Most view it as a single-layer system where affiliates send traffic up the food chain in exchange for payouts being sent back down in return. However, there is another much less-explored second layer between primary and secondary affiliates that comes into play when one webmaster refers another to a sponsor.
Many affiliates overlook the webmaster referral opportunity that exists because they see it as a very small 5 percent or 10 percent additional value for sales sent from the affiliates that they refer. In truth, since the majority of all sales come from a very small minority of webmasters, most webmaster referrals do amount to only a few dollars per month or less being earned by the primary affiliate.
Several new webmaster productivity sites have, however, been launched in the past year and while they do accept ad revenue from sponsors as their primary source of monetization, the addition of webmaster referral revenue as a secondary income stream certainly is part of their long-term business models.
One site from this new breed is IndustryIncentives.com, which easily and expertly sorts all of the bonus payout days being offered by sponsors for webmasters who are trying to chase "bonus day" payouts with their traffic.
"With Industry Incentives, webmaster referral revenue is a key ingredient of our business plan," said Dee Wyld of IndustryIncentives.com. "We expect to be able to bring valued webmasters to quality sponsors, and we appreciate the fact that we can earn our revenue on the mutual success of all parties involved."
Being able to send even a few whales or a large mass of smaller affiliates to a particular sponsor can become quite lucrative. While each second-tier sale may only amount to a handful of cents, hundreds of sales per month can eventually amount to significant dollars.
Assisting a webmaster in finding a new program that he has never worked with before can be a slow and laborious process that requires a fair amount of expertise and a good deal of credibility. Once a profitable webmaster has joined a program under you, however, and sees that your recommendations were based on objectively helpful factors, a primary webmaster can start to develop a meaningful rapport with other secondary webmasters and even become known as a worthwhile source of affiliate reconnaissance.
The next hurdle that a referring webmaster faces is the lack of almost any meaningful statistics to track the value of their referrals. While most sponsor sites do show a total number of all second-tier joins and the total value of second-tier commissions, very few show a referrer who "signed up under them" specifically, or any individual sales data.
That means a referrer who sends 20 webmasters to a particular program and earns $18 in second-tier revenue has no way of knowing which of those 20 members generated sales and should be pursued for future referrals — or which of those 20 webmasters has zero traffic and just enjoys wasting valuable time "picking the brain" of the referrer.
I contacted leading stats solutions providers to find out if the lack of referral data was a procedural issue or a political one. "Executive Stats does show webmasters the account number of the webmasters who signed up under them and any sales percentage that has been earned," said Gregtx of Executive Stats.
"If the secondary webmaster then wants to tell the primary webmaster they are user account 1234 for example, that is up to them to disclose. As a sponsor, we do not condone handing out names or company names by default, because we feel it is a privacy issue. Our newest program CreamBling.com shows account numbers only for that exact reason, but since ES is a flexible open-source code product, programs using it can choose to show whatever they want."
Oystein Wright, the owner of Mansion, maker of the MPA stats system had similar privacy concerns: "We have chosen not to allow referrers to see information about webmasters signed up under them because we know many webmasters would not like it if others knew detailed facts about their sales and traffic patterns.
"The referring webmasters see the total of all referred webmasters and statistic-wise we believe that should be plenty. In many cases webmasters sign up to a program from a referral link not even knowing who the referrer was, and having a total stranger knowing all about your income — I wouldn't feel comfortable with myself in that situation."
It should be noted that TooMuchMedia, the makers of the NATS stats system, and several other stats providers were contacted for webmaster referral tracking policy information in regard to this article but were unavailable or had no comment.
"I actually remember back when I used to work at Igallery in '97 we used to show a lot of information regarding webmaster referrals but I guess those days are gone now," said Holly of HMOSS. "Basically, there were more drill down options, but stats have become much more streamlined in most cases."
Some programs do take a more open approach and provide referring webmasters with data designed to give them feedback. "Webmaster referrals are a great way for affiliates to supplement their income," said Pussycat, affiliate manager of LoadedCash.
"Our program has many affiliates making significant money just from referral income. I think our success with referrals is based on the fact that we show webmasters who is sending sales though their referral link. They actually know where the money comes from. On top of that, paying 10 percent of all revenue earned makes it a viable way to bring in income. By showing affiliates these stats we find that they are more motivated to keep their referrals sending which is good for everyone."
Webmasters I spoke with who do send many referrals to a variety of programs did express interest in knowing which programs would provide them with meaningful tracking data. While privacy concerns are understandable, referring webmasters look for stats on webmaster referrals much the same way all affiliates look for stats on surfer sales because those stats allow them to know which second-tier affiliates are capable of providing referral revenue and which referral campaigns are effectively persuading them to signup.
One way to handle the double-edged sword of webmaster referral stat tracking and privacy concerns might be to allow an opt-in system where the referred webmaster is able to click a checkbox authorizing the display of very basic generic stats to their referring webmaster. Perhaps a monthly tally of total sales within the program, without any showing of hits, uniques, referring URLs, etc., would be a fair indication of activity for webmasters who choose to allow a primary referrer access to that information.
"As someone who has been purchasing webmaster advertising for years, and who has always tracked the performance of those ads through webmaster referral tracking systems, I can tell you that traditional banner advertising on many forums and resource sites has steadily diminished in efficacy over the years," said Lea Busick, TopBucks Director of Marketing and Sales.
"I think that in the months and years ahead, word-of-mouth promotion by webmasters will become even more crucial to the growth of their affiliate base than it has been so far. One good 'plug' on the boards from an established and respected webmaster can be even more productive in terms of generating webmaster signups than a long-term banner campaign on the same board."
As affiliate programs continue to lure webmasters to their sites with competitive payouts and incentive offers, the forward-thinking programs are simultaneously looking to find new ways of monetizing traffic with a variety of aggressive billing practices — but perhaps the best way to improve the revenue stream of any sponsor program is to utilize primary webmasters more effectively in an attempt to bring in more worthwhile secondary webmasters. That task is made harder, not easier, in many cases by the lack of trackable statistics.
According to Busick, "A fairly small percentage of our affiliates have come through accounts associated with a referring webmaster. At the same time, some of our top individual webmasters came to us by way of a personal recommendation from a well-respected referring webmaster. So the qualitative effect of word-of-mouth should not be ignored, just because the quantitative effect may not be that impressive at first glance."
Primary webmasters I spoke with mentioned the loss of some referred accounts at a variety of programs due to the recent climate of buyouts and mergers, and some feared shaving of webmaster referral revenue was rampant as well due to a lack of meaningful stats. It isn't difficult to imagine a scenario where sponsors begin to see the trend of established webmasters orienting masses of smaller ones.
We have all seen board posts where a veteran webmaster mentions a new site or program in a positive light and based on the reactions of other webmasters in many of those threads, a good deal of heat is generated for the program. Perhaps rather than spending capital on "sig whores" and stunts, programs should focus instead on establishing promotional agreements with webmasters, publishers and productivity sites that they believe are capable of generating the kind of peer-to-peer pressure that can dramatically enhance or damage the draw of an affiliate program.