Affiliate Marketing 3.0 – What’s Wrong, What’s Right

Dave StewartFounder & CTO

CAKE

David SendroffFounder & CEO

Forensiq

AgendaThe Affiliate Landscape

What to Avoid

What You Should Be Doing

Key Takeaways

Q & A

1

2

3

4

5

CPA very appealing price format• Theoretically no risk to advertisers

Wild Wild West• No transparency• Inaccurate data• Fraud

- Affiliates not vetted properly- High profile cookie stuffing cases on Ebay and Amazon (popups)- Sophisticated botnets and teams overseas dedicated to faking conversions, many with stolen

credit cards• Many incentivized offers without advertiser approval• CPA offers over promising on “lotions and potions” led to FTC involvement

Affiliate marketing not taken seriously, too risky with fraud rampant and difficult to manage

The Affiliate Marketing Landscape – Past to Present

The Affiliate Marketing Landscape – Past to Present

Some improvement over the years but still many issues until recently• Lackluster tools to effectively manage affiliate programs

- Unreliable, high profile outages- Missing data granularity- No incentive for higher quality traffic

• Bad business models- Networks without exclusive offers, no differentiation- Networks without direct affiliates, only working with other networks- Affiliate payments occurring before conversions confirmed, high float, networks

don’t get paid and go out of business- Remaining/reputable affiliates not paid

What To Avoid

Impact of Fraud

• Fulfillment costs• Product costs• Affiliate payouts• Loss of advertisers

• Loss in revenue

Affiliate Fraud Tactics

Penetrating Networks

Acquiring Stolen

IdentitiesSpoofing IP

ManipulationUnapproved

Incentivization

Mobile Fraud Tactics

Device Emulation

Device Hijacking Appjacking Install Fraud Unapproved

Incentivization

Infiltrating Networks

Recycling Data

Spoofing Tools: Browser, OS and IP Manipulation

Conversion Rate of High-Risk Recycled Traffic

According to numerous studies across multiple verticals, high-risk leads were up to 7x less likely to convert when compared to average lead data.

What You Should Be Doing

Introduction to Attribution

Advancements

• First/Last Touch not good enough anymore• Increased visibility crucial to understand affiliate interaction• Advertisers will start pushing partial payouts at some point, will

flow downstream Challenges

• Affiliates want simple/predictable payouts• Tools have traditionally been lacking to support this concept

Attribution

Multiple Threats

• Fraudulent Links• Malware• Forced Actions In Browser• Cookie Stuffing

Solution

• Fraud detection is the first step to proper attribution

In-House & Outsourced Affiliate Marketing – Best Of Both Worlds

• Publishers want to go to direct to the Advertisers• Innovation is typically driven by the needs of the largest clients• High commission fees • Lack of transparency• Difficult to view the Lifetime Value of each consumer and match it to the appropriate

source

On average, 90% of a brand’s traffic comes from 10% of its publishers. The capabilities of the new technology solutions on the market mean that advertisers can work directly with that 10%, cultivating those key relationships one-to-one, while continuing to rely on third-party networks to manage the long and mid-tail affiliates that they are good at harvesting.

Going Mobile – Don’t Lose The Trail• Mobile web only – Identical to desktop tracking

• Native Apps

– CPI – Track App Installs

– In App Events

• Game Progress

• Virtual Currency Purchases

Growth of MobileMobile is growing and accounts for 29% of eCommerce transactions in the US and 34% Globally

Key Trends:

• 10% Growth in 1st Quarter 2015• In most countries, including US, the majority of transactions are on smartphones• Conversion rates are improving

The Future:

mCommerce on track to be 40% of eCommerce by the end of 2015

(Source: Criteo – State of Mobile Commerce Q1 2015)

Targeting – It’s No Longer A One Size Fit’s All

Target With:

• Unique Creatives• Country Specific Landing Pages • Device Specific Landing Pages• Click Scoring

Payout Granularity

• Incentivize specific affiliates (and/or sub affiliates) for higher quality traffic with custom payouts

• Create tiered payouts based on volume

• Classify unproven affiliates in lower payout tiers with path to upgrade

Pending Conversions – Quality Counts

When a conversion is marked as pending, Advertisers have the ability to review each conversion and process it before verifying the conversion as either approved or rejected.

• Eliminate Risk and Fraud• Take Control of Your Data• Enhance Advertiser/Affiliate Relations• Improve Lead Quality

Real-Time Status Updates – Enhance Leads

Buyer specific feedback allows purchasing buyers to assign a status to a lead. This information from the buyer is pivotal in determining the true quality of your leads. If buyers filter this feedback into a lead status report, this will provide Advertisers with real-time metrics on lead quality.

• Eliminate Poor Quality Traffic• Identify Top Performing Affiliates• Enhance Buyer/Advertiser Relations

Retail Data- Where To Spend In The Future?

Voucher Codes• Useful for attribution on non-traditional cpa campaigns• Attribution can be misleading if only crediting one

source

Shopping

Increased Data Granularity• Track items purchased• Know your affiliates’ strengths• Target future campaigns

Performance Marketing Survey

What clients are saying:• Affiliate space is more defined now with access to more brands and

increased trust throughout the industry• Improved support• Increased self-regulation• Innovations and regulations improving consumer experience

Opportunities• Social media integration• Mobile as it matures

The Past, Present and NOW The Future

More focus on data and optimizations• Gather more consumer data with proliferation of DMPs

- Work with affiliates proven in targeted segments• Machine Learning

- Recommendation engines- Incentivize high quality traffic, drop low quality

- Prediction engines- Target users to different offers based on likelihood of conversion

• Performance Marketing = Affiliate MarketingCPA taken seriously again

Key Takeaways

Data Collection: Anywhere & Everywhere

Attribution, Targeting, Optimization

Growth of Mobile

Value of Fraud Detection

Q + ADave Stewart

dave@getCAKE.com949.548.2253

Twitter: @Davestewartwww.getCAKE.com

Dave Sendroffdavid@forensiq.com

212.685.5931Twitter: @forensiqwww.forensiq.com