Affiliate marketing is international, is your tracking software?
What do Brazil, Germany, Israel, Spain, Sweden, and Turkey have in common? We’ve helped clients in these countries build successful affiliate networks. Some of these programs simply target users in countries with non-English speakers, while others actually have international affiliates and advertisers and do business in multiple languages and currencies all on one platform.
If you have an affiliate network or aspire to take your program abroad, here’s a few things to consider and some best practices that will get you started on the right foot.
If your business operates in a non-English language, then you know the importance of translating your software to the languages of your users. Traditionally its been difficult to translate software to non-English languages. Most software providers (including HasOffers) made it cumbersome to update language files.
HasOffers has completed translations for Chinese (simplified), Czech, Dutch, French, German, Italian, Portuguese, Romanian and Spanish. Affiliates, advertisers and employees in your affiliate network can specify their unique language preference in their user settings.
While this is a great step in the right direction, it doesn’t provide true flexibility to allow businesses to truly customize their own language files.
Last week we made an update to HasOffers that really inspired this blog post. Affiliate networks can now customize their own language files, and not only can they customize language files that we already provide, but they can create new language files for languages we don’t yet support. This flexibility gives people the ability to build a more unique experience, customized around the user’s language preference. Affiliates, advertisers and employees of the network can then chose the language file appropriate for them.
For most software as a service applications providing internationalization, language files are stored in a Portable Object (PO) file format. The ability to edit PO files allows you to translate text strings from a default language of English to another language. Once a client makes changes to a PO file, they can upload it to their application to change the language that is displayed. With HasOffers, this updated PO file only applies to the network that uploaded the file and is private to that network. Other affiliate networks using HasOffers cannot use these files.
With the ability to edit and create new PO files, you can even make changes to general vocabulary. You could go so far as to change the word “Affiliates” to “Publishers” or even hard-code your company name in various phrases throughout the application to increase brand recognition. These custom PO files over-ride the default PO files provided by HasOffers, so if you upload a Spanish PO then the custom PO over-rides the default Spanish PO file.
There is a ton of confusion and misconception surrounding the use of multiple currencies in an affiliate network. This is due to the many different business models that use currencies in different ways and knowing when currencies should be exchanged.
For example, if an affiliate network decides to utilize “multiple currencies” (as seen in HasOffers) this means they are operating in USD (or some other default currency) while running offers from advertisers who pay in foreign currencies. Thus, they need to be able to set a different currency for individual offers.
Your affiliate tracking software should always track cost and revenue by the currency set for each offer. If no custom currency is set, then cost and revenue is tracked using the default currency. This allows the application to display statistics by currency.
Some of our clients wonder why we don’t take into account an exchange rate and just record all stats in their default currency. In other words, if a network’s default currency is USD and an affiliate is promoting an offer with a payout of €2 EUR per conversion; HasOffers records any conversions (leads, sales, etc.) as €2 and not $2.84 (sample exchange rate of 1 euro = 1.42 US dollars). We do this because we cannot make a judgement on when the currency exchange should take place (as this can make a drastic difference in revenue). Each network has their own rules and policies on exchange rates.
Deciding when to take the exchange rate into account is very unique to your business model, and we need to continue to be a technology provider that enables you to make major revenue driving decisions.
Managing Exchange Rates
How you manage your exchange rates can have a major impact on your business. If you spend time talking to your billing department or accountant, you’ll find that exchange rates are usually taken into account the day the advertiser pays you – not when the conversion is recorded. In 99% of cases, the conversion is recorded and then days later (or sometimes months) the advertiser pays for the conversion. This difference in time allows for the exchange rate to fluctuate up and down.
In the example above where the payout was €2, the network would receive $2.84 by taking into account the exchange rate for the day of €1 =$1.42, but again, the advertiser usually doesn’t pay right away. Instead, the end of the month comes and the advertiser finally gets around to paying the network. The exchange rate is now €1 = $1.25, meaning the network would only receive $2.50, losing $0.34 on the timing of the exchange rate. As you can see, the fluctuation in the exchange rate can cause pretty dramatic gains and losses.
It is not common practice for advertisers to pay a network at a specified exchange rate. There is an entire investing strategy devoted to forecasting exchange rate fluctuations called Forex, but most advertisers aren’t sophisticated enough to buy media and hedge against exchange rates at the same time.
Invoicing Foreign Currencies
We recommend that you track and record foreign currencies separately. Your affiliate software should create invoices for affiliates and advertisers individually by currency. If a single affiliate generated conversions in three different currencies, then three invoices should be created – one for each currency.
Invoicing advertisers should operate the same way. This allows networks to pay their affiliates on the day that they receive a payment from an advertiser, minimizing the impact of exchange rates. It is extremely important to time these closely or you can find yourself taking a risk by having to pay affiliates on a different exchange rate than you were paid by the advertiser. You will be safer paying within a day or two, as exchange rates do not tend to fluctuate greatly day to day.
No matter what, check with your billing department or accountant to confirm how your advertisers actually pay you for conversions and how they take exchange rates into account. Don’t risk your profits by mismanaging exchange rates.
Reporting Exchange Rates
So how do affiliates know how much they’re getting paid if they are promoting offers with multiple currencies? Because they are paid using the default network currency (ex. USD), all of their reports show cost, revenue, and sale amounts in USD, calculating the daily exchange rate for the default currency. This way, roll up and summary reports for affiliates, advertisers, and employees include activity for all offers and currencies. Each user has the ability to group reports by currency since affiliates are paid by the default currency and the advertiser pays in their custom currency.
In HasOffers, these estimated amounts are calculated using exchange rates that are updated once per day according to the European Central Bank.
By providing affiliates with these estimated amounts (based on the current exchange rate), they can have an estimated understanding of how much they will be paid. This allows their activity to be stored in their respective currencies and protect networks from changes in exchange rates.
Lucas and his twin brother Lee began their first businesses before starting high school in their hometown of Elma, WA. They quickly found this world suited them, launching other successful businesses in college and reporting their first million dollars in revenue as sophomores in their dorms. Developing unique solutions for their own ad network, Lucas had the foresight to white-label their technologies to empower other businesses, which quickly became the birth of TUNE. As Chief Product Officer, Lucas leads agile product teams that strive to quickly meet the needs of an ever growing client base. As a founder, Lucas and his twin brother Lee supported the company in the beginning, growing to profitability by 2010. Lucas' expertise in complex business models, integrations, implementations, and his constant drive for innovation make him a cornerstone of this Seattle based startup. Lucas graduated from Babson College in Boston, MA.