Affiliate marketing, the concept of paying commission for referred business, was employed long before the internet. But just four years after the invention of the World Wide Web, it made the jump into the digital world.
In the early years an affiliate (now often referred to as a “publisher”) would receive one or more static links from an advertiser (or affiliate network).
For many affiliates the smart link was a fantastic evolution, since this enabled them to increase their revenue without changing their volumes. This is great, but like with everything there are a few downsides.
The affiliate would put these links on his website, sending his users to an offer that monetized his traffic. Every URL would always link to the same offer and the affiliate would receive a fixed payout for every conversion made from his affiliate link.
This worked pretty well for a couple of years, but soon people started to notice that not all traffic is created equal. In other words, one type of user is more likely to convert on offer A while another group converts better on offer B. So they started sending different types of traffic to different offers.
This was very effective, but proved to be quite time-consuming if done properly. Especially when the amount of variables used to determine the best matching offer increased. A need was born for a system that would automate this process.
Smart links
Slowly but surely, smart links started to replace static links. Smart links work by using an algorithm that decides what offer is shown for each specific user. The algorithm takes data about which user converts on what offer, analysis it, and uses this data to send visitors to an offer that is most likely to convert the user. So if the algorithm notices a particular offer performs well in Italy, then it will automatically send more Italian visitors to that offer. This ensures that an affiliate will get the best results from his traffic.
The algorithm
Most algorithms these days are very advanced and take many variables into account, like the country, device, operating system, mobile carrier, current time, traffic source etc. This information is usually automatically extracted from the visiting user, but can also be manually provided by the affiliate itself.
One type of info that cannot be automatically detected is the source type. This is why the affiliate will have to let the algorithm know if the traffic comes from a banner, redirect script, pop under etc. Affiliates should always try to provide this information, since it will only help to improve the overall performance of their campaigns.
Another big advantage of using a smart link is that traffic will never be sent to an offer that is offline. Once an offer is down, the system will detect it and immediately disable the offer. Some offers even have limited availability, for example because of a volume cap. Affiliates using static links will not be able to use these kinds of offers.
Last but not least, traffic will always be sent to a working offer. Most offers are built for specific geos or mobile carriers. So, when using a static link, your traffic has to meet very specific requirements. Visitors that don’t match the targeting settings of the offer will reach a dead end, meaning it will be impossible to convert the user.
Downsides
For many affiliates the smart link was a fantastic evolution, since this enabled them to increase their revenue without changing their volumes. This is great, but like with everything there are a few downsides.
For the algorithm to work, it needs to collect large amounts of data. Along with the best performing offers, it also needs to keep track of other promising offers that are not in the best performing list yet. This means that a small percentage of traffic from each affiliate will be used to test these new offers.
This is for a good cause, since the algorithm might discover a new “best performing” offer. But it does mean that a very small part of your traffic will be used on offers that might not perform that well.
So, by definition, the affiliate will have to hand over a large amount of control to the algorithm. This will save them a huge amount of time, but will also open up the possibility that traffic will be sent to unwanted offers. Some offers might even contain malware, JavaScript alerts, auto downloads etc.
Not every affiliate is able to work with these kind of offers. Media buyers (affiliates that get their traffic from ad networks) must often adhere to rules set up by the ad networks, and they might not be so happy with these “aggressive” offers. This can result in a block from their ad network.
In order to help media buyers, Traffic Company has built an application to scan every offer in our system on a regular basis. We call it the Crawler. Every offer that contains malware, auto download links, JavaScript alerts or other unwanted content is flagged and will be disabled if necessary.
Even though we cannot guarantee that 100 percent of our offers are clean, the crawler has proven to be a very powerful tool in our battle against harmful offers. At Traffic Company, we have over 50,000 offers in our network. Unfortunately, this means that we can never afford the crawler to take a break.
Like we said before, static links will usually use a static CPA for each conversion. When working with smart links it’s not possible to provide fixed payouts. One of the consequences of dynamically selecting an offer (like with smart links) is that the payout per conversion can fluctuate.
It can happen that you receive $2 for one conversion, and $15 for the next. For some affiliates this is a big disadvantage of a smart link compared to a static link, since this makes it very simple to compare CPA’s (which in turn makes it a lot easier to negotiate with your account manager for a better payout!).
To help affiliates make reliable comparisons with these varying payouts, the term eCPM (effective cost per mille) was coined. The eCPM allows affiliates to accurately compare his income by calculating the revenue per thousand clicks.
Finally a static link allows affiliates to create a perfectly matched prelander for each offer. There a several product types for which it’s very important to create the right user flow to increase conversion rates.
A smart link can lead to many different offers, making it impossible to create a consistent flow. Subsequently you’re more likely to use a general banner that might perform worse than a banner with a matching prelander.
Bottom line
Whether you should use a static or smart link really depends on the wishes of the affiliate and the type of traffic.
For some affiliates it will be more profitable to use a smart link, while others might think a static link works better for them.
The only tip I can give you is to take both methods into consideration and do some split testing.
Wouter Groenewoud is general manager at Traffic Company.
