Advertisers: Why Commission Segmentation Matters to You

Advertisers: Why CommissionSegmentation Matters to You

Affiliate Summit East 2014Aug. 11, 2014 New York City

Presented by

Brook SchaafCEO and Co-FounderSchaaf-PartnerCentricAffiliate Program Management AgencyTwitter: @schaafpc

If you’re live-tweeting about this presentationbe sure to use hashtag #ase14.

Agenda

• Background • What is Commission

Segmentation• Why We Use It; How It Helps

• Case Studies• Summary • Questions and Answers

Commission Segmentation Is …

• Using attribution tools / analytics to design custom commissions for specific affiliates or types of affiliates in order to reward based upon performance.

Why We Use It

• The more we learn about who’s driving results, the more advertisers want to focus on top performers …

… and dangle the proverbial carrot.

The Benefits

• Allows for a strategy-driven approach to commissions that goesbeyond trying to paymore than competitors

• Rewards affiliates whoare driving desired outcomes

• Reduces amount spent on results of lesser quality

Case Study – Coupon / Loyalty

• After analyzing program performance we began segmenting coupon and loyalty publishers for a retail client.

• Value was lower for these “introducers” than it wasfor other publishers who were “closers.”

• Coupon/loyalty publishers commissions were lowered from 8% to 5%

What was the outcome?

Case Study – Coupon / Loyalty

• Revenue for coupon/loyalty publishers saw a modest year-over-year decrease (6.66%) while the commissions paid to those publishers dropped by 49.95%.

08/01/12 10/01/12 12/01/12 02/01/13 04/01/13 06/01/13 08/01/13 10/01/13 12/01/13Month of Period

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

Revenue

$9,914,296

$2,614,563

$2,575,992

$2,486,796

$2,404,616$2,212,642

$1,989,204

$6,662,518

$1,876,008

$3,753,342

$1,609,188

$1,574,062

$1,164,379$941,366 $898,894

$656,829$598,345

$5,172,291

Month of Period:01/23/13

Q1 Segmentation

Revenue Over Time

Cost of Sale Over Time

08/01/12 10/01/12 12/01/12 02/01/13 04/01/13 06/01/13 08/01/13 10/01/13 12/01/13Month of Period

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

COS

11.92% 11.86%

3.44%

11.72%

3.38%3.37% 3.24%3.17%

3.11%

11.40%

2.77%

2.77% 2.61%2.58%

10.84%10.78%

2.46%

9.98%

Month of Period:01/02/13Q1 Segmentation

Cost of Sale – Vertical Spread

2012 2013 2014Year of Period

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

11.00%

12.00%

COS

August 2012

September 2012

October 2012

November 2012

January 2013

February 2013

March 2013

April 2013

May 2013

June 2013August 2013 October 2013

January 2014

Case Study – Midline Commissions

• A new client had been paying coupon publishers a 5% commission and non-coupon publishers a 20% commission.

However, many non-coupon publishers were still promoting coupons.

What was the solution?

Case Study – Midline Commissions

• We established a midline commission rate and based a tiered commission structure on that.

Commission payouts and the cost of sale remainedsteady during this period of adjustment.

Monthly Data Table

Month ofPeriod

RevenuePublisher

CommissionsCOS Total COS

7/1/2013

8/1/2013

9/1/2013

10/1/2013

11/1/2013

12/1/2013

1/1/2014

2/1/2014

3/1/2014

4/1/2014 10.94%

10.88%

11.00%

11.05%

12.54%

12.07%

11.28%

9.23%

12.47%

22.03%

8.91%

8.84%

8.95%

9.00%

10.51%

10.04%

9.23%

7.17%

10.44%

20.00%

$11,185

$7,486

$5,186

$4,734

$8,361

$10,873

$7,213

$6,547

$17,373

$14,568

$125,562

$84,706

$57,955

$52,589

$79,522

$108,286

$78,117

$91,278

$166,392

$72,842

Revenue Over Time

July 2013 September 2013 November 2013 January 2014 March 2014Month of Period

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Revenue

$166,392

$91,278$84,706

$79,522$78,117

$108,286

$72,842

$52,589$57,955

$125,562

Publisher Commissions Over Time


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Publisher Commissions

$17,373

$8,361

$10,873$11,185

$7,486$7,213$6,547

$14,568

$4,734$5,186



0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

COS

20.00%

10.44%

10.51%10.04%

9.23%

9.00%

8.95%8.91%

8.84%

7.17%

Rate at Initial Engagement

Commission Rate TiersMonth of Period

8/1/2013 9/1/2013 10/1/2013 11/1/2013 12/1/2013 1/1/2014 2/1/2014 3/1/2014 4/1/20140.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

CR

Case Study – Lowering Commissions

• An advertiser was offering a default 8% commission ratethat we lowered to 5% for most publishers (allowing twotop performers to remain at 8%).

Commission payouts fell from an average 6 - 6.5% to 5 – 5.5%. Click throughs and revenue remained consistentwith advertiser’s historical data.

Monthly Data Table

Month ofPeriod

RevenuePublisher

CommissionCOS

2/1/2012

3/1/2012

4/1/2012

5/1/2012

6/1/2012

7/1/2012

8/1/2012

9/1/2012

10/1/2012

11/1/2012

12/1/2012

1/1/2013

2/1/2013

3/1/2013

4/1/2013

5/1/2013

6/1/2013

7/1/2013

8/1/2013

9/1/2013

10/1/2013

11/1/2013

12/1/2013

1/1/2014

2/1/2014

3/1/2014

4/1/2014 4.20%

4.00%

4.02%

4.16%

4.71%

5.92%

6.04%

6.26%

6.22%

6.70%

8.95%

9.29%

9.26%

9.29%

9.35%

9.28%

9.94%

10.27%

10.15%

10.14%

10.15%

10.17%

10.13%

10.13%

10.16%

10.01%

10.00%

$1,930

$1,576

$1,320

$1,718

$1,940

$2,933

$2,519

$2,482

$2,291

$2,385

$2,862

$3,919

$4,200

$3,895

$3,085

$3,734

$4,132

$4,216

$3,838

$4,040

$4,084

$4,464

$4,298

$4,950

$2,814

$1,337

$201

$46,016

$39,379

$32,836

$41,355

$41,235

$49,525

$41,689

$39,634

$36,809

$35,613

$31,983

$42,172

$45,351

$41,910

$33,011

$40,231

$41,586

$41,054

$37,807

$39,861

$40,217

$43,910

$42,422

$48,856

$27,708

$13,355

$2,006

Revenue Over Time

March 2012 June 2012 September 2012 December 2012 March 2013 June 2013 September 2013 December 2013 March 2014Month of Period

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Revenue

$27,708

$40,217

$40,231$39,861 $39,634 $39,379

$49,525

$41,054

$41,235

$41,355

$48,856

$41,586 $41,689$41,910 $42,172

$31,983

$37,807

$42,422

$32,836$33,011

$36,809

$43,910

$46,016

$35,613

$45,351

Month of Period: July2013

Transition of CouponPublishers from 8% to

5% Payout

Publisher Commissions Over Time


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Publisher Commission

$3,085

$1,320

$2,933

$2,862

$4,950

$2,814

$1,576

$3,734

$1,718

$3,838

$2,519

$2,482

$3,895 $3,919

$2,385

$4,464

$1,930

$1,940

$4,040

$2,291

$4,084

$4,132$4,298$4,200$4,216

Month of Period: June 2013Transition of Coupon Publishers

from 8% to 5% Payout



0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

COS

4.00%

4.02%

8.95%

4.16%4.20%

6.70%

9.26%9.28%

9.29%

9.29%

9.35%

4.71%

6.26%

6.22%6.04%

9.94%

5.92%

10.13%

10.13%

10.14% 10.15%

10.15%10.16%

10.17%

10.27%



5% Payout

Case Study – Lowering Commissions

• A top coupon publisher was earning a 10% commission rate at initial takeover. This was lowered to 5% and then 1%, dramatically reducing the cost of sale. Revenue remained consistent with past performance.

Top Coupon Publisher Revenue & Commissions


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

$24,000

$26,000

$28,000

$30,000

Revenue

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Publisher Commission

$16,898

$29,548

$10,552

$28,165

$19,001$18,889

$18,741

$20,482

$20,829

$18,211

$18,160

$18,097

$20,979

$21,145$21,434

$21,472

$17,245

$22,124

$25,007

$16,118 $15,968$14,999

$23,422

$15,065 $15,454

$1,055

$2,955

$1,889 $1,888

$1,629

$1,278$1,408

$1,506$1,690

$1,350$1,552

$1,072

$215 $205$187

$950$714

$211

Month of Period: July 2013Transition of Coupon Publishers from

8% to 5% Payout

Top Coupon Publisher Cost of Sale


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

COS

1.00%

1.00%1.00%

1.00%

8.27%

5.00%

5.00%

5.00% 5.00%

5.00%

9.00% 9.00%9.00%

9.00% 9.00%

2.85%

9.73%10.00%

10.00%

10.00%10.00%

10.00% 10.00%10.00%10.00%



5% Payout

Case Studies – Elasticity

• We implemented a Q4 growth plan for a fashion retailer whose affiliate program saw YoY growth each week in November/December between 42% and 65%.

• We grew year-over-year revenue for a lead gen client's mature program by 84% in one month.

• Our affiliate recruitment efforts for a new client brought 118 new affiliates by our second month managing the program, and by that time the program saw a 135% year-over-year increase in revenue.

Case Studies – Elasticity

• We grew a retail program 20% year-over-year in the first six months. Inour second year of management, itgrew 60% year-over-year. Now, two years later, the program is pacing to hit a 175% year-over-year increasefor July 2014.

• We grew the program for an online business solutions client by 20% year-over-year in the first quarter. In Q1 2014 the client's program experienced 41% year-over-year growth.

Non-Traditional Opportunities

• ArkNet owns MagazineDiscountCenter.com,which drives $5 - 10k daily but with only a 2 - 4% re-order rate.

• Wants to optimize email list by targetingthose consumers with Quidsi offers

• Goal: develop traditional merchant/publisher relationship

Non-Traditional Opportunities

• InnerVid is a collection of daily and weekly newspapers

• Wants to monetize papers by joining affiliate programs

• Will advertise in print editions and track via unique URLs or coupon codes

Summary

• Use your analytics to identify your top performers.

• Create a commission structure in which the rewards are tied to performance.

• Don’t be afraid to lower commissions when performance isn’t there. By the same token, don’t be afraid to pay higher commissions for top performing publishers.

Thank You

[email protected]

Marketing

Advertisers: Why Commission Segmentation Matters to You