Executive Summary

Digital marketing today includes a wide range of channels that are vying for investment. With a myriad of ways for consumers to connect with brands, the bar has been set higher than ever for channels to prove their value. For brands to intelligently invest, it is important for them to truly understand the value each channel delivers. In this vein, CJ Affiliate set out to measure the incremental value that the affiliate channel delivers to brands.

Using test and control methodology, we split a population of 20.2M shoppers into two groups with only one difference between them: the test group had an affiliate click. We further controlled for brand awareness, seasonality, and time to conversion.

We found that overall, when a shopper interacts with the affiliate channel, they are more likely to purchase, spend more with each purchase, and make more subsequent purchases. Furthermore, we also found that shopper interaction with the affiliate channel positively affected results for both new-to-file and return customers.

These results are validation that the customercentric approach of the affiliate channel is providing value to consumers as well as brands. Consumers seek out publishers to help answer questions around where to buy, what to buy, and how much to spend. This third-party perspective lends credibility to brands with whom a consumer may not be familiar, leading to higher new-to-file rates. Repeat customers also benefit from an unbiased resource. Affiliate marketing provides incremental value because these wide variety of customer needs are met through publishers who provide this information and make consumers confident in their choices.

To put these findings into practice, brands should invest more in the affiliate channel to leverage the confidence publishers bring to shoppers by credibly meeting consumer needs— which results in higher conversion rates and spend, across both new and repeat customers.

Key Findings

  1. Overall, when a shopper interacts with the affiliate channel, they are more likely to purchase, spend more on each purchase, and make more subsequent purchases. When compared to the control group (consumers that did NOT interact with the affiliate channel), the test group (consumers that DID interact with the affiliate channel) resulted in a(n):
    46%
    Higher Shopper to Customer Conversion
    29%
    Higher Spend Per Customer
    88%
    Higher Revenue Per Shopper
  2. Affiliate compounds the value of returning customers by influencing them to purchase more, spend more, and convert at a higher rate, leading to greater revenue per shopper and lifetime value.
  3. As a channel, affiliate demonstrates a stronger ability to convert new customers for a brand than those new customers who don’t interact with the channel.
  4. While these new customers convert at a higher rate through the affiliate channel, they spend less on each purchase and complete about the same number of orders than non-affiliate customers. However, these customers are then likely to continue to shop through the affiliate channel and thus benefit from the higher revenue per shopper observed for existing customers, and ultimately will drive more revenue over time.

Methodology

Definition of Incrementality

Incrementality is a subset of the overall value that was measured. It focuses on the additional value the channel provides that would not have occurred without the channel present. Incrementality asks the question, “Did that set of marketing touch points influence customer actions (knowingly or unknowingly) to drive more value?” Incrementality for any marketing channel is about successfully influencing shopper behavior and meeting consumer needs such that you gain more value with the channel versus without it.

Incrementality is not attribution. Attribution is a transaction level analysis that allows you to model the impact of multiple marketing touch points for any given transaction. Incrementality, on the other hand, looks at the consumers/people who drove those transactions; it looks at the behavior of these people and how having a certain marketing channel in the mix impacts your business outcome. Incrementality is a measurement of behavior across groups and is independent of an attribution model. Understanding incrementality can help you create a better model for attribution.

incremental-lift
Definition of Methodology

This incrementality study used the widely accepted test and control methodology. The test group of users exhibits the behavior that is under study: in this case, affiliate clicks. The control group of users are similar to the test group, but the only difference is they did not click on any affiliate links during the testing period. By analyzing the differences in behavior between the test and control groups, the impact that affiliate clicks have on key performance metrics can be measured.

Data Origin

Brands included in this study are highly recognizable household brands, with a combined total revenue of approximately $31B.

Data Source

Retail client CRM customer files, transaction data, site visit data, and affiliate click data

Time Frame

September 2018

Total Population Size

20.2M (1.1M Affiliate Shoppers, 19.1M Non-Affiliate Shoppers)

Total Transaction Volume

5.5M Retail Transactions

Definition of Groups

Affiliate Shoppers (Test Group)

Visitors to an Advertiser’s website who have clicked on any affiliate link at any point during September 2018 (1.1M Affiliate Shoppers)

  • The Affiliate Shopper group only looked at the users who clicked on an affiliate link. This study did not measure impressions or other non-click influence. Affiliate likely has greater influence than what is represented in the Affiliate Shopper group. (For example, impressions such as reading an article aren’t accounted for here).

Non-Affiliate Shoppers (Control Group)

Visitors to the Advertisers’ site who did not have an affiliate click during September 2018 (19.1M Non-Affiliate Shoppers)

  • All site visitors are assigned to the Non- Affiliate Shopper group UNTIL they generate an affiliate click. At that point, any affiliate click will move the individual into the Affiliate Shopper Group.
  • The Non-Affiliate Shopper group takes into consideration any visitor to the brand’s site, regardless of any click/activity that lead to the user visiting the brand’s site.
Study Controls

Brand Awareness

The Non-Affiliate Shopper group members had to at least visit the brand’s site during September 2018. This controls for shoppers’ brand awareness. It also controls for the fact that these shoppers are in market and already know about the brand.

Seasonality

Both groups were observed and measured during the exact same time frame.

Time to Conversion

Both groups were given the same amount of time with which to engage with the affiliate channel or brand, as well as to convert. The Affiliate Shopper group was measured up to 30 days from their affiliate click(s). Similarly, the Non-Affiliate Shopper group was measured up to 30 days from their site visit(s). This 30-day period allows both groups of shoppers an equal opportunity to convert and controls for potential differences in time to conversion.

Study-Controls
Metrics Used

Individuals

Deterministically and cross-device matched to unique and anonymous customer profiles. These profiles may be associated with multiple emails, devices, and cookies. This matching methodology eliminates double counting between user groups and allows us to accurately measure their shopping behavior.

Shopper

Individuals in either the Affiliate Shopper (Test) or Non-Affiliate Shopper (Control) group.

Customer

Shoppers who have made at least one purchase with the respective brand.

Shopper to Customer Conversion Rate

Total customers divided by the number of shoppers.

Average Order Value

Total revenue divided by total number of orders.

Orders per Customer

Total orders divided by total number of customers.

Revenue per Customer

Total revenue in one group divided by total number of customers in the same group.

Revenue per Shopper

Total sales revenue divided by the total number of shoppers.

New Customer

Brands define their custom new-to-file definition. If no custom definition was given, then CJ defines a new customer as someone who has not purchased from the brand in the past 2 years.

Return Customer

Brands custom define a return customer definition. If no custom definition is given, then CJ defines a return customer as someone who has purchased from the brand within the past 2 years.

Overall Performance of Affiliate Group Compared to Non-Affiliate Group

During the observation timeframe, when comparing Affiliate Shopper performance to Non-Affiliate shopper performance...

Affiliate Generates
88%
More Revenue Per Shopper
Takeaway

As a total group, Affiliate Shoppers complete more purchases, spend more on each purchase and convert at a higher rate than Non-Affiliate Shoppers.

Affiliate shoppers convert at a 46% higher rate.

Affiliate customers drive 23% higher AOV.

Affiliate customers purchase 4% more orders.

Affiliate produces 29% more revenue per customer.

* This statistically significant value (p-value = 0.00) is earned when the affiliate channel is present; it is not otherwise earned when the channel is not present—thus making it incremental value.

NEW CUSTOMERS
Performance of Affiliate Group Compared to Non-Affiliate Group

During the observation timeframe, when looking at new customer performance for the Affiliate Shoppergroup compared to the Non-Affiliate Shopper group...

Affiliate Generates
118%
More Revenue Per Shopper
Takeaway

While new customers converted through affiliate complete about the same number of orders and spend less than Non-Affiliate Shoppers, affiliate is much stronger at getting new customers to ultimately convert when compared to non-affiliate channels.

Affiliate converts new customers at a 140% higher rate.

Affiliate customers drive 12% lower AOV.

Affiliate customers purchase 3% more orders.

Affiliate produces 9% less revenue per customer.

This statistically significant value (p-value = 0.00) is earned when the affiliate channel is present; it is not otherwise earned when the channel is not present—thus making it incremental value.

RETURN CUSTOMERS
Affiliate Shopper Group Compared to Non-Affiliate Shopper Group

During the observation time frame, when looking at return customer performance for the AffiliateShopper group compared to the Non-Affiliate Shopper group...

Affiliate Generates
101%
More Revenue Per Shopper
Takeaway

Affiliate compounds the value of returning customers by getting them to purchase more, spend more, and convert at a higher rate when compared to non-affiliate channels, leading to greater revenue per shopper and lifetime value.

Affiliate shoppers convert at a 43% higher rate.

Affiliate customers drive 27% higher AOV.

Affiliate customers purchase 11% more orders.

Affiliate produces 41% more revenue per customer.

This statistically significant value (p-value = 0.00) is earned when the affiliate channel is present; it is not otherwise earned when the channel is not present—thus making it incremental value.

Conclusion

The results that we uncovered through this study demonstrate the unique ability that affiliate has as a digital marketing channel to address a wide variety of customer need states through publishers. These publishers offer trusted third-party perspectives to meet customer needs such as: getting introduced to new brands, researching and comparing products, saving money, earning cashback, and much more. It follows then that a brand’s spend would return more in terms of key KPIs such as orders, AOV, conversion, and revenue.

How can brands use this information to intelligently grow their business?
  • Measure incrementality using your transaction file for all marketing channels you invest in.
  • Leverage your affiliate solution provider to perform an incrementality study at this level: deterministically, cross-device, on and offline.
  • Use incrementality results to make a case for the affiliate channel and increased investment.
  • Allow an incrementality assessment to go beyond a singular view attribution model that is driven by number of clicks, impressions, timing, and sequence, to inform your attribution model more accurately about where the true value is coming from.
About Affiliate Marketing

Affiliate marketing is a performance-based digital marketing channel that has been around for over 20 years. In the wide variety of marketing channels that exist today, affiliate marketing is the only channel that reaches and influences consumers worldwide, at every part of their purchase journey, both on and offline. Advertisers/Brands pay publishers for desired actions (sales, sign-ups, etc) when those actions take place. Publishers receive this commission based on their unique respective abilities to meet a myriad of customer need states. Networks, such as CJ Affiliate, help to facilitate these relationships, as well as track and optimize performance through innovative technology and data-driven strategies.

About CJ Affiliate

CJ Affiliate is the global leader in affiliate marketing. Founded in 1998, CJ Affiliate services nearly 4,000 brands/advertisers and over 70,000 active publishers from across the world, accounting for over $15 billion dollars in annual client revenue.

Learn more about this study and find out how we can help you intelligently grow your business.

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