Effective data collection is essential to tangibly measure the success of your affiliate marketing campaign and improve its performance. Which parameters should you track, and why? What relevant insights can you gain from this data, and why is it important? Let’s find out.
What is Affiliate Marketing?
Affiliate marketing has become an important section of digital marketing. Here, affiliated entities (businesses, online personalities, individuals) promote your products on their platforms to boost your sales. You provide them with a unique link, offering a discount to clients. At the same time, the affiliate earns an agreed-upon commission for each sale or site visit.
The benefits of affiliate marketing are enormous, with an estimated value of $8.2 billion in 2022 in the US alone.
What is the Role of Data in Affiliate Performance?
Optimizing your affiliate program is likely to increase your bottom line considerably. That’s where data tracking enters the picture. Collecting the relevant data and gaining valuable insights from it in near real-time is essential. Doing this effectively allows you to understand how visitors interact with your site, where they come from, and how well your affiliates are doing.
Understanding how affiliates drive traffic to your site allows you to evaluate the effectiveness of your affiliate program in real terms. This nuts-and-bolts approach enables you to tweak and fine-tune your affiliate network. Here, you can optimize results or scrap entire portions that are not translating into the desired results.
What is the Relevant Data?
Gaining many site visits from your affiliate network is excellent – that’s the first step. But, do these site visits convert into sales? If so, what percentage? And, does this happen on the first visit, our do people visit your site a few times before they purchase something? Here is an overview of the data you need to track this effectively:
Click-Through Rate (CTR)
The click-through rate measures how many people click on links to your site, compared to the number of people who see your page, advertisement, or email (these are called impressions). This is a good measure of the success of online marketing campaigns, although it is by far not the only measure.
CTR is calculated as follows:
(Total clicks on ad) / (Total impressions) = Click-through rate
A high CTR indicates that a large percentage of people who see your ad click on it. Suppose you advertise with Google’s PPC (pay per click) or similar services. In that case, a high CTR is essential since it affects your quality score. Google and other search-driven marketing platforms offer discounted rates for ads with high quality scores since they make searchers happy. This is good for business, for both the platform and the advertisers.
A high CRT also indicates that you’re advertising in the optimum space since you drive many visitors to your site. A “good” click-through rate is hard to define since it varies significantly between ad campaigns, platforms, keywords, the ad copy, how the ad displays on the screen, and how high your ad ranks in the search results, to name a few.
One crucial caveat: a high click-through rate can be bad for business if these clicks generate irrelevant traffic that doesn’t convert into sales. Here’s why: You pay per click to your site. If that traffic is funneled from irrelevant searches to your business, you won’t see conversion. This means that you generate a high ad spend without a return on investment. The same is valid for clicks related to expensive keywords. Here, the ad spend would outweigh the profits gained from conversions. Both of these scenarios are bad for business.
To get the most out of your click-through rate, especially when coupled with pay-per-click services, ensure that you target keywords judiciously. This ensures that your keywords are relevant, cost-efficient, driving up relevant traffic and the associated profits. Additionally, use tools and methodology to integrate keywords with ad copy and landing pages and segment keywords to generate more effective targeting. Having these measures in place improves your quality score, in turn improving your CRT. It’s a snowball effect.
A conversion is any step you want a visitor to take. In affiliate marketing, this would typically be related to sales, although it could include signing up for a newsletter or demo, downloading an ebook, or any other form of interaction.
The conversion rate measures the percentage of visitors to your site that complete this desired goal. A high conversion rate indicates a successful marketing campaign since the people visiting your site want what you offer and purchase it. As with click-through rates, conversion rates vary significantly by industry.
Low conversion rates could indicate that your landing page design is inadequate, making it difficult for visitors to find what they need. It could also indicate that your offering targets the wrong audience. This means that your product or service is too expensive or not valuable enough for the visitors funneled to your site.
Luckily, improving conversion rates is often a simple exercise. The first step is to consider your offering. Is it genuinely irresistible? How does it compare to your competitors? What sets you apart from them, and is that clearly shown on your website?
The second step is to optimize your site for conversions. This process is often incremental but can pay considerable dividends in the long run. It is also an ongoing process. Here are three principles to help you along:
– A/B testing. Change various elements on your website, following the A/B testing approach. Determine which of these drive more conversions.
– Ensure that your headline communicates your value proposition.
– Use high-contrasting colors to display your call-to-action buttons. Also, enlarge this site, making it hard to miss.
– Place important page elements above the fold. These include forms and buttons.
– Use a strong call to action (CTA).
– Ensure that your product images are high quality.
– Add a video to your landing page if this is relevant.
– Optimize your site and landing page’s performance for mobile devices.
– Make it easy for potential clients to reach you using either chat or phone options.
Revenue By Traffic Source
In affiliate marketing plans, you would use various platforms to drive traffic to your site. Knowing which of these generates the most traffic and accompanying conversions is essential. Here, you can determine the effectiveness of your various marketing campaigns and optimize your strategy accordingly.
Here, you can optimize your marketing spending. Typically, Google ads and search results, along with emails, would drive nearly three-quarters of your web-generated revenue. You’ll need eCommerce tracking, use Google Analytics, or other similar packages to track revenue by traffic source.
The traffic source also offers insight into your customer’s profile: if the traffic is directed mainly from search engine results, it’s typically specific to the product, service, or solution on offer. Conversely, traffic directed from social media platforms generally indicates that a friend recommended the product or service. These insights enable you to optimize your marketing strategy further.
Note that the source of direct traffic is hard to categorize and doesn’t necessarily offer meaningful insights. For more precise insights, pair this metric with information on purchasing habits and demographics.
Average Time Spent on Page
The average time a visitor spends on each page indicates how valuable that page is to them. If the average time spent is high, that page is valuable and would probably generate more significant revenue. If the time spent on a page is low, you should improve that page to add value to your customers.
There are also instances when the time spent on a page is too long. If your customers spend much time on a product page, it could indicate that the information they’re looking for is hard to find or that it’s confusing. If a long average time spent on a page is coupled with a high bounce rate, the visitor likely didn’t find what they were looking for and left your site without making a purchase.1 Here, additional images and more user-friendly Q&A sections might solve the issue. If that doesn’t work, consider redesigning the page with the visitor in mind.
Other Factors to Consider
Linking ads with relevant landing pages is essential in driving conversions. Generic landing pages tend to lead to greater bounce rates (visitors leaving your site without interacting). In contrast, landing pages relevant to the question they want answered generally lead to greater conversion rates. If you notice a high bounce rate, consider optimizing your landing page to display relevant information and opportunities to convert prominently.
A/B testing will help identify your best-performing content. Add a variation of a specific element to your ad campaign, and use this to determine which version drives greater traffic and conversions on your website.
Measuring the success of your affiliate marketing campaigns is essential to optimizing your marketing spend and maximizing your profits. To this end, it is crucial to collect relevant data, enabling you to base decisions on measurable metrics. This data includes click-through rate, conversion rate, revenue by traffic source, and the average time spent on the page. These are the basics – your specific situation may call for other metrics to be tracked as well. Fortunately, this data is easily collected and processed using free or paid tools available online. Making judicial use of this information will drive up revenue and improve the efficiency of your marketing spend.