During any given quarter, optimization can almost always be found as one of the key strategy components in any affiliate program’s objectives and key results. Like other initiatives such as recruitment, activation, and compliance, optimization is a crucial element of the affiliate marketing channel.
Why Is Optimization Important?
In any program, it is crucial to explore growth through a variety of different means. For instance, although growing a program through recruiting new partners is important, this is not enough. A program can add countless high-value publishers, but this will not produce effective results if the true value of these affiliates is not being fully explored. Success in affiliate marketing means pulling every lever available, and a key lever is optimization. It is crucial to not only add new partners to a program but to work with the existing partners to grow these partnerships. Not fully exploring partnership opportunities with the high-value publishers already in the program results in a major loss, as the program is not able to unlock all of its potential revenue.
Optimization benefits program growth in a variety of ways. For starters, it is a highly effective strategy to drive increased revenue and conversions. Oftentimes, it is less expensive and less time-consuming to optimize existing partnerships than to recruit more partners. Additionally, optimization creates better program diversity. Due to the time and effort required to create promotional content, there is a higher uplift for content partners to drive significant revenue compared to other partner types, such as coupon and cashback. As a result, targeted optimization opportunities are particularly important when it comes to increasing content partners’ contributions. This allows for a balanced program that produces more incremental growth.
Optimization is not a strategy that only works for certain types of affiliate programs at specific levels of growth. Because of how much it can be targeted to each individual brand based on factors such as promotional method, payout, and partner type, optimization is a highly promising strategy for every affiliate program.
When Should I Focus On Optimization?
Although optimization is always an important part of affiliate strategy, there may be certain times when it makes more sense for a program to prioritize optimization versus times when it makes more sense to prioritize a different initiative, such as activation. To determine how much of a priority optimization should be, there are a few key factors to consider.
During holiday seasons, publishers are often focused on optimizing with their existing brand partners rather than joining new affiliate programs. As a result, these are especially important times during the year to focus on optimization. A program will see much greater success through focusing on sourcing optimization opportunities rather than on conducting recruitment outreach, as potential new partners may not be able to be as responsive.
Additionally, optimization can be an invaluable tool to support a brand’s holiday promotions. As brands typically see higher conversion rates and average order values during these sale periods, it is particularly beneficial to be able to get the promotion out to as many potential users as possible. An affiliate program can offer additional incentive to publishers, such as higher payout, in exchange for increased exposure.
The more mature an affiliate program, the more optimization should be a priority. For a newer or smaller program, it typically makes more sense to focus on onboarding as many foundational partners as possible. However, a more mature program has likely already onboarded most of the key publishers that will be driving revenue. Thus, it is more important for the program to prioritizing on optimizing with these existing partners.
Optimization is also particularly important when an affiliate program is focused on short-term growth. If a program aims to reach a certain amount of revenue or number of sales within a short time frame, optimization will be the most cost- and time-efficient means for growth. Although recruitment and activation are also highly effective in driving increased conversions, these initiatives should be viewed as more of a long-term play, as it takes more time to see growth.
How Do I Target Partners For Optimization?
Publishers, especially coupon and cashback sites, will often reach out to affiliate programs to suggest optimization opportunities. However, to maintain account health, it is also necessary for those managing the program to be proactive about reaching out to affiliates and asking what optimization opportunities they have available.
Not every partner in an affiliate program is necessarily worth optimizing with. For instance, a site with a low number of monthly visits and weak audience alignment is likely not a good candidate for optimization. To efficiently run an affiliate program, it is important to strategically decide which partners to reach out to for optimization opportunities. There are many different courses of action available when targeting partners for optimization.
A key targeting strategy is selecting partners for optimization based on their key performance indicators (KPIs). In KPI optimization, those managing an affiliate program look at performance reporting from a set period of time, typically the previous quarter. In particular, if a partner has driven notably high clicks, sales, conversion rates, or average order value, they are likely a great candidate for optimization.
While KPI optimization targets partners based on strong recent performance, winback analysis focuses on publishers who have been strong performers in the past but have recently stopped generating revenue. For instance, while looking into partners to optimize with during Q3, a marketing agency might target an affiliate who drove $10,000 of revenue in Q1 but no revenue in Q2. The affiliate program can then explore optimization opportunities with this site for Q3 in order to get them reactivated within the program.
Targeting Based On Partner Type
Another option for targeting partners to optimize with is to consider if there is a certain type of partner that the brand would like to focus on working with. For instance, if an affiliate program is heavily dependent on coupon and cashback partners, the brand may want to diversify the program by increasing content partners’ contributions. This can be done by optimizing with high-potential content partners within the program.
The agency managing the program might look into the program’s performance data in order to see which content partners have generated the most traffic or revenue within a certain time frame. Additionally, the agency can target partners for optimization based on factors such as the number of site visits, alignment based on audience demographic, the vertical of the blog, and the type of content they write (i.e. reviews versus gift guides).
What Optimization Tactics Can I Use?
At its core, optimization is exploring opportunities to scale growth with high-potential partners that are already part of an affiliate program. However, optimization is not a one-size-fits-all solution for programs. There are a number of different options through which programs can optimize with partners, allowing for optimization strategies to be highly targeted to a program’s specific needs.
CPA Increase (CPAi) Campaigns
The most popular method of optimizing with affiliate partners is through CPA increase (CPAi) campaigns. These opportunities entail increasing a publisher’s commissions, usually for a set time period. In exchange, the publisher provides increased exposure for the brand.
For instance, a coupon partner may typically promote a brand at a 5% commission rate. However, the partner might offer to feature the brand in a special placement on their homepage for two weeks in exchange for their commissions being increased to 8% during that same time period. Similarly, a cashback partner may typically receive a 5% commission from a brand, keeping 2% for themselves and passing along 3% to their user base as cashback. This partner might request a CPA increase to 8% for 2 weeks, during which they would pass the additional 3% to their users, resulting in a total of 6% cashback. Due to the higher cashback rate, there is now an additional incentive for users to purchase from the brand through the affiliate channel, resulting in higher revenue.
Flat Fee Placements
While affiliate marketing has traditionally been focused on a commission-based model, many publishers now also offer flat fee placements, such as a blog post that costs $3,000 or a newsletter inclusion that costs $1,000. Partners of all sizes offer flat fee placements with costs ranging from as low as $50 to upwards of $15,000. However, this method of optimization is most used for larger publishers, especially content sites.
Although flat fee placements are a more expensive form of optimization, they offer their own unique benefits. For instance, these placements often have higher fees associated with them because they are a stronger form of exposure with a higher potential to generate conversions. They may reach an audience that is wider or more highly targeted to the brand. Additionally, larger content partners often require flat fees to write articles about brands, since there is a higher lift required on their end to promote the brand.
Flat fee placements work best for larger affiliate programs with a higher budget. For smaller programs that are unable to invest in flat fee placements, it is often possible to negotiate with publishers to get these fees removed in exchange for higher commissions. Furthermore, many publishers are willing to work on a hybrid basis, combining both CPA increases and flat fee components. For instance, an affiliate might offer a placement package for $3,000 plus an 8% commission rate versus a $5,000 fee at a 5% commission rate.
Another effective form of optimization is through offering exclusive codes. Brands can provide exclusive codes to their affiliates to share with their audiences. For instance, for a partner called “Hamster Garage Coupons,” a brand might create the HAMSTERGARAGE15 code for 15% off sitewide. Partners often require these codes to be best-of-web deals that are more competitive than any other online offers for their brand. For instance, if a brand’s highest discount is 20% off sitewide, a partner might request a code for at least 21% off.
Exclusive codes are a great way to optimize with partners who have highly aligned and engaged audiences. These codes have the potential to drive a high sales volume. Additionally, they are a low-risk method of optimization. With a CPA increase campaign, a partner might be receiving higher earnings while not actually driving an increased volume of sales. Similarly, with flat fee placements, the monetary investment may not necessarily convert into increased revenue. These optimization methods are certainly still worth exploring despite their risks. However, for brands looking for lower-risk opportunities, exclusive codes are an excellent option.
Conclusion: Optimization is an Essential Part of Any Program
With many publishers, optimizing through methods such as CPA increase campaigns is one of the simplest, easiest, and most proven ways to scale program growth. Thus, optimization is a critical component of any affiliate program’s strategy during any given quarter. However, though optimization is universally valuable within the affiliate industry, it is important to consider many program-specific factors when charting strategy. For instance, a program should consider its current circumstances and goals when deciding whether optimization should be the number one priority for the upcoming quarter or whether it should be a secondary initiative supporting the primary focus. Additionally, it is necessary to consider program size and budget when determining which optimization tactics to leverage. Through a full consideration of all these nuances, an affiliate program can create an optimization strategy that is bound to drive great success.
Thanks to Merve for reviewing this article.