Granted, I'm not known to be a champion of affiliate marketing. However, I do acknowledge that by head-count the majority of affiliates work within the rules of the relationships, and don't intend to scam advertisers. Many affiliates drive incremental sales through hard work and smart use of paid search, organic search optimization and other legitimate activities that make them valuable partners.
I still have questions, though, about whether the sales attributed to the coupon affiliates -- which make up the vast majority of affiliate sales overall -- are actually incremental.
The data we've looked at suggests that most of these sales are not incremental, that absent the affiliate intercession the sale would have taken place on the advertiser's site without the coupon discount and without the commission to the affiliate. In other words, not only are the sales not incremental, their value to the advertiser has been significantly diminished. But we can't prove that definitively.
To me the question of incremental value hangs on the answer to one question: how did most of these customers end up on the coupon affiliate's site? If the answer is that the affiliate site has a loyal following; customers go there directly and look for good deals, then clearly the sales driven are incremental. If the customers search for a product or type of product and click on an affiliate link (paid or natural) and end up coming to your site to buy, then clearly those sales are incremental.
However, if the lion's share of the orders are from people who found the affiliate's site by typing in YOUR brand name, only a tiny fraction of the orders are incremental: those who would only buy if they found a coupon. Most advertisers prohibit affiliates from advertising on their name "Acme", but whether they're advertising or not, if the person searched for "Acme" and clicked on a natural search link for "Acme Coupons, Great Deals", that order isn't incremental. If people search for "Acme Coupon", again, I'd argue that those affiliate orders aren't incremental whether the consumers click on a sponsored link or natural link, they'd already announced their intention to buy from you.
The big coupon affiliates claim they have loyal followings and maybe they do, but I, and many retailers I know remain suspicious.
I propose a test: Coupon affiliates can easily prove their value simply by capturing the referrer string from visitors to their site (showing the last page the visitor was on prior to arriving at the affiliate's site -- including a search string if relevant) and appending it as a parameter when that traffic passes from the affiliate's site to the advertiser's. The advertisers could then see what fraction of affiliate orders come from people looking for the advertiser by name and what fraction got to the affiliate site by something other than brand search.
Mom and pop affiliates might not be able to pull this off, but the big ones certainly could. Which of them is game to accept the challenge?