The affiliate marketing sector is thriving, with annual growth increasing by 7% between 2022 and 2023. In the first half of 2024, affiliate-related expenditures reached £179 million, a 4% rise compared to the same period last year (source: 32nd SRI Barometer). As a result, it is a channel worth considering when investing in digital marketing. However, due to its diverse players, varying commission rates, and performance metrics depending on programs (couponing, cashback, shopping guides, display, email campaigns, etc.), affiliate marketing can be challenging for advertisers to manage. To fully capitalise on this channel and maximise ROI, it’s essential to understand its role within the customer journey. This is where an algorithmic attribution solution, like Wizaly’s, becomes indispensable, offering an objective view of performance and enabling better-informed management of affiliate programs.

What Is Affiliate Marketing?

Affiliate marketing in digital strategy operates on a tripartite model where an intermediary, called an affiliate, with access to an audience, promotes a product, offer, or service on behalf of a vendor. The vendor pays the affiliate a predetermined commission when a sale or specific action is completed. This performance-based model (payment occurs only if revenue is generated) has led to the rise of specialised players and affiliate platforms that streamline program management between affiliates and advertisers.

Who Are Affiliates?

Affiliates come in various forms:

1. Individuals: Bloggers, content creators, influencers, etc., who share products or services with their communities on social media platforms like Instagram, Facebook, YouTube, and TikTok. These programs typically use links embedded in stories or blog articles.
2. Affinity Sites: Websites that align with the advertiser’s theme, driving traffic through banners, promotional strips, or calls to action (CTA).
3. Email Campaigns: Affiliates send newsletters or email campaigns containing special offers or promotions.
4. Price Comparison and Promo Code Sites: These platforms often specialise in cashback and couponing programs.

How Are Affiliates Paid?

Affiliate remuneration can vary:

• CPS (Cost Per Sale): Commission per completed sale.
• CPA (Cost Per Action): Commission per specific action (e.g., downloads, newsletter signups).
• CPC (Cost Per Click): Payment for each click on a banner, even if no purchase is made.
• CPL (Cost Per Lead): Payment based on generating leads.
• CPM (Cost Per Mille): Payment for every 1,000 impressions.

How Can Algorithmic Attribution Optimise Affiliate Marketing?

After setting up programs and payment models, tracked links are essential for measuring campaign effectiveness. Tracking identifies the source of a user’s action (purchase, click, download) and attributes it to the relevant affiliate program.

However, affiliate marketing is rarely the sole touchpoint. With complex customer journeys, consumers may interact with multiple channels before making a purchase. This raises the question: What is the true contribution of affiliate marketing within the customer journey?

Limitations of Last-Click Attribution
The last-click model, which credits the sale to the final touchpoint, provides a partial and biased view of marketing performance.

Advantages of Multi-Touch Models
In contrast, multi-touch models like Wizaly’s consider all touchpoints in the customer journey, assigning a share of the conversion to each interaction. This approach reveals the role of affiliate marketing in the journey (initiator, assistant, or closer) and its interplay with other channels (autonomy ratio).

The Process

1. Comprehensive Data Collection: Gathering all touchpoints, visits, and impressions. Wizaly’s GDPR-compliant, cookieless solution ensures 100% touchpoint collection and reconciliation, avoiding biases in understanding journeys and calculating contributions.
2. Data Processing Using Algorithmic Attribution: Combining AI with Marketing Mix Modeling (MMM) to deliver objective measurements of channel performance.

This enables advertisers to access reliable data on affiliate marketing. Questions such as the following can be answered:

• Does affiliate marketing deliver on its promises?
• What role does it play in the customer journey?
• Which affiliates yield significant ROI, not only in conversion volume but also in customer quality (lifetime value, retention rate)?
• What strategic adjustments and budget reallocations could enhance performance?

To learn more about how Wizaly can optimise your marketing performance, request a demo.