Just like SEO and paid search campaign audits, I recently audited an affiliate marketing campaign for a client. As part of this process I evaluated the campaign on many levels from the initial campaign strategy to affiliate recruiting, production and management.
In general this affiliate campaign looked pretty good on the surface. The campaign was getting a good EPC rating and had recruited several hundred affiliates within its first 6 months. I also examined the creative and found numerous banners with strong creative that dovetailed well with the initial strategy.
Affiliate Payment Analysis
As I started to examine the payments made to the affiliate, within minutes I quickly noticed some unfortunate discrepancies.
I noticed that a few affiliates had unusual sales cycles. In these situations affiliates had the majority of their sales occur within the last week of the month. As I drilled down further into this activity, I found many of the sales from these same affiliate websites ended up cancelling the sales within 2-3 weeks after the sale. While this can occur around certain holidays such as Christmas, it is also sign that affiliates are possibly defrauding the client.
Affiliates are paid at the beginning of the month, usually within a week. If sales are being reversed 1-2 weeks after the affiliate is compensated – there should be chargebacks – a reversal of the sales transactions. Unfortunately there were no chargebacks.
In digging even deeper, I also discovered that almost 30% of these sales where chargebacks should have occurred were from websites based outside of the United States. My experience suggests that my client has been defrauded. My client sells furniture and it is not likely that someone is going to buy wood furniture and have it shipped to England.
Affiliate Marketing Policies
Finally I started examining the policies created by my client regarding the marketing of their products. In order to maximize its profitability, my clients affiliate marketing policy indicated that affiliates can employ paid search but not bid on my clients branded keywords.
The belief here is that doing so reduces the overall profitability for the client on many levels. First it drives up the cost per click for a branded keyword. If my client receives the click – they will pay more for the click, reducing profitability. If the affiliate gets the client instead of my client, my clients pays a higher customer acquisition cost compared to a direct sale – again reducing profitability.
After monitoring affiliates for 2 weeks, I discovered 3 affiliates that were not adhering to the affiliate marketing policy regarding branded keywords. While not excessive, these affiliates are reducing my client’s profit margins.
I am a strong believer in affiliate marketing and recommend it for many clients, particularly once clients have matured their SEO and paid search campaigns. Just like an SEO and paid search campaign audit, it is important to audit an affiliate campaign at least once a year to ensure maximum profitability.