Do retailers have affiliates’ best interests in mind when utilising dynamic commissioning? Should this matter?
Dynamic commissioning could be the future of affiliate marketing, but what this future looks like is unclear. Right now, it’s a double-edged sword, and the industry is figuring out whether it’s going to be a shining Excalibur, or an accident waiting to happen.
But less talk of swords. First of all, let’s define what dynamic commissioning actually is.
What is dynamic commissioning?
Affiliate marketing is a strategy whereby affiliates drive traffic or sales to a business’ site and then receive commission for this. Dynamic commissioning is the practice of adjusting affiliate commissions based on predefined criteria.
This criteria could really include anything: product category, specific products, increased AOV, type of payment model, new customers. For retailers, it’s a means of zoning in on pain points or areas of opportunity and giving them a boost through the affiliate channel. There’s also the chance to collect and leverage more data about an audience, which can make for more sophisticated strategies in the future.
However, there is a counterargument to dynamic commissioning. Some view it as a strategy that prioritises the retailer’s needs to the neglect, even detriment, of the affiliate. Some view it as a means of exploiting affiliates. In fact, there are examples of this being the case.
Is this practice part of the evolution of affiliate marketing, refining its possibilities, or making it unnecessarily complicated, while selling out the affiliates in the process?
We spoke with a number of people in the industry to figure this out.
The bad news…
Let’s start with the negatives.
Dynamic commissioning can be used by retailers to not only push for increased sales or activity in one parameter but also close off commission in other parameters. Amazon and Target are notorious for this, but other retailers have done the same.
For example, Target has an affiliate programme with tiered commission rates. It uses different commission rates for different product categories and then increases these rates based on the amount of stock an affiliate can shift. If an affiliate can bring 0-10 monthly net orders in Apparel & Accessories, they receive 5% commission. If they increase that up to 1,001-2,000 orders, they receive 7.25% commission. This seems perfectly reasonable. However.
