Study: Apps and Content Startups Miss Out Because Affiliate Model Is Broken

Skimlinks, the platform which gives publishers greater control over affiliate links and content monetization, releases some major research today which could well concentrate the minds of online "publishers", and that includes apps, startups and bloggers.

It's white paper reveals that while editorial or social websites can point a user towards a product they might go on to buy, publishers rarely receive the financial reward for doing so because of problems with the "Last Click" attribution model used in affiliate marketing. Now, while the study is clearly a ploy to get apps and content publishers to run their affiliate programs through Skimlinks rather than through traditional affiliate platforms, the research itself does bear examination.

The study found that content sites were the first place users read about a product 27% of the time, and were in the first quarter of the user's path to purchase 36% of the time. And when a user started their journey to a purchase with a content site, she or he was a new customer 55% of the time. However, content sites were the Last Click only 6% of the time and 94% of the time, the content affiliate was NOT awarded the sale. Plus, 65% of the time when a content site is the first click in a purchase journey, sparking purchase intent, another channel is the last click, taking all the credit for the sale.

They also found that content sites drove nearly 30% more new customers to brand sites than the average of all other channels. In addition, when consumers started reading about a product on a content site their desire to purchase grew over time: in this case, 9% of the sales would occur within one hour, 16% within 24 hours and 31% happened within 3 days.

In other words, if online marketers shifted their affiliate strategy away from the Last Click attribution model towards online publishers, apps and social sites, they'd basically get faster and more robust sales.

This would be music to the ears of many social and content sites.

Alicia Navarro, CEO and co-founder of Skimlinks says: "The general view is that better attribution is required - that distributes the cost-per-acquisition across multiple parties responsible for creating and driving purchase intent. By only remunerating the last-click publisher, you create the wrong incentives, and end up with a ton of low-value deal/coupon sites, rather than rich apps and content, who have less incentive to link out to merchants because they don't get paid for top-of-funnel activity via affiliate marketing."

Ryan Jones of Shop Direct, where the study was based, points out that it's a two-way street: "Retailers are probably missing out on exposure as commercially savvy content sites tend to promote the brands they earn more from."

For the research Skimlinks analyzed data provided by Shop Direct's ecommerce site, Very.co.uk, which spanned all orders between July and November 2012 that included a click from a Skimlinks content site.

Skimlinks clients include Conde Nast, Gawker, AOL Europe, WordPress, Hearst Digital, Haymarket Consumer Media, Telegraph Media Group, among others.

Skimlinks' main competitors are the Google-backed VigLink and the seed-backed startup Yieldkit. This year it completed an undisclosed growth financing round led by Greycroft Partners and others.