Affiliate Consumer Insights

January 22, 2007

Performics, the performance marketing division of DoubleClick and a leading provider of Affiliate and Search marketing services and technologies, commissioned a ground-breaking research study to advance the Affiliate Marketing industry and demonstrate the value the channel provides. 

Performics partnered with comScore to provide insight into consumer behavior and illustrate the performance of the Affiliate channel relative to other forms of online traffic. comScore’s consumer panel tracks the online behavior of more than 2 million consumers.

Performics’ goal in developing and commissioning this research project was two-fold:

1. Compare performance metrics impacting Affiliate programs across groups of comparable merchants, including several Performics clients who will receive specific data regarding their programs; and

2. Gain a better understanding of Affiliate shoppers’ (consumers’) demographic profile within the Affiliate channel compared to that of the total Internet population.

The research encompassed several large merchant clients, the clients’ key competitors within a category, and the three major Affiliate networks. The online activity for these 63 Affiliate programs was then analyzed to determine where visitors came from and their purchase behavior, utilizing the following metrics:

• Visits

• Transactions

• Average Order Value Conversion Rate

• Active vs. Productive (Affiliate traffic vs. Affiliate    

referral resulting in a sale)  

In addition, comScore identified a demographic profile for shoppers who transacted through the Affiliate channel and compared that data to the demographic composition of the average Internet shopper.

This group of 63 merchants represents more than half of the total sales volume in the Internet Retailer Top 500 and is reflective of the overall Affiliate channel. The merchants analyzed represent several verticals, including: apparel, consumer electronics, computer and technology, credit card, hardware and home goods, sporting goods, travel and wireless.

In addition, 19 of the largest Affiliate publisher sites were analyzed to provide a demographic overview of Affiliate consumers.

The research was conducted by reviewing the online activity of comScore’s recognized panel of Internet users with data reviewed at the end of each quarter throughout 2006. The findings outlined below include data for the first half of 2006. In subsequent releases, Performics will have data available for the second half of the year.

Research Findings

The Affiliate Channel Delivers Highly Desirable Consumers

• Affiliate channel shoppers are a highly desirable demographic

• Affiliate shoppers spend more

• Affiliate shoppers are buyers rather than browsers

            • Comparison of large merchant programs highlight opportunities

Affiliate channel shoppers are a reflection of the Internet population. But the research identified interesting nuances that demonstrate the value Affiliate traffic provides.

Desirable Demographic

Household incomes for Affiliate channel shoppers identify them as a particularly attractive consumer segment group. The research shows that 47.2% of Affiliate channel shoppers have a household income of $75,000 or higher compared with approximately 40% of the average Internet shopper.

Affiliate shoppers also skew slightly older than the average Internet shopper with a 47.8% of all Affiliate shoppers identified in the 45 to 64 year old age group. In addition, these shoppers are more likely to have a larger household or at least have a household partner as 73% of Affiliate channel shoppers come from a household with 2 to 4 people. 

The demographic profile is shown below, in Figure 1.

Figure 1: Demographic Profile

Affiliate Shoppers Buy More

The average order size in the Affiliate channel is better than or on par with the Internet average with the Affiliate channel average order size exceeding the average Internet shopping cart value in the second quarter of 2006. In preliminary data from Q3 2006, this upward trend of larger average order size from affiliate shoppers is also evident.

Promotions, deals and discounts are critical tools in Affiliate program optimization, with Affiliate publisher sites in the deal and discount category representing a significant portion of overall volume in the channel. As a result, the Affiliate channel customers are often mischaracterized as “bargain hunters” who may not provide unique value for merchants.

However, Performics’ research shows that Affiliate channel shoppers are very similar to other online shoppers and in many cases tend to spend more, as shown in Figure 2.

Figure 2: Average Transaction Value

Affiliate Channel Shoppers are “Ready to Buy”

Affiliate publisher sites focus on converting visitors into buyers. All sites are commerce driven since Affiliates are only compensated for driving a sale. As such, they are among the best on the Web at knowing which offers convert best for which merchants.

Visitors come to rely on Affiliate publisher sites to present them with commerce-oriented information, deals, offers and product descriptions. Therefore consumers are often “ready to buy” when they come to an Affiliate publisher site and it is, as one might expect, a more transaction-based channel than others.

• Affiliate traffic is more productive: the percent of transactions from Affiliate is greater than the total online traffic from this source

• Direct referral traffic (visitors who navigate to a merchant’s Web site by typing directly into a browser’s address bar or using a bookmark), by contrast, shows a decrease in the percent of transactions vs. its total online traffic

Figure 3 shows the percent of traffic driven by each source: Affiliate, Direct, and Other (“Other” is defined as traffic that does not come from either Affiliate or Direct as defined above). 

Figure 3: Traffic and Transaction Source Comparison (%)

The Affiliate Channel “Converts”

As shown in Figure 4, below, conversion rates for the Affiliate channel reflect the fact that it is a commerce/transaction-based channel, outperforming many other forms of marketing (represented by “Other Referrals”).

Figure 4: Conversion Rate Comparison Performics is a division of DoubleClick

Active vs. Productive Affiliates 

Active Affiliates are defined as those that drive a visit to a merchant site; productive Affiliates are those that drive not only visit but at least one transaction during a specified period of time (generally 30 days). Managing and optimizing the active to productive ratio is a key means of achieving Affiliate program growth and determining its success. Many tactics are available to improve the ratio including giving productive affiliates more information and special promotions to help better convert traffic. 

The Affiliate Consumer Insights study showed the ratio of active to productive affiliates is fairly consistent across all of the programs analyzed. This represents an ongoing opportunity for improvement but a merchant can never expect that all active affiliates will become productive.

In addition to improving the active to productive ratio, merchants can leverage the “free traffic” (that which does not convert) to build a relationship with the consumer, add them to an in-house email list or convert that customer through another online or offline channel.

The Realities of Affiliate Marketing

• Shoppers who visit merchant sites from Affiliates tend to be wealthier, spend more, and are ready to buy

• Effective Affiliate Marketing requires an understanding of the competitive environment, particularly in relation to key competitors within an industry vertical

• Promotional strategies play a key role in Affiliate program optimization and in driving growth

• Smart advertisers learn how to best leverage the “free” traffic that Affiliates provide and factor the value of that traffic into pricing

• The Affiliate channel provides a reliable source of sales and is a core foundation for advertisers

• Advertisers should compare their return on investment in the Affiliate channel and most will find it is very favorable relative to other channels

Methodology

comScore’s proprietary panel of online users was analyzed to determine actual Affiliate-driven activity. comScore captured URL and click-stream data for all activity by comScore panelists. When a panelist transacted on a merchant’s site, the most recent Affiliate was given credit for the transaction (as long as an Affiliate was visited within the previous 30 days). If no Affiliate domain was recorded, the domain of the referring URL was credited. If neither an Affiliate domain nor referring URL was observed, that transaction was classified as Direct. Affiliate referral links were identified by either a known Affiliate site URL appearing in the stream and/or an Affiliate network domain URL was observed. 

Note that no personally identifiable information was captured from the comScore panel and none was used for this study.

Key term definitions:

• Transaction: Commission-generating activity from a user who visited a merchant from an Affiliate within the 30 days preceding the transaction

• Affiliate-referred traffic: Traffic from identified Affiliate network domains

• Direct traffic: When a visitor types in the URL directly into the address bar or uses a bookmark to navigate to the site

• Indirect traffic: Identified as when users navigate to the site in any manner other than Direct or Affiliate

• Other referrals: All traffic that was neither direct to the merchant site nor an Affiliate link. Traffic includes: search, email, display banners, links from other sources, etc. 

Data was derived by monitoring comScore’s panel activity on the following merchant and publisher sites: