Comedian Sam Levenson is known for saying that one must learn from the mistakes of others because we simply can’t possibly live long enough to make them all ourselves. In the context of affiliate program management, this statement would have to be slightly reworded. I’d say that you must learn from the mistakes of others precisely because you can make them all yourself, burying your affiliate program in the process.
In this article I’d like us to look at 10 deadly mistakes which merchants and affiliate program managers routinely commit. Sometimes the below mistakes occur when merchants have a limited understanding of the importance that the affiliate channel really has, while in other cases, they happen because merchants simply do not fully comprehend the consequences that some of their actions (or lack thereof) may have on their affiliate program.
I have limited the list only to those that can do most damage to the development of your affiliate program.
Mistake 1: Leaky Websites
Leaks constitute conditions within the advertiser’s website, which may lead the affiliate-referred user to actions for which the affiliate will not get compensation. They come in all sorts of shapes and forms, but the essence is always the same—the merchant benefits from them, while the affiliates who refer traffic to the merchant do not.
Some of the most common types of leaks are as follows:
Telephone Number/Live Chat
You are making it possible or even encouraging the end user to place their order by phone or via an instant chat system, bypassing affiliate tracking.
Ads (e.g. AdSense, AdChoices)
You are “monetizing” the traffic that is being sent to you by affiliates, but affiliates do not get any compensation for it (because the only one Google is paying in this case is you).
Affiliate Links/Amazon Widgets
Although it may seem obvious to some, there are merchants that do not see how having these on their sites hurts their affiliate program. Reason? It’s the same as for AdSense units!
Links to “Network” Stores/Sites
If you have a “family” of web stores and are interlinking them, make sure your affiliate platform tracks transactions across all of these stores—so that if an affiliate refers a customer to one online store of yours but the shopper makes a purchase from another one you’ve linked to, the affiliate still gets compensated.
Links to Other Merchants
I understand the benefit of link exchanges, banner swaps, and other types of link partnerships, but look at things through your affiliates’ eyes: If the traffic they refer can go to another merchant that does not compensate them for their work, it’s a leak.
If you absolutely must have some of the above-quoted “leaks,” make sure they are invisible to affiliate-referred traffic. With phone numbers: you do not have to suppress it if you can track calls as well. Look into platforms like Invoca, Freespee, or talk to your affiliate network/solution provider.
Mistake 2: “Autopilot” Approach to Affiliate Program
In a Fall 2013 blog post Mitch Joel of Twist Image pointed out to the problem with modern advertising. Things used to be easy, but “as the industry evolved, grew and matured, things changed” and most advertisers now look like they are “asleep at the wheel” running their marketing the old auto-piloted way, which no longer works. Unfortunately, it is no different in affiliate marketing. However, you must flee from “automatically steering” your affiliate program. It cannot be run on autopilot or cruise control. It must be managed. Otherwise, it may become a gateway to all sorts of unwanted “marketing” activity, which will not only hinder the healthy growth of your affiliate marketing channel but also cannibalize the other channels of digital marketing that you are involved in.
Mistake 3: Unclear or Absent Program TOS
Your program’s Terms of Service (TOS) agreement is one of the best defensive mechanisms to deal with rogue players. Make sure you have a good one in place. Refer to http://amnavigator.com/TOS.html for a sample of one. And once you have one in place, make sure you also actively police affiliate compliance with your TOS.
Mistake 4: Nonexistent PPC Policy
Although paid search rules and restrictions that you want your affiliates to abide by are an integral part of the terms of service agreement, it isn’t unusual for a merchant to have the agreement in place but lack clarity on what’s permitted and what’s forbidden for PPC affiliates to do while aboard your program. With this thought in mind, I’m singling this one out as a mistake of its own. It is one of the most important parts of your agreement. Don’t leave it out!
Mistake 5: Noncompliance With FTC Rules on Endorsements & Testimonials
Are your affiliates disclosing their relationship with you on their websites? In the Federal Trade Commission’s eyes, they are your “endorsers” while you are their “sponsor.” The FTC is clear on their expectations of both you and them. In 2011 we saw how an advertiser ended up facing a fine of “$250,000 for deceptively representing endorsements … that were posted on blogs or other websites created by affiliates.” You may read more about how to comply at http://bit.ly/FTCGuides
Mistake 6: Embarrassing Commission Rates
With larger etailers, it isn’t unusual to see commission rates ranging from 1 percent to 4 percent. Following them by example, some smaller merchants set their commission rates significantly lower than they could in reality afford. For help in deciding on the optimum commission/payout rates, do your competitive intelligence – to see what your direct competitors are offering their affiliates. Do not skim your salespeople of the commission that you can easily pay them. With the larger and more well-known brands, whose affiliates enjoy conversion rates as beautiful as 10 percent or even 20 percent, lower commission rates still attract affiliates. The strategy of low commission/payout rates may not necessarily be the best idea for smaller brands/advertisers, though.
Mistake 7: Short Cookie Life
Again, looking at some of the larger brands (see the table below), some merchants think one to three days is enough of a cookie life for an affiliate program.
Table: Shortest cookie lives
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5 hours or less
Toys R Us
Nordstrom.com (12 hrs)
Dell (3 days)
Babies R Us
Enterprise Rent-A-Car (23 hrs)
Walmart (4 days)
Coldwater Creek (23 hrs)
Barnes & Noble (4 days)
Amazon (24 hrs)
Sears (5 days)
Apple iTunes (24 hrs)
Kmart (5 days)
Sephora (24 hours)
DKNY (5 days)
Guthy Renker Corp (24 hours)
Note: Data collected on November 2, 2013.
The data on end user cookie retention rates, as well as distribution of affiliate-referred orders by return days, speaks in favor of building affiliate-friendly cookie duration terms by setting cookie life at 90 days or more.
Mistake 8: Commission Drops
A smart affiliate program manager will warn a merchant from doing this, but some merchants will still do it. Here is an example of an email text one merchant sent to their affiliates:
As a valued [Merchant Name] affiliate partner, I wanted to let you know that we are currently working to make our program, and our partnerships, as successful as possible. In order to continue to support the success of our current partnership we are unable to continue to offer you a flat 4 percent commission on all goods. Starting at the end of February, our new offer will be lowered to 1.5 percent on all goods. [underlining mine]
Speaking of how much you value your affiliates and want to support the success of the partnership between you while doing exactly the opposite is paradoxical and illogical. In fact, it is destructive to your relationship/partnership. Think and calculate your expenses thoroughly before you launch the program, and not after it has picked up, and you’re trying to increase your profit margin at the expense of your “valued affiliate partners.” Unless, of course, you want them to turn around and switch their links to your competitors
Mistake 9: Late Payments
No excuses. “We can’t pay you until they pay us” is never an excuse to withhold payment from your affiliates. This always reminds me of the way salaries were, and still are, paid in the former Soviet Union: People would work for months without pay, not getting their January paycheck until July. No “Soviet Union excuses” in affiliate marketing, please!
Mistake 10: Tampering with Tracking Code
Everyone who in your company has access to the pages that contain the tracking components of your affiliate program must be instructed on the importance of these pieces of code. More than once I have seen web designers and SEO folks delete or mess up the affiliate tracking pixels on the merchant side. This immediately resulted in untracked transactions and major problems with the affiliate program. Never let anyone tamper with your affiliate program’s tracking code.
As Otto von Bismarck put it, “Any fool can profit from his own mistakes. The wise man profits from th
ose of others.” Learn from the above ones, and may your affiliate program be healthy and beautiful!