For many years there’s been a nagging question about the real value of online marketing? But if you get to grips with performance and specifically affiliate marketing you’ll find a way to get a true return on all your marketing efforts.
Affiliate marketing is probably something you’ve heard of, but aren’t really sure what it is – and like everything in the digital world, it’s a fast-moving model with creative innovation and technology continuing to gather pace.
Affiliate marketing sits under the umbrella of performance marketing. And it’s a growth area, according to a survey by international marketing company, rakutenmarketing.com, US affiliate marketing spend is expected to be $6.8 billion between 2015 and 2020.
What exactly does it mean? Who are the players in affiliate marketing, and what are the future trends for this always growing model that seems to be finally able to put the money where the internet’s marketing mouth is?
What is it?
Put simply it’s a payment on performance set up – an arrangement by which an online brand pays commission to an affiliate via an external website for traffic or sales generated by their marketing efforts, which can be as simple as a blogger placing a link, button or banner within a blog post that will lead readers to that product or service.
“The predominant payment model for affiliates is Cost per Acquisition (CPA), so affiliates are rewarded directly for the sales they make, and as a result tend to be excellent at converting traffic to sales,” explains Helen Southgate managing director of performance marketing agency, Acceleration Partners (www.accelerationpartners.com).
However, she adds: “There is a growing trend to use differing payment models to reward other behaviour such as engagement, content, higher funnel traffic etc.”
How is it different to influencer marketing?
Influencer marketing is another form of affiliate marketing which has traditionally sat in PR teams with top celebrity influencers being paid up to £160,000 for a Facebook post. These high stake large influencers “will always want a direct relationship with the brand, or PR,” says Southgate.
Research repeatedly shows that digital brands are often in the dark as to where their money is going. In a presentation by Allyson Griffiths of iCrossingi at the 2017 Brighton SEO conference, it was revealed that brands had spent $570 million in the US on Influencer Marketing in 2016. But further research found that 57 per cent of the major brands reportedly didn’t know what the ROI on their investment was. And a study by Rakuten Marketing from August 2017 found that when asked what would encourage brands to spend more on influencer marketing 50 per cent said greater transparency and better reporting of influencer contribution to sales was most important.
There’s no doubt, however, that even though it’s hard to quantify influencer marketing does have a vital role to play. Nick Fletcher, VP Customer Success at Rakuten Marketing UK stresses the importance of focusing on measurement across the whole user journey. “What makes measuring the value of influencer marketing more difficult than other more typical affiliates is they quite often don’t lead to a purchase directly. Our data shows that influencers start more customer journeys than any other affiliate publisher type. We see influencers as the first touchpoint in a user journey 53 per cent of the time. So, if advertisers are looking to measure the value of their influencer marketing campaigns in terms of sales and revenue, it’s essential that they are able to track the whole user journey, rather than just the last click, and attribute value accordingly.
“Additional metrics, such as time on site, number of pages visited, and which high value areas of the site influencer traffic visited can also be included in any measurement of the value of influencer visits. Using ‘softer’ engagement metrics such as these helps advertisers understand the quality of traffic being driven by their influencer partners.”
The more linear, sales-orientated, affiliate marketing is risk-free, says Ami Spencer, director of International Publisher Relations at Webgains (WG), whose clients include Nike, Decathlon and a number of online sports retailers. “ROI is at the focus of all discussions and as everything is tracked it’s incredibly transparent,” she adds. And when it comes to the newer influencer marketing, Helen Southgate explains: “There are a huge long tail of micro-influencers who are well suited to the affiliate channel which can track and monetise websites at scale.”
Successful affiliate marketing
So how do you find the right team of affiliates and micro-influencers to scale up your advertising efforts? The simplest way is through an affiliate network. This is where the affiliate goes to find out what’s on offer for them as a publisher, and the network is also a place to do the basic admin, such as processing payments and refreshing the affiliates, keeping them relevant.
“Explore and understand the publisher mix that network can offer, sometimes if they manage other similar clients they can have a skew towards certain affiliates e.g. WG manages NIKE’s affiliate programme and we have grown a huge network of very good sporting content affiliates (and we’ve found good content is directly linked to increased revenue) from sneaker heads to the FA, to promote the brand using affiliate links,” says Spencer.
Other questions brands should consider when selecting a network could include: international reach; and growth plans for expanding the affiliate network; and a good compliance and screening system for affiliates. A network will have a dedicated publisher team who will make sure your affiliates are always relevant, as well always working on screening who your brand is reaching out to.
Finally, a network can take out the hard work of building relationships, a key to successful affiliate marketing. “We have very strong relationships across all affiliate segments from content (e.g. the Telegraph), to voucher/cashback, price comparison sites,” says Spencer. “We also connect with influencers and partners who can offer the latest technical solutions, for example, overlays, re-targeting and PPC/SEO optimisation.”
A new type of affiliate: how publishers are changing
As stated above the type of digital business platform for affiliates is growing and evolving. “Many are community-based,” explains Spencer. “And sport is ideally suited for this kind of model where performance, for example, miles logged by runners are rewarded by vouchers.” A good example of this is Running Heroes, who also provide relevant and shareable content for their running community (uk.runningheroes.com).
And for brands looking for new types of publishers, the emergence of websites such as Boom 25 (boom25.com) show how far we’ve moved on from the traditional club card school of loyalty. The shopper can choose their brand (including a number of sporting brands), then they’re taken to the partner site to buy. If they’re 25th in line buying their chosen product, they win their money back.
‘Non-traditional’ affiliate marketing methods also include storefronts, a term used to refer to partners, usually non-profit entities that get co-branded with the retailer. In the US, Ultimate Fighting Championship fighters have teamed up with Reebok. One female fighter has her own Reebok-branded range, which she sells via a shopfront on her site, allowing her to track what market her visitors are coming from. And in the promotion of a specific Reebok fight, newsletters were sent out to affiliates with even more incentive to make a commission on sales.
It goes without saying that mobile is just as important in affiliate marketing as in any other form of digital marketing. And some brands are using voucher codes to link their online with offline sales and footfall in shops, for example, www.vouchercloud.com and Runner’s Need have teamed up. With their ‘smart targeting’ on mobile you could be alerted to an offer when you’re walking past Runner’s Need, who can track data about you should you use the voucher and purchase their goods.
With vouchers and sales and cases of fraud, affiliate marketing hasn’t always had a good name. A quick google search can give an impression of ‘get rich quick’ schemes with young men talking about going from nothing to seven figure salaries. One Blogger, writing on the blogger hosting site Medium said: “Affiliate marketing is this weird underground world of mostly young guys making ads online trying to sell other people’s stuff. It’s the only industry I know of where you can drop out of college, and a year later be making a million dollars per year online.” However, this is a misconception, as Spencer explains, “this is more from the camp of display lead generation.”
Like all digital marketing, data is vital. Networks such as WG are using IBM’s Watson to crunch big data, such as changes in the weather, and social media trends to help them plan exactly what product to push to their affiliates. Advances in automation and artificial intelligence will also make it easier to create a clear picture of exactly where and when consumer-buying decisions are made, as well as manage day to day administration of managing large volumes of affiliates – and feedback intelligent and accurate metrics for brands.
Who’s who in affiliate marketing
- The brand who is also known as the retailer, merchant or advertiser.
- The ‘affiliate’ also known as the publisher.
- They can be found in digital business models or platforms that include: price comparison sites; bloggers/vloggers and social media; voucher sites; and loyalty platforms.