Written by Tony May, performance and affiliate marketing specialist at Tradedoubler, who are one of the founding members of the APMA and a highly influential global affiliate marketing network.
The last click CPA model – benefits and drawbacks
The last click CPA (cost per action) model has done a fantastic job in creating a thriving partnership ecosystem through which billions of pounds of advertising spend is channelled every year. The concept is simple yet effective – advertisers can choose a reward which they know is profitable, and partners can earn commission by leveraging that offer with their own audience.
However, this model is not perfect. A major issue with the last click attribution approach is that it is unable to accurately reward the contribution of multiple partners in the purchase funnel. This has the potential to lead to a misallocation of marketing spend and create an ignorance of higher funnel activities that may generate awareness of an advertiser’s products in the first place.
Other issues include the model being incompatible with non-online or difficult to track journeys and an inability to recruit a diverse range of publishers to a program. It is for these reasons that we’re starting to see more and more advertisers diversify their commission structures beyond the last click CPA.
So how are brands diversifying their commissioning strategies?
Introduction of multi touch attribution models
One of the key difficulties of the last click CPA model is that multiple partners may have been involved in a purchase decision but only one is rewarded. There is no hard and fast solution to this problem but one way of tackling it is to introduce a multi touch attribution model which aims to more accurately assign influence in a purchase journey.
We have a really interesting working example of this currently in place with one of our global clients. They wanted to reward non last click partners who they deemed to have played a significant role in the purchase journey.
We therefore worked together to develop a scoring system which denotes how much influence each publisher has had in the journey, based on a range of factors including initial influence, final conversion and website dwell time. This score is then displayed for all partners involved in a transaction in the Tradedoubler platform in real time and commission rates are dynamically calculated and awarded based on this data.
Consider alternative or hybrid payment models when necessary
There are certain scenarios when a last click CPA model just isn’t suitable – most notably when the conversion event is difficult to track or when it happens in an offline scenario.
A prime example is when the conversion event sits within a mobile app. Even with a fully functioning mobile app integration, there is likely to be significant drop off in this type of journey from a tracking perspective – especially when a customer is initially referred from a desktop device. In these instances, more creative methods of remuneration such as a hybrid CPC / CPA model or a click floor arrangement may be required.
Another case in point is when more complex products are being promoted. If it requires a telephone call or face to face appointment in order to convert, it is the responsibility of the advertiser in these cases to ensure that these conversions are tracked and rewarded correctly (perhaps via call tracking technology or a longer validation process whereby the initial online conversion is pending until the offline process is completed). A failure to do this risks the alienation of your partner base.
An evolution of this strategy is to reward publishers more fairly when they refer customers who complete an action which denotes value to that brand at a future date i.e. renew their policy, buy again, or are still a paying customer after a set period of time. Multiple brands on the Tradedoubler network set up automated commission bonuses via the API when an action of this type takes place, which ensures that publishers are fairly rewarded for referring loyal customers.
Embrace partners at all stages of the purchase funnel
As partnership marketing platforms such as Tradedoubler become the preferred method of measuring marketing relationships of all forms, we are seeing an increasing number of diverse partner types joining our network.
A number of these new partner types often require fixed fee, recurring SaaS or CPC style commissions. The reason partners implement these pricing structures is likely in part due to the last click model itself – a fixed fee helps to safeguard revenue for these partners whose efforts are often unrewarded under the current widely adopted attribution approach. Some partners also have extremely focussed audiences or unique promotional methods which cannot otherwise be accessed.
To ignore partners requesting this type of payment structure risks creating a program focussed only on the lower funnel, thus becoming too reliant on partners whose incrementality is more difficult to prove. Examples of partner types who may require fixed fees include card linked offers, verification tools, conversion rate optimisation, gift card tech providers, referral partners, closed user groups, media outlets and influencer subnetworks.
Conclusion
It’s clear that a flat CPA has its uses in affiliate marketing, but in order to benefit from the plethora of opportunities available in the channel and optimise their programs fully, advertisers should look to implement diverse strategies in order to keep up with a continually evolving landscape.
It is crucial to remember that a purchase is much more than just the last touchpoint. As such, brands should embrace partners at all stages of the funnel if they are to succeed in their marketing objectives, whilst also being mindful of the intricacies of particular conversion journeys to ensure fairness in their program at all times.
About the author
Tony May is a performance and affiliate marketing specialist with a particular interest in personal finance & investing. He has experience spanning over ten years across network, publisher and advertiser roles and is currently responsible for promoting Tradedoubler‘s market leading suite of performance marketing tools to some of the world’s best known consumer brands.
