Tips to Improve Your Affiliate Marketing Program

It's no mystery why affiliate marketing has historically had a reputation as a channel full of fraud and off-brand promotion. However, shady affiliate practices are now taking a backseat as retailers with properly managed affiliate programs are starting to shift to practices that focus on and drive incremental revenue and brand relevance.

These improvements are the results of experienced marketing professionals recreating the channel's reputation by guiding its evolution from Generation 1 to Generation 2. The difference between Gen 1 and Gen 2 programs is not only the difference between shady and reputable practices, it's also the difference between a mediocre and stellar return on investment.

A properly managed Gen 2 affiliate program ­— which measures performance by new customer acquisition and incremental revenue instead of simply measuring clicks, total revenue or number of affiliates — can have the highest ROI of any online marketing channel. Making sure that your program is keeping pace with industry changes starts with evaluating where your affiliate program falls in the Gen 1 to Gen 2 continuum, beginning with a look at who manages your program.

Would you let someone just out of college with next to no professional experience oversee a multimillion dollar account or be in charge of licensing your brand? Probably not, but high turnover rates and inexperience are usually par for the course with Gen 1 programs.

The opposite is the case with Gen 2 program management, where in-house managers or independent third-party agencies with experienced and specialized marketing experts are in control, making the affiliate program a priority, not just a side note. Determining where your program falls might be as simple as reviewing the resume of the person managing your account.

Specialized affiliate experts also know how to properly gauge the success of their affiliate programs. They look closely at new customer acquisition and use multiattribution models to understand which part of the process is converting the most viewers into buyers. Gen 1 programs typically don't offer complex performance metrics, instead measuring success strictly by the number of affiliates and overall program revenue.

Knowing which affiliates are primarily responsible for a sale is crucial to encouraging future success. Gen 1 programs simply give commissions to the last affiliate to touch the customer before a sale is consummated. However, that disregards those affiliates that may have been more influential earlier on in the buying process. Gen 2 programs use dynamic attribution technologies to identify the affiliates most responsible for a transaction — not just those last-in cookies — and compensate them accordingly. Understanding attribution helps properly assess the value an affiliate brings to the table, not just the volume it generates.

Value is of primary concern to Gen 2 programs, which place emphasis on high-quality content. With more than 80 percent of affiliates typically coming from generic coupon or toolbar sites, adjectives like quality aren't accurate descriptors of Gen 1 affiliate programs.

Identifying valuable affiliates is the most effective way to make an affiliate program successful. However, instead of a targeted approach, Gen 1 programs cast as wide a net as possible by using multiple networks, which are often in direct competition with one another. A "bigger is better" approach isn't the case with Gen 2 programs, which choose to operate on one to two networks and are increasingly managing large partners directly on a branded SaaS platform.

Transparency is also a top priority for Gen 2 programs, which require URL data for all clicks and sales. Good luck getting that information out of Gen 1 programs, which usually don't even understand the business models of many top affiliates.

If your current affiliate program sounds like its closer to Gen 1, or if you're looking to transition it fully into Gen 2, making a few simple changes can get your program up-to-date:

• Know what each of your top affiliates is up to. Keeping track of their activity is key to serving partner brands effectively.
• Conduct a conversion rate analysis to detect any abnormalities in affiliate performance.
• Use attribution tools to alter payouts so that affiliates which generate incremental sales are rewarded.
• Make affiliate marketing a specialized division within an overall marketing plan. Keep those in charge of other marketing channels up-to-date on affiliate efforts as a way to prioritize affiliate performance.
• Complete an audit of your affiliate program with a reputable third party to identify possible weaknesses and opportunities.

Determining where your program stands is the first step toward making affiliate marketing a major ROI producer for your company. When properly managed by in-house specialists or a third-party affiliate management firm, it's clear that the affiliate industry is leaving its dark days behind and moving up to the marketing big leagues.

Robert Glazer is founder and managing director of Acceleration Partners, a digital strategy firm focused on profitable online customer acquisition for high-growth consumer businesses.