ensure the value driven is measured and rewarded even if the final click is attributed to another channel

What are we trying to achieve?

The goal is to have fair, sustainable growth for affiliates, merchants and the industry as a whole. Retailers must ensure their validation strategy supports attracting and retaining strong affiliates, providing confidence that the channel will properly reward for the value they deliver.