Forming Strong Sub-Affiliate Network Partnerships
If you are new to affiliate marketing, sub-affiliate partnerships can seem a ...
We have seen massive change in the affiliate space in the last several years. Many brands are driving 30%+ of their sales via the affiliate channel and upping their channel investment to keep sales growing. Everyone in affiliate welcomes more investment, but what should affiliate leaders do with all that extra cash? I’m passionate about taking a different perspective with this more mature affiliate channel and am convinced that pouring money into “more of the same” won’t cut it. Here’s how you can change your approach – and get the kind of results your brand needs from affiliate marketing in 2022.
Affiliate has traditionally operated as a separate entity from the rest of a brand’s marketing efforts. Senior marketers saw their affiliate programs as an essential revenue driver but somehow less valuable than other marketing approaches. People who misunderstood the medium thought it was fundamentally too discount-driven, subsidizing many purchases that would have occurred anyway. Despite research showing that affiliate shoppers were more valuable than those attracted through other channels, brands operated as if they had “good” customers influenced by the primary brand marketing approach, and less-than-optimal affiliate customers focused primarily on price.
This completely misrepresents the ways customers see and interact with affiliate marketing. Affiliate plays a role in driving awareness and differentiation in a far larger proportion of customer journeys than those caused by last-mile conversion links. Every customer has a journey, and most of those journeys involve touch-points in a host of marketing channels.
Unfortunately, the traditional approach of managing affiliate as a silo limits our potential and effectiveness. The majority of brands with affiliate agencies have the affiliate in a siloed channel. Data, learnings, and strategic approaches are not aligned with the rest of the brand’s marketing, as the channel is managed separately. We resolve this problem as an agency-of-record (AOR) for all media. We can help champion the affiliate channel and see scalable growth through cross-team collaboration, transparency, and alignment.
Siloed thinking delivers a further disservice to brands. Over time, I’m convinced that this approach has conditioned more and more customers to do what I call the “Control-T” pivot. Hey, you may do it yourself. Shop on our favorite site, then hit CTRL-T to open a second window to look for coupons. Siloed thinking has elevated the prevalence of deep discount affiliate venues. We need to stop increasing the discounts and participate in the broader brand marketing programs and ecosystem.
If we stop thinking about the channel first, what needs to rise to the top? The answer is what got most of us into marketing in the first place. Brands need to make “data-driven” affiliate more than a checkbox or buzzword. We need to put the customer and their actions first, and leverage ethically-sourced data from all channels – including affiliate – to create the richest possible customer understanding.
Brands are beginning to understand the tremendous value of affiliate and are increasingly looking to invest more in outcome-based channels. Full-service agencies recognize the value in aligning resources to customer needs. We put an end to the channel-level competition for resources and instead focus on each shopper in their unique journey. I joined Matterkind because they’re truly integrating affiliate into the broader marketing mix, redefining its role at all stages in the customer journey. It’s a different approach to affiliate that demands better data access from networks and data platforms, then integrates that information into strategic allocation decisions.
Integration reveals affiliate’s role throughout the journey rather than in the few minutes before checkout. It enriches customer insight and powers more knowledgeable budget allocations via proper algorithmic attribution. Further, agencies can and should play a connective role in breaking down silos on the brand side.
When digital came along, many brands assigned it a direct marketing role separate from the “real” brand marketing in other channels. That allowed the traditional media folks to continue producing and airing “beautiful film” while the digital side got cases moving out of the warehouses. While some digital media is now well regarded for elevating and differentiating brands, affiliate advertising is rarely thought of in that context.
At Matterkind, we reject this polar model, and some brands have too – with much success. My team and I work with PR and brand marketing teams to connect them directly to upper-funnel partners. Increasingly, brands include performance components in their media programs with influencers and mainstream publishing giants. Further, we provide tracking, measurement, and reporting that demonstrate direct sales impact for these hybrid programs.
All marketing should be helping to drive sales, and reveal differentiation on dimensions other than price. Managing affiliate as a silo makes specialist stakeholders embrace the former without recognizing the latter. Changing our thinking is essential to “conscious marketing,” an idea transforming the way brands and marketers think about purpose, relevance, and celebrating the humanity of customers.
Embracing “brand” and “direct” simultaneously will naturally change what we do in our channel. Most affiliate programs need to do a better job delivering value instead of flagging an ever-increasing percentage off. Affiliate needs to cut its dependence on discount and coupon-centric publishers and find new partners that can create demand by differentiating the brand.
I am not suggesting we walk away from the coupon and cashback environments that brought us to the dance. We simply need to be more selective about the partners and programs we choose. Fortunately, changes in the media environment and consumer behavior are creating new opportunities.
Traditional publishers are now scrambling to create teams and products to attract pay-for-performance marketing dollars. They need the cash – after all, Google, Facebook, and Amazon take about 65% of all CPM media spend, according to eMarketer. Name almost any major publisher, and I’ll bet you’ll find they are building out a performance business. These programs are working exceptionally well for brands. To take just one example, Buzzfeed drove $500M in client revenue in 2020 alone. Mainstream publications generally take an SEO-driven approach, targeting consumers on key terms like “best running shoes.” This brings a new and potentially much broader audience to the channel than just “deal seekers.”
Influencers and other opinion leaders now play a central role in brand development, especially given the decline in the importance of linear TV in younger people’s lives. We need to make influencer marketing deliver scale. That’s been a big focus for my team, and we are seeing great results from precise collaboration across channels and innovative new influencer compensation agreements. We just finished research for one brand that showed a 35% increase in total program sales after adding influencers to the mix. Additionally, social platforms are investing heavily in affiliate – TikTok, Instagram, and Facebook have all built outcome-based affiliate platforms where they reward creators for specific performance indicators.
Mobile technologies like peer-to-peer payment platforms create new opportunities to influence brand choice. Matterkind has been a first mover in this area and is seeing remarkable results from these broad reach/low clutter environments. Card-linked offers are already a part of agile affiliate programs helping brands capitalize on the increasingly cashless society and connecting with customers to provide relevant experiences based on individual buying behaviors.
These and other new partner types work well and are far less discount-dependent than traditional affiliates. Programs often feature a modest offer to stimulate excitement and urgency but don’t drive brands down the spiral of constantly increasing percentages off. The affiliate programs my team leads are now far less discount-focused and reach a far broader audience than the siloed approaches our clients came to us to reimagine.
The data sophistication of affiliates has become even more relevant in recent years. With a helpful volume of consumer information, affiliates can come to brands with an audience-first approach to the channel; for this very reason, PayPal acquired Honey for $4B in 2020. This approach allows brands to connect with their ideal consumers with the right messages at the right times.
More money in the channel makes us all feel great. It also gives us greater responsibility – to drive more sales and lead the charge on finally destroying channel and data silos. Siloed thinking has kept a “niche” channel growing for two decades, but we aren’t a niche anymore, and we need to stop thinking like one. Let’s break the channel mindset and lead our brands forward.
A data-driven approach to affiliate can ensure we optimize our programs and the channel to meet the revenue and other demands brands are making in 2022.