Affiliate industry will implode if it doesn't change "last click" model, says Skimlinks
Content sites aren't getting adequately rewarded by the prevailing model for affiliate marketing, and the system unfairly favors trashy coupon and discount sites, according to content monetization company Skimlinks.
Content sites, including news and magazine websites, social networks like Pinterest, and blogs, play an important role in helping to raise awareness about products and services, but they often miss out on the financial reward for those leads because of a "last click" attribution model that Skimlinks CEO Alicia Navarro calls outdated. By merely paying the last point of contact for referrals, retailers such as Amazon and Best Buy are potentially undermining the entire affiliate industry, she says. “It’s going to implode if something isn’t done.”
In a new study conducted in conjunction with an unnamed retail partner, Skimlinks has found that content sites were the first place users read about a product 27 percent of the time, and that when a user started their journey to purchase with a content site, she or he was a new customer 55 percent of the time. Only 6 percent of the time were such sites the last click before a purchase; and 65 percent of the time a content site was the first click in a "purchase journey," another channel ws the last click, giving them all the credit for the sale, the study found.
Some media and content companies are staking at least parts of their future on income from affiliate marketing – usually realized as a result of taking a referral fee from retailers when a piece of content, such as a photo or link, drives a sale – especially as digital display advertising gets ever cheaper. Gadgets website The Wirecutter, for instance, gets the bulk of its revenue from such means, and Maria Popova's Brainpickings also benefits from the system. Gawker Media, which is a Skimlinks customer, has been stepping up its efforts to earn money from such content-driven commerce. In December 2011, Gawker Media owner Nick Denton sent an email to his staff saying that the company made $70,000 through affiliate marketing without even trying. For other sites that are more explicitly commerce-driven, such as Pinterest, the affiliate revenue is much more crucial.
Indeed, the affiliate landscape is seeing sharp growth across the board. Forrester Research, for instance, has projected that affiliate marketing spend in the US will increase to $4.1 billion in 2014, up from $1.6 billion in 2007.
While the affiliate industry is swelling, however, Skimlinks argues that the "last click" model means that merchants are only getting referrals from opportunistic commerce websites instead of cultivating quality publishers in their networks. In a white paper to be published on its website today, Skimlinks argues for an alternative model that takes an holistic view of the "click path" that leads to a purchase and duly acknowledges the sites that help drive awareness early in the purchase journey. For example, its retail partner for the study – which for some reason refuses to be identified in media reports – uses an algorithmic weighting system that splits commissions among the sites that played a role in driving a purchase by applying "grades" to the importance of each one based on factors such as time between click and purchase, and customer types.
That "multiclick" method is not without its critics, however. Writing for econsultancy.com, a BskyB online marketing manager has said a split commission approach is time-consuming, resource-intensive, and potentially wouldn't produce results that are all that different anyway. Certainly, most of the major merchants have shown no great enthusiasm to change the status quo.
Still, Navarro believes the industry is starting to consider a more analytical approach, and that it needs a push. “The way I see it is that they’re aware that the model is broken but they haven’t proposed another model to fix it," she says.
When a fix does come in, she says, merchants will benefit from content sites that deliver new customers based on quality of product rather than just the cheapest prices.
[Image via Skimlinks]