26 Aug 2019
“Why is it taking so long!”, “A parcel can go around the world in that time!”, “How much longer do I have to wait?!” — these are the comments we receive from the publishers regarding the average time of processing and payment. Let’s see what they are made up of and why it really takes so long?
Today we will consider the following issues:
- What “hold time” and “payment time” are
- Specifics of payment timeframes in different segments
- Why there is a short hold time in other affiliate networks (not e-commerce)
- How hold time can be reduced
Hold time is a sort of fraud insurance for the advertiser (fraud here means fraudulent transactions such as unredeemed or returned orders, for which the publisher may receive a reward). In a nutshell, this scheme makes sure that the advertisers will not pay the publisher until they receive the money from a customer and make sure that they do not have to return that money, or until they minimize the risks of this happening. In affiliate networks working with the e-commerce segment, payment is carried out only by CPA (that is, for the performed and confirmed action, most often — CPS, cost per sale). But let’s dig deeper.
What are “hold time” and “payment time”?
Average processing time also known as “hold” — is the lapse of time from the moment of registration of an action (placing an order, installing an application etc.) to its confirmation or rejection.
Payment time — the period of time from the moment the action is registered in the statistics to the moment the money arrives to the publisher’s account. Usually it equals hold time (the money is paid on the day the actions are confirmed) or exceeds it by mere day or two, that is why we will consider only the hold time in our article.
What does the average processing time consist of?
- Order processing. Some stores work only on a prepaid basis and send a link to make the payment after the order has been made. Which means that when the user clicked the “Order check out” button and saw the “Thank you for the purchase” screen, the action already got registered in the Admitad reports for the publisher. But after that the customer receives a payment link in the mail, and the store needs to wait for the receipt of funds from the buyer. Usually three days are allocated for that.
- Delivery. Express delivery within the city limits can take up to 24 hours, standard delivery from an online store in China can take up to a month. Therefore the hold period covers the maximum possibility. Moreover, delivery time often takes into account only business days (meaning that in case of long public holidays, delivery can take much longer) — this is also taken into account. It is also worth remembering that delivery is ensured not only by the store itself, but also by outsourced services of logistics companies and national mail. And let’s not forget the remoteness of the destination. In total we have a period from 24 hours (if the warehouse is also located in the city) to a month if the parcel is traveling from China to a remote village. Delivery works in a similar way in all countries: store — distribution center — customer.
Life hack: if you want faster payments, check the store’s delivery conditions for the regions, where the products are delivered the fastest and target those regions (at least for the test run to quickly assess whether the offer would work on your traffic). In some affiliate programs, this can speed up reconciliation.
- Return. By law the buyer can arrange a return if the purchased item does not meet the desired parameters: form, size, style, color or configuration. The customer has two weeks to do this, and this period is also added to the hold period in case the buyer decides to proceed with the return.
In total, we get the timeframe from one day to more than a month. During this time, the advertiser must receive the confirmation that the order was made by a real person, delivered, and payment for it has been received. As we remember, the advertisers pay the reward from their income, so this condition is mandatory.
The smaller the store, the fewer publishers work with it and the easier it is for them to agree on individual conditions and speed up the reconciliation time. And vice versa: it is difficult for hypermarkets, marketplaces, large Chinese stores to keep track of the quality of the traffic of thousands of publishers, so small publishers cannot expect individual conditions from them.
Hold time in different categories
Due to the specifics of each segment of e-commerce hold times vary greatly. Let us consider the primary areas:
- Travel (tickets, hotels, apartments, car rental), insurance, event tickets. Most often, users make purchases in advance (up to a year), that is, long before the moment the service can be received. Especially if this affects the cost of the service (early booking is much cheaper than buying in high season). Accordingly, the user has plenty of time to get a refund for services not yet provided. The exception is non-refundable tickets and tours: the advertiser will receive income in any case, and the publisher will be rewarded, so there is no point for an affiliate program to stretch the time. In other cases, the average hold time will amount to one month and longer.
- Online games, mobile applications. In these categories KPI needs to be reached. We wrote about this in the article «How to place a mobile offer in the affiliate network», but we’ll go over this again: the advertiser needs to make sure that the user you brought to the game or the application is genuinely interested and plans to go on using it. Typically requirements are set for an active user (returning to the app within a week, reaching a certain level in the game, spending a certain amount of time on it). KPI is the share of users who complete this action. Accordingly, until the actions are completed, until the KPI is reached, the advertiser will not be able to count on potential revenue from the audience in the future, and the publishers will not be rewarded. On average hold periods here come down to the period from 1 week to 1 month. Apart from that in order to assess the quality of traffic the new publisher is given a test limit: the publisher will not be connected to the program until the advertiser evaluates the first 50-100 leads.
- Financial offers. If we are talking about microloans (if they are allowed in the country) then the processing of the application takes less than 24 hours, and the money arrives to the user’s account right after the confirmation, — in this case the hold period (from the submitted application to the arrival of the money) is only one day. If we are talking about credit cards, opening an account, loans, then the issuing process can be longer, since the amounts are usually much higher. First, the application from the user, attracted by the publisher, goes to the bank, it is examined there, the person’s credit history is checked after that the bank makes the user an offer regarding the amount and conditions. The process of negotiations and thinking over the deal on the part of the user can take up to 2-4 weeks. Only after the contract has been signed with the financial organization, the publisher receives the reward for the lead.
- Soft (programs) and online services. In this case the hold time is shorter due to the lack of delivery, but the confirmation does not happen instantly nonetheless. The reason for this is that the reward is paid for the paid order, but the user is usually given a trial period (from 1 week to 1 month), within which the user decides whether or not to purchase the service. However, the cookie lifetime here is high: from 1 month to (in some offers) a year.
«Why is the hold time shorter in other
affiliate networks (not e-commerce)?»
The publishers arriving from other affiliate networks (products which quality is doubt, gambling, dating, adult), complain that the payment time in the classic e-commerce CPA is several times longer. Why is that so?
- Product offers — products (of questionable quality), for which the demand works for only a month or two. It is in their interest to pay reward to the publishers as quickly as possible so that they can spend this money on further promotion.
- One product offer — one product (obviously), one-two rates (maximum). In such circumstances, calculating the results of a publisher’s campaign is much easier than if you have a hundred categories of goods with a dozen rates on each of them (which usually happens in standard large and medium-sized e-commerce offers).
In the classic e-commerce that Admitad works with, everything works differently.
- There is no reason for stores to rush and take just any traffic: large advertisers possess in-depth analytics based on statistics on expenses, revenues and paid orders. They closely monitor the quality of traffic. The important aspects here are not only lack of fraud in the form of incent traffic and forbidden channels, but also the absence of reputation risks for the brand.
- Many products, rates, GEO, publishers and sources of traffic. Keeping track of everyone, manually selecting the best and confirming the action in advance is virtually impossible with massive turnover. It takes time and fine-tuned checking of the quality of leads and actions in order to bring auto-verification closer to the level of manual verification, without losing control over the quality of leads.
- Work with CPA model. In these conditions the reward goes only for confirmed actions (sales, installs) and leads. If the user did not complete the purchase this very moment he must potentially do it in the future — these are the only conditions for the action to qualify. Which means that even leads need to confirm their quality.
What we have in the result: one product per offer with one rate against thousands of products for an affiliate network with a rate grid and the need for post payment after the action is confirmed. And if we are talking about the high season (Black Friday, Bachelor’s Day, Cyber Monday, Christmas Eve), the timeframes of verification can grow even more: make sure to provide budgets for advertising campaigns in November-December in advance, so as not to slow down, because the online stores will be literally swamped with orders.
How can hold time be reduced?
Confirmation time may be reduced, but this will require the actions of both the advertiser and the publisher.
- Advertiser. In addition to accelerating business processes (online payment at checkout, express delivery), the advertiser can set up auto-verification with a minimum time period (for example, once a day). This will speed up the process of order confirmation, attract the publishers and accelerate the offer promotion cycle, as the publishers will receive the money faster and go on investing them in advertising campaigns (this is most relevant for arbitrage traffic).
- Publisher. Increasing the turn over, improving the quality of traffic and individual work with the offer (special promotions, detailed reviews from bloggers, unique author’s creative input) will highlight your site among all those connected to the affiliate program. The advertiser will treat you with greater loyalty and by agreement will be able to provide special conditions, varying from the size of the reward to personal coupons and quick reconciliation. And, naturally, no fraud: the more publishers use prohibited types of traffic, the more advertisers expand the restrictions on the affiliate program in order to secure the reputation and loss of money.
No matter how automated the verification processes are in affiliate networks, there is always room for the human factor. First of all, it concerns the buyers’ behavior and the speed of their decision-making about the purchase. Secondly, there is the relationship between the publisher and the advertiser: the more individual approach they have to each other, the more effective their collaboration becomes.