The affiliate marketing industry has undergone a period of rapid growth and development. Not only have revenues increased, but the perceived value and professionalism of the affiliate channel has also notably improved. Moreover, many brands and networks are now looking to expand their affiliate marketing programmes to a global scale, as the digital nature of affiliate marketing means that anyone around the world can effectively become an affiliate regardless of location.
1. Growing pains – the globalisation of affiliate marketing
Of course with rapid growth comes a new set of challenges, and the increasingly global nature of the industry causes a number of headaches for affiliate managers. Where once affiliates and networks tended to operate solely in their home country or region, they are now increasingly driving traffic and earning commissions around the world. In particular, many affiliate networks based in the US are looking to expand into Europe and vice versa. This raises new issues such as language and currency barriers which have not historically been a concern, but could be both costly and time-consuming for marketers.
2. Harnessing social networks
As well as the increasingly global dispersion of affiliates, the challenge has been intensified by the rise in popularity of social networking and blogging. Facebook currently has more than 400 million active users around the globe, followed by 75 million Twitter accounts and 70 million LinkedIn members worldwide. This speedy expansion has not gone unnoticed by marketers who would love to tap into the millions of social networkers and mobilise them as advocates that drive traffic and sales for their brands. However, in practice, it is far more complex to successfully monetise social networking groups. Combining this with the globalisation of affiliate marketing, the general assumption tends to be that the administrative and cost burden of working with a large number of micro-affiliates outweighs the potential revenue benefits.
3. Communication is key to success
Another challenge associated with rising numbers of micro-affiliates around the globe is how to communicate with them effectively. Communication is an important part of building the relationship between the brand and the affiliate, and Econsultancy’s 2009 Affiliate Census report revealed that the vast majority of affiliates (64% in the U.S., and 70% in the U.K.) stated to have limited communication, indirect communication or no communication with merchants. Brands that are looking to unleash the power of micro-affiliates can utilise advanced technology and performance marketing software to improve affiliate loyalty and experience through clear and open communication.
New technologies are challenging this theory and improving brands’ ability to successfully leverage the potential of a booming population of budding micro-affiliates within social networks. For instance, Amazon has launched a new feature called Share on Twitter, which encourages its affiliate network to use Twitter as a new channel to earn commissions: ’When Twitter users click on the link in your post and make a qualifying sale, you’ll earn referral fees. That’s it.’ (Official Amazon Associates Blog) This is another indication that the recent boom in user-generated content has impacted on the development of affiliate marketing through the emergence of micro-affiliates.
Another example is Domino’s Pizza, which announced in March that it will be testing a new “social affiliate” widget to allow anyone with a personal web space, such as a social network page or blog, to host advertising from brands and earn commissions from any sales driven from their ads. It will be interesting to observe the results of this trial and to see whether other brands will follow suit by integrating their social media and affiliate marketing programmes more closely.
Technology is not only offering solutions to more easily engage social networking users but there are also solutions to address the challenge of rewarding micro-affiliates financially. Social networkers are unlikely to remain motivated and aware of their affiliate activity unless they are getting regular reminders in the form of rewards. According to the 2010 AffStat report, around 60 per cent of affiliates believe that the frequency of commission payments affects their decision to promote an affiliate offer. Therefore, when targeting micro-affiliates, infrequent commission payments become an obstacle to sales and, in turn, growth. If marketers are looking to successfully mobilise the global ’long tail’ of affiliates, they must look to adopt a standard global payment process. This should be designed to increase the speed of global payments and to provide flexibility to affiliates. For example, allowing payments to be issued in a variety of currencies or formats will ensure that affiliates retain their enthusiasm and loyalty towards the brand.
The world of affiliate marketing is changing, and brands can no longer afford to solely focus on the super-affiliates that drive the most traffic. Those that can successfully integrate their social media and affiliate marketing campaigns in a transparent and honest way, and can nurture relationships with affiliates regardless of size or location will be well positioned to build brand advocacy online, thereby staying one step ahead of the competition.