06:45 AM

Skimlinks Says Affiliate Payouts Short-Change Publishers

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I recently met with Alicia Navarro, CEO and co-founder of Skimlinks, a service that helps publishers monetize their sites by sharing affiliate partner revenues if readers buy products or services.

Skimlinks automatically adds a link to key words on a web page, if a reader clicks on that link and buys the product or service, Skimlinks gets paid a commission and splits the money with the publisher. 

However, Skimlinks has found that publishers are not getting the credit they deserve in the sales process. Buyers will often check out price comparison and other sites following their initial exposure to a product in an article. Those latter sites will overwrite the affiliate tracking cookies of the first site and claim the entire affiliate commission. Yet without the original article the sale would not have occurred.

Here are some notes from our conversation:

- Online publishers are struggling to make a living and affiliate programs offer a source of revenues, it's not enough but it helps. They are losing out because current affiliate programs only reward the last click.

- Online articles are important to the sales process because they initiate customer interest but their importance isn't noticed because of the way affiliate payments are tracked.

- If publishers go out of business then that could be bad news for merchants because they won't be producing the content that is the starting point for the sales funnel.

- If the publisher is losing out then Skimlinks is losing revenues too.

- The solution is complex because it is difficult to determine how far back to track the sales process.

- Affiliate programs can be a problem because their design encourages bad behaviors. When it's the last click that's rewarded then it encourages third-parties to use sometimes nefarious ways to overwrite affiliate cookies, such as through toolbars and pop-unders. 

- The last-click is part of the reason that high quality content isn't appreciated by merchants and advertising agencies. They pay attention to end-of-funnel sites.

- Key research findings from Skimlinks: Content sites are the first place users read about a product 27% of the time, and they are the source of new customers 55% of the time, 

- Content sites drive nearly 30% more new customers to brand sites than the average of all other channels.

- When consumers start reading a content site about a product it sparks a growing desire for the purchase: 9% of sales occur within one hour, 16% within 24 hours, and 31% within 3 days. Yet they receive only 6% of affiliate payments.

Foremski's Take: In online publishing everything that a visitor does can be tracked, which is often lauded as great for publishers and advertisers. Publishers have an instant read on what articles or videos resonate with visitors and advertisers know which sites provide the best conversions and can focus their ad budgets on their best prospects.

But the sales process is never clear-cut, which is why marketing requires a multi-channel approach and multiple messages. Everything can be tracked but that doesn't mean that it is, and that the right metrics are being examined by merchants to identify cause with effect. 

Skimlinks has identified an important problem facing all media companies: they can't capture the true value of the content that they create. They can't convince advertisers and sponsors that they provide an important service that is vital to their sales. 

Fixing affiliate payouts to be fairer, and to give credit where it's due, would go a long way to helping media companies make the transition to an online business model. But a lot needs to change.  

- Affiliate tracking systems aren't designed for such tasks and are vulnerable to multitudes of shady practices by companies trying to hijack the last click. 

- How would commissions be divided among affiliates feeding the sales funnel? Which type of content is more valuable to a merchant? 

- Merchants often have a love/hate relationship with their affiliate networks. They are glad for the sales but aren't always happy with the way they are made. And they will sometimes actively undermine their successful affiliates by copying their marketing programs to save on commission payments. There is little motivation for merchants to change their affiliate systems to make them fairer.

This is a great example of the complexity in determining the value of an independent media sector to society and the economy.

Even with the enormous amounts of Big Data collected about online commerce and user behaviors, the value of quality content remains unquantifiable.

When the last-click can come from pirate sites publishing content scraped by automated bots, and that's what's rewarded by the affiliate networks, then it's not surprising that the scourge of poor quality web content and scummy practices continues to grow. There is no economic reason for publishers to invest in better content.

What's the answer? No one has figured it out, not even the massed computer scientists at Google have come up with a solution.

Yet this is the most important question facing the future of the Internet and a healthy democratic society: how do we quantify and capture the value of high quality media so that there's a clear incentive to produce more of it?

How can we ensure a vibrant, thriving media industry that educates and protects people from egregious acts by governments and business self-interests?

We have the technologies to reward low-quality content but not the reverse. Something is very seriously broken here, yet it's not being addressed by any of our leading Internet companies, government economists, or academic institutions.

The last-click economics of the web is a very important issue and one that Skimlinks is right to draw attention to because its resolution is very much in the public interest.

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