COVID-19 has impacted numerous industries in a myriad of ways, and the affiliate marketing industry is no different. With more and more consumers shopping online, one might assume that all parts of the affiliate industry would be thriving. While some verticals have in fact seen exponential growth, such as the pet and wellness verticals, others have struggled immensely, most notably the travel and entertainment verticals.
The lull in activity for these verticals has left many advertisers suspending programs or reducing commissions in an effort to maintain cash flow – translating to much lower incomes for affiliates. This may have dire impacts on the industry as whole. This is because the success of an affiliate network is based on publisher loyalty, which is greatly impacted by three key challenges: lack of payment options, costly fees and delayed payments. For the affiliate marketing industry to remain profitable throughout the pandemic and beyond, these problems need solutions.
What is affiliate marketing?
Affiliate marketing is a way for a company to sell its products by signing up individuals or businesses to market them via their networks. Advertisers pay affiliates a performance-based commission for referring traffic to their website, resulting in a desired action. An affiliate network acts as an intermediary between affiliates and advertisers, tracking user journeys from one to the other. They also provide reporting facilities for analyzing performance, handle the payment of commissions to affiliates and sometimes provide account management services to the advertisers.
Challenges Facing Affiliate Networks
While this market can be incredibly profitable, it comes with a variety of challenges for both affiliates and affiliate networks. These include:
Lack of local currency payments
Despite many steps forward in big data and the world of business payments, affiliate networks have yet to catch up. Affiliate marketers are still typically paid in major currencies, including USD, EUR and GBP, or through an e-wallet solution – meaning that most of the time, affiliates are not able to choose the type of currency they’d like to be paid in. As a result, most affiliates are subjected to forced conversions of commission payments into their local currency bank account. This can severely impact published loyalty, as many affiliates are likely to look for other agreements where they’re paid in their own currency. For example, affiliates located in Indonesia are often paid in USD, as opposed to Indonesian Rupiahs, meaning they have to convert some if not all of their commission payments from USD to IDR.
Costly transaction fees
Depending on the type of payment processed, affiliates may also be subjected to an incoming wire fee and/or transactional fees each time they process a transaction from their e-wallet.
Additionally, when a payment is transferred into an affiliate’s bank account, they are subjected to foreign exchange fees as it is usually a USD payment being converted to a local currency, as a result of the lack of local payment options noted above.
Due to this, many affiliates will look for the most optimal payment alternative that balances any transaction fee costs or FX fees they may incur. This might include setting a minimum threshold for payouts and/or opting for larger payouts, if given the choice.
Delayed payments are also common in the affiliate marketing space. Under this structure, affiliates do not get paid until the affiliate network they belong to gets paid. If advertisers or brands begin to delay payment to affiliate networks beyond payment due dates, affiliates will not receive commissions, which can impact their livelihood if they rely on commissions as a primary source of income.
Payment delays can also result from not asking for the local regulatory rules up front. In this case, the recipient bank will typically return the payment until the right information is provided. The network then has to go back to the publisher to ask for the information to re-execute the payment, which causes further delays.
Looking Forward: How can affiliate networks improve publisher relationships?
Local currency payments: To improve publisher relationships, affiliate networks should first consider paying affiliates in each affiliate’s local currency. Since affiliates have varying payment method preferences, it is important for affiliate networks to find a payment solution that is flexible. This might include payment optionality, an e-wallet solution or a direct deposit alternative, such as iACH.
Align with internal processes: Affiliate networks should ensure that the SLAs are in line with internal processes and publisher support teams. An example of this is the exception handling process when it comes to returned payments or additional information required to re-execute a payment.
Doing so will ensure that all affiliate payments are made in the most secure way, and that funds arrive on time and in their entirety.
Cambridge provides such expertise and can deliver full value publisher payouts; for many currencies Cambridge can deliver payout using in-country rails. We empower global commerce and ensure operational efficiency by connecting businesses, buyers and sellers all over the world. Our network provides access to 145+ currencies which can not only lower cost per transaction but also take care of bank validation and local regulatory rules, saving both businesses and affiliates many headaches.
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