Hidden disadvantages of affiliate programs
The CPA (cost-per-action) model provides for the sale of “pay-per-action” advertising made by users as a result of viewing this advertisement. The CPA model is the basis of a variety of affiliate programs and is considered very fashionable. But she also has its drawbacks. One of these drawbacks — double pay per user — is reviewed in an Atlas Institute analysis report entitled “The Hidden Cost of Pay-for-Performance Media” (PDF file).
The fact that the CPA advertising model is becoming increasingly popular, says statistics. According to the Direct Marketing Association, last year about 14.8% of all advertising budgets were spent on paying affiliate programs and CPA-type schemes. This is really a lot of money.
Affiliate programs are considered to be a very effective type of advertising, because there is supposedly no risk here: the advertiser pays “after the fact” for really attracted customers who either made the purchase or performed another action determined by the terms of the contract.
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In fact, there is a risk. The hidden risk is due to the fact that the advertiser may overpay very substantial amounts of money due to the nature of accounting for attracted customers. In many cases, for one client you have to pay twice or three times.
The problem of double payment is caused by the fact that the same ad from different sources gets to the user, for example, banners are shown to him simultaneously on several sites. Even if the user ignores the advertisement, but then enters the advertiser's site, it is possible that a record of attracting a client will appear simultaneously in several affiliate programs, since they recorded a display of advertising to the client.
At first glance, the problem seems insignificant. However, studies show that losses from double counting exceed even the wildest assumptions. In October-November 2005, experts from Atlas Institute analyzed ten affiliate programs from four advertisers and found a discouraging fact. For each client attracted through these programs, the advertiser overpaid an average of 170%. That is, one person was paid almost three times (2.7).
With an average level of "duplication" of 170%, in ten affiliate programs subjected to research, the minimum level was 26%, and the maximum - 379%. The logical result was millions of dollars in losses, that is, extra costs.
With affiliate programs with transitions (clicks), the level of “duplication” was much lower than in campaigns, taking into account banner-shows. But in some cases, even there, a level of 200% and higher is fixed, that is, the accounting of link clicks does not save from double counting.
The fact that the CPA advertising model is becoming increasingly popular, says statistics. According to the Direct Marketing Association, last year about 14.8% of all advertising budgets were spent on paying affiliate programs and CPA-type schemes. This is really a lot of money.
Affiliate programs are considered to be a very effective type of advertising, because there is supposedly no risk here: the advertiser pays “after the fact” for really attracted customers who either made the purchase or performed another action determined by the terms of the contract.
')
In fact, there is a risk. The hidden risk is due to the fact that the advertiser may overpay very substantial amounts of money due to the nature of accounting for attracted customers. In many cases, for one client you have to pay twice or three times.
The problem of double payment is caused by the fact that the same ad from different sources gets to the user, for example, banners are shown to him simultaneously on several sites. Even if the user ignores the advertisement, but then enters the advertiser's site, it is possible that a record of attracting a client will appear simultaneously in several affiliate programs, since they recorded a display of advertising to the client.
At first glance, the problem seems insignificant. However, studies show that losses from double counting exceed even the wildest assumptions. In October-November 2005, experts from Atlas Institute analyzed ten affiliate programs from four advertisers and found a discouraging fact. For each client attracted through these programs, the advertiser overpaid an average of 170%. That is, one person was paid almost three times (2.7).
With an average level of "duplication" of 170%, in ten affiliate programs subjected to research, the minimum level was 26%, and the maximum - 379%. The logical result was millions of dollars in losses, that is, extra costs.
With affiliate programs with transitions (clicks), the level of “duplication” was much lower than in campaigns, taking into account banner-shows. But in some cases, even there, a level of 200% and higher is fixed, that is, the accounting of link clicks does not save from double counting.
Source: https://habr.com/ru/post/4071/
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