Launching a New Affiliate Marketing Program, Part 1: Tracking Platforms

Editor’s Note: This is “Part 1” of a three-part series on launching a new affiliate marketing program. “Part 2” and “Part 3” we published subsequently.

There are four steps involved in launching an affiliate program. They are: (a) evaluating potential affiliate networks and tracking platforms, (b) implementing and testing the tracking code, (c) developing your creative inventory, and (d) promoting your newly launched program. I’ll review the first two steps in this article. As a merchant launching a new affiliate program, you should be able to complete these two steps in a month or so.

That will leave the final two steps, which I will cover in next month’s installment.

Evaluating Potential Affiliate Tracking Solutions

There are two types of affiliate tracking solutions: affiliate networks and independent tracking platforms. Both track the essentials: impressions, clicks, conversions, and sales amount. The main difference is that affiliate networks have an established base of affiliates that you can immediately recruit from. This is helpful for small-to-medium sized retailers and new companies, because it gives them an immediate recruiting channel. One strategic decision is understand if your competitors run their affiliate programs on that platform. If they do, and their programs are successful, this would be evidence that affiliates on that platform are relevant to your own efforts. Leading affiliate networks include AvantLink, Commission Junction, Google Affiliate Network, LinkShare, and ShareASale.

AvantLink is one of several leading affiliate marketing networks.

Independent tracking platforms are different, in that there is no pre-established base of affiliates to recruit from. Many larger and more seasoned brands look to this solution because they want to limit their programs to specific online marketing partners. Independent tracking platforms also allow for deeper customization. So if there are specific parameters you’re trying to catch in the checkout process, such as customer account information or coupon codes, you will have greater flexibility in passing these parameters through to your reporting. In fact, if you are running an affiliate program on multiple affiliate networks, you can even aggregate that data into a single tracking platform, thus reducing the potential of multiple payouts on a single transaction. Examples of independent tracking platforms include Impact Radius and Performance Horizon.

Performance Horizon is one of several leading affiliate tracking platforms.

The other factor to consider is whether or not you have the internal resources to manage the payment process. Can your accounts payable function handle potentially hundreds of new payees, handling monthly commission payments and end-of-year tax forms? On-time commission payments are a critical success factor for any affiliate program. Missed payments, improperly calculated payment amounts, and bounced checks are surefire ways to lose affiliates, and tank your affiliate marketing channel.

If you have a global affiliate program, you also need to make payment in the affiliate’s local currency. Canadian affiliates, for example, should be paid in Canadian dollars. All major affiliate networks include a payment function. So if you use these networks, you do not need to worry about issuing checks and tax forms.

With affiliate networks, you will generally maintain an account balance. Every time a transaction occurs, the associated commission will be deducted out of your account. If a transaction is reversed — i.e., if a customer returns an order — the associated commission will be deposited back into your account. Many independent tracking platforms include a proprietary payment solution, or are integrated with established third-party payment solutions.

Pricing varies across solutions. To launch your program with an affiliate network, expect to pay a one-time integration fee along with a “network fee,” which is usually a percentage of what you pay out in commissions. An additional cost to monitor is a possible fee associated with contacting affiliates. Typically, there may be fees for contacting “non-joined” affiliates, those that are not currently partnered with your program. There shouldn’t be any fee for you to communicate with your joined affiliates. Most affiliate networks will recognize that properly managed affiliate programs involve direct communication between retailers and affiliates. Since networks are also paid a percentage of commissions, it is in their interest to ensure that all the tools are in place to properly track transactions and promote programs. With independent tracking solutions, there may be licensing and hosting fees in place.

Implementing the Tracking Code

Once you have decided on a tracking solution, it’s time for integration. Once that is complete, you will be able to track a consumer from an affiliate’s website, through to your own, and then through a completed transaction. Cookie-based tracking is the most common approach currently, where affiliates distribute a tracking link that directs traffic to your site. When a consumer clicks through that link, a cookie is placed on his or her computer that identifies the referring affiliate. When a transaction is completed, this tracking solution associates the information on that cookie with the transaction data. For cookie-based tracking to work, you need to place a tracking pixel on your order confirmation page. This pixel will “fire” each time the order confirmation page is delivered, but will only transmit transaction data to the affiliate network if an affiliate cookie is present.

The disadvantages associated with this method of tracking are that consumers may clear their computer of cookies, which would break tracking, and that certain browser settings may prevent cookies from being set in the first place. Another disadvantage is that, to set the cookie, affiliates need to use a redirect link instead of a direct link, so you wouldn’t receive any search-engine-optimization benefit from your affiliate program.

Another form of affiliate tracking involves server-to-server calls, which is offered by many of the independent tracking platforms. Since this approach does not rely on cookies to track affiliate transactions, it will not break if consumers delete their cookies. Also, it will track transactions through direct links to your site, so you will enjoy SEO benefits of multiple, direct inbound links. This approach typically involves an API integration, which may or may not be feasible, depending on how your ecommerce solution is set up.

Summary

In short, the best solution varies by retailer. Just because one of your competitors uses one solution, doesn’t mean that is the best approach for you. Conduct due diligence. Speak with company representatives before making a decision. Also, in most cases, you won’t pay for the solution until the integration is complete.

Read “Part 2: Developing Creative” and “Part 3: Promotion.”