Both affiliate marketing (in general), and affiliate program management (in particular) have intricacies. And the further we go, the more fascinating these become. With the proper approach (read: due attention), new doors and opportunities open all around the place.

My today’s Q&A guest is Tony Nelan, Head of Account Management at Google Affiliate Network. Having affiliate marketing experience both in the United States and in the United Kingdom, Tony is now leading Google’s global affiliate account management team.

What are the major challenges with which you see affiliate managers struggle?

We know that online advertising has become increasingly complex, and the affiliate channel is no exception. There are two major challenges I see affiliate marketers confronted with today:

  1. Understanding the full value of the affiliate channel
  2. The pursuit of “incremental” publishers

The two objectives are related. As a channel that pays on sales or leads, many affiliate publishers typically optimize around the last click prior to a conversion. When you’re only looking at the last click, this approach can raise questions about the nature of the channel like, “Was this publisher necessary for the conversion?” or “If this publisher was absent from the user journey, would I have gotten the sale anyway?”

We’ve seen data from agency partners, third party studies and Google that indicates that affiliate publishers play important roles across the purchase funnel – as awareness drivers, assistors and converters. At Google, we’re focused on helping companies gain stronger insights into the measurement and valuation of their customers’ journeys, working to improve conversion rates through better utilization of tools like Google Analytics as well as advanced attribution modeling. The popular attribution session from this year’s Google Affiliate Network Client Summit dives more deeply into this topic.

In evaluating their online marketing strategy, advertisers and networks need to understand what sort of publisher, business model and offer type was necessary for conversion and helped them acquire the highest quality customers. They can then use those inputs to create an effective publisher optimization and recruitment strategy.

Today’s affiliate manager faces challenges that are often outside of their immediate control: analysis of data, collaboration across multiple in-house marketing channels, transparency between networks, advertisers and publishers, and the willingness of their executive decision makers to focus on attribution. I am confident that as an industry, we’ll get there. We’re lucky to be at the starting point to answer these important questions.

What do you view as the main affiliate program growth opportunities?

Coupon codes, cashback and loyalty publishers have an enormous impact on volume in the affiliate space. This makes sense as it is a channel that is primarily built around direct response goals, and these publishers have spent over a decade optimizing their sites for conversion.

I don’t expect this to change dramatically for affiliate programs in 2012. Sustained growth will be driven by transparency between advertisers and publishers and networks, where the three parties can work together to review the data and assess what tactics and tools delivered the most valuable customers to that advertiser’s site.

What are the top 3 things that affiliate managers (and merchants) should be looking at while choosing an affiliate network?

  1. Focus on the fundamentals first. The network you choose should have robust measurement, reporting, and payment capabilities wherever in the world you’re focused on growing your business.
  2. Your network should value transparency. It’s vital for affiliate managers to have a complete understanding of the network’s breadth and reach. Evaluate the tools that the network offers so you understand the current and prospective publishers in your program.
  3. Finally, it’s important to compare how different networks approach network quality. We’re seeing a lot of innovation in the affiliate channel, which sometimes means that there’s a dizzying array of ways publishers can utilize their links. Network quality is also a core focus area for Google Affiliate Network. We’ve invested heavily in technology and people to detect and fight everything from click fraud, to malware, to spam, and countless other areas.

Over the next 4 years Forrester predicts a steady growth for affiliate marketing. What are the top 3 areas of opportunity for affiliates these days?

  1. Mobile! The market is growing at a remarkable rate. According to Nielsen, over 50% of US mobile users were on smartphones as of February 2012. Within Google Affiliate Network, a growing number of clients are seeing significant increases in program conversions coming from mobile devices. Affiliate publishers must invest in mobile and tablet-optimized experiences for their users — according to Compuware, 57% of users would not recommend a business with a bad mobile site. Good mobile sites are built with input from your audience, so think about what experience your mobile visitors want, and remember that testing and optimization are an ongoing process.
  2. Growing sophistication around multi-channel attribution and pricing models will naturally encourage affiliate publishers to innovate beyond the last click. More publishers will enter the channel that are not optimized for last click, particularly those focused on building awareness and influencing consumers in the research and consideration phase. This natural evolution will expand the channel’s value, making affiliate inventory more viable in higher funnel websites. Affiliate publishers should focus on understanding the activities that advertisers deem most important for their business, and focus on optimizing around those activities.
  3. Finally, new technology connecting online to offline conversions will unlock tremendous opportunities for affiliates. Tools are emerging that offer powerful insights into in-store activities and coupon redemption. Google Wallet turns your phone into a wallet that carries your credit cards, debit cards, loyalty cards and offers. There’s a lot more innovation down the pike for affiliate publishers in this space.

If you were to leave affiliate managers with just one advice today, what would it be?

My advice would be to invest in understanding the affiliate publisher landscape. It’s extremely diverse. Business models vary widely and demand different, adaptive approaches from an advertiser. It’s not a one-size-fits all proposition. With a dramatic increase in new business models like virtual currency, with developers monetizing apps and social games with affiliate, the publishers in your program become more and more complex and sophisticated. Know what’s going on with top performers and emerging publishers and get insights from your network. Understand what segment of your publisher base drives your best customers and reward them appropriately.