The affiliate marketing category is going through a long overdue disruption. And that’s a good thing for traders.
For two decades or more, affiliate marketing has been defined as a “last click” transactional channel. And it was right. Performance-seeking marketers have long used the channel to increase sales volume against short-term goals, leveraging coupon and cashback tactics. Yet, steeped in its own rambling heritage, doing marketers a huge disservice, the channel itself has been unwilling to adopt the professional measure, unlike other active pay channels, where it is standard. This reluctance, if not arrogance, held him back.
The volume of business for many years has resulted in reasonable growth in affiliate marketing revenue. But the retailer’s lack of measure and accountability to the dollar created headwinds, preventing traditional vendors from generating the growth they needed in their own businesses. In turn, without this growth, traditional vendors have been unable to operationally deliver the solution that today’s marketers have realized in recent years. they need.
In the new era of affiliate marketing that is upon us, the emerging intersection of infrastructure, technology, platform and service, not to mention a commitment to measurement and analysis, is a collective and welcome driving force for healthy change.
You’re starting to see brands that have historically avoided the category entering the channel. Brands have walked away before because they didn’t see themselves as discount brands and wouldn’t participate. Take luxury, for example. Before the last 3-5 years, these marketers were not active in the space. Now they are among the busiest and spending has tended to increase in the last two years alone.
As the evolution of affiliate marketing dawns on marketers
Coming out of a long period when marketers were chronically dependent on Facebook, Instagram, and Google, performance marketers recognize the need for scale and automation. Brands want automation like paid channels offer, but they’re looking for a performance-based model that gives them the operational leverage they need to win. The best of today’s affiliate marketing offers that.
For so long, this measurement-unfavorable legacy network model has been, albeit clumsily, preserved as a status quo due to its protectionist attitude. It’s finally being challenged – and you can see the positive tension reverberating throughout the category and spurring an evolution.
On this higher comfort level and the broader state of overall stability and maturity in the space, we are seeing marketers in a number of verticals expanding their approach to affiliate marketing. One of the first moves you’ll see—and one that automation makes easier—is diversifying the types of revenue-generating partners. As new brands enter the category, the emergence of new types of partners is accelerating. Whether it’s brand to brand, content or influencer, the combination of innovation, transparency and accountability has put the category on the path to permanent residency. in the CMO playbook.
Previously, the category would have seen revenue from coupon and cashback partners, and marketers would limit themselves to this type. Flash forward to today, and content publishers have been a notable entrant as an example of diversification. As new entrants to the space, experiencing pronounced growth in the past year alone, content publishers have become an even larger and more productive contributor within the affiliate mix. Content publishers contribute to 64% year-to-date revenue growth on the Partnerize platform alone. This has mostly come at the expense of cashback and coupon publishers who historically would have been in that last click position and credited for the sale in that old world. This shift and shift signals well-being in space, boding well for its future.
Today, in its most evolved state, the power of this channel is in the performance model and automation that allow a marketer to adapt to it. A marketer does not pay a partner if the partner does not generate an attributable conversion. The marketer defines the value of this conversion. This is a fundamentally different business dynamic than a pay-for-access channel, where you pay for an impression-based view or even a gateway performance model, such as a cost-per-click , where you pay for traffic distribution. Yet the onus of conversion falls on the distributor. And it should be noted that this conversion is never guaranteed, only access to the possibility.
The double imperative makes the measure non-negotiable
Marketers’ growing attention to the ubiquity of messaging is also fueling the evolution. As the consumer has taken control, it is up to the distributor to be everywhere. This dual focus on brand and performance is expensive. So the ability to automate partner diversification and measure and compensate for it based on performance is smart marketing and smart business. It’s a winning career change, if nothing else.
“If you can’t measure it, it doesn’t exist (or it can’t be improved)” is a common mantra for a reason. Our industry has had this prolonged and unseemly practice of behaving like a walled garden when it comes to attribution. It’s the inherent baggage of being a last-click channel and having a concern, even paranoia, that the channel’s incrementality or performance contribution would be marginalized, ignored, or absent if marketers let the measure to others. And that’s conceivable, but that’s no reason to build a higher wall.
The technology is there to understand and measure the role any partner plays in that customer journey. So why wouldn’t a performance marketer, knowing the value of revenue partnerships, do it? Vendors in the wider affiliate marketing space should open up APIs and allow measurement data to be exported into metered record systems alongside marketers’ other active channels. It’s the only way for marketers to understand how to deploy dollars in their active mix and get the most return on their spend. This is how we are finally completely shaking up that perception of the last click. Rest assured, the obstacle to progress is no longer technology. It’s a historic bias to the status quo and a continued failure on the part of some legacy vendors in the category to open up those walled gardens I referenced before and stand up and be measured.
Now that the industry is getting there and traders are clear in their desire for subsidies and operating leverage with their mix, evolution is underway.
Coupon and loyalty programs are essential parts of a successful overall partnership strategy, but they should never become out of proportion or unmeasured. Isolated reliance on these programs became problematic over time and limited the channel’s potential. Moreover, by reputation, this dependence has kept suspicious brands away. Now that the table is set for affiliate marketing to operate at a more evolved state of play, we recognize that these types of partners are certainly not dead. They need to be part of a larger whole aligned with the overall business purpose. And, of course, the sophisticated marketer is strategic enough to operate that way as a starting point.
Partnerize offers software and services for brands engaged in affiliate marketing and partnership programs.