A business opportunity that’s only a click away

Affiliate marketing can help struggling publishers to generate income from online media and provide brands with a platform to reach and engage with new audiences.

It’s no secret that publishers have struggled financially over the past few years as more readers move online, but with the emergence of increasingly sophisticated performance marketing techniques and initiatives that link editorial content to retailer websites, it could be good news for both them and the brands involved.

MailOnline, the world’s most popular digital news site, recently launched an affiliate programme that offers advertisers the chance to be featured in selected news stories. If readers like a product, they can click and buy it immediately, and once the transaction is complete the publisher earns a commission.

The business model, which is the result of a partnership with Rakuten LinkShare, creates additional revenue for the publisher, while the brand is exposed to a vast and trusting global audience that it can potentially convert into customers. It is a strategy that seems to work for one of the Duchess of Cambridge’s favourite high street retailers Hobbs. The Duchess wore the retailer’s Dalmatian print coat at the launch of the Royal Princess cruise ship in June, and within an hour of MailOnline including a link to it in their news story about the launch, the coat was sold out.

Hobbs could not confirm whether the sell out was as a direct result of the article, but considering more than 3.6 million people visit the news site on a daily basis in the UK alone, it must have had an affect, even if it was not the sole reason.

Affiliate marketing generated £8bn in sales for UK businesses in 2012 – £9bn including lead generation – creating an impressive £11 return for every £1 spent, according to the Internet Advertising Bureau’s first study of the performance marketing industry published earlier this year. Despite that, the IAB estimates that fewer than 4,000 brands are taking advantage of it.

For a company new to performance marketing, it’s essential to take a long-tern view and back it with sufficient investment

“With everyone talking about digital marketing, working out where to start can be a big task in itself,” says Ed Lovelock, affiliate marketing manager at Argos, which is very active in the affiliate space.

“If a company is new to performance marketing, there will be a lot of testing required to understand what does and does not work. As a result, it’s essential that a long-term view is taken, planned carefully and backed up with sufficient investment.”

However, he agrees that the benefits of doing so can be plentiful.

“By linking consumers directly to a sales page from editorial, we can help the customer by reducing the number of clicks in their purchase journey and ultimately increase conversion. It also helps to reduce ‘leakage’ to competitor websites.”

Additionally, while the affiliate channel is often seen as purely deal-led, links within rich, relevant content can help brands reach a wider audience, generating new customers and incremental sales, he adds.

But he suggests that having a mobile-optimised retail site is critical, particularly if consumers are being directed from other mobile-optimised websites and apps.

“By understanding customers’ browsing behaviour and device preferences, we can ensure a consistent and simple journey, so they are more likely to complete their purchase and reduce overall bounce rates,” he adds.

A fifth of all sales on Affiliate Window’s network came via mobile devices in July, with the performance marketing company working for brands including BT, Boots and John Lewis.

However, as tracking on mobile is different to that on standard desktop sites, publishers need to ensure that it is enabled, which is something the IAB is working on to increase awareness.

B&Q, which relies heavily on the affiliate channel in its marketing strategy, is testing the potential of linking the online and offline purchase journey with Affiliate Window.

BQ-product-2013-460
B&Q uses affiliate marketing activity to generate sales and raise awareness of its product categories

Amy Meredith, affiliate co-ordinator at B&Q, says: “We have recently executed a cross-channel affiliate exclusive, [which allowed] users of particular affiliate sites to get a discount in our kitchen, bedroom and bathroom categories when they spent over a certain threshold [in-store]. We made the buying process easy for them, as not only could they enter a code at [our online channel] diy.com, but they could also download a barcode that could be scanned at the tills in-store or presented as a printed voucher.”

As the affiliate space becomes more sophisticated in its profiling and targeting, Meredith says retailers will continue to evolve the way they use it.

She says: “We are about to embark on a campaign that targets people who have shopped within the home and garden category lately, but not with B&Q. This is a fantastic opportunity for us to target new or lapsed customers with a different message to those who have shopped with us recently.

”

Performance marketing can also be used to ramp up sales internationally, as is on the agenda at fashion retailer River Island, which started using Rakuten LinkShare’s cost per acquisition (CPA) network last month.

The retailer has stores throughout Asia, the Middle East and Europe, and operates a multi-currency ecommerce site selling to consumers in the UK, US, France and Australia.

As part of the programme, which is being managed by ecommerce agency Biglight, River Island is working with fashion bloggers and publishers including FashionBeans, rewardStyle and ShopStyle to offer editorial, seasonal promotions, limited edition products and exclusive videos of pop star Rihanna to promote her fashion line for the brand. It will also be using the network to boost awareness of its growing menswear range and kidswear.

river-island-2013-460

Josie Roscop, marketing director at River Island, believes online channels are becoming increasingly valuable to international consumers who want to buy goods from foreign brands.

“We want to enable those shoppers to buy,” she says, “but also to make sure that the shopping experience they have is entertaining, personalised and exciting.”

MailOnline is also looking to monetise its global audience more effectively through its new affiliate marketing initiative.

Clare O’Brien, senior industry programmes manager at the IAB, says it is a shrewd move: “Publishers need to make money out of their audience. MailOnline already has a global reach, and while it might not be appropriate to sell advertising to a global audience, providing links to products for them to buy makes a lot of sense.”

Affiliate marketing has been hailed by some as a cost-effective way of reaching global audiences at scale as retailers only pay the publisher when a sale is made.

However, O’Brien says that while large, third-party networks can offer cost savings by helping brands quickly establish a presence in different countries, it isn’t a cheap alternative.

She adds: “Advertisers still need to be professional, pull together strong and relevant campaigns, and employ smart people. The fact campaigns are highly measurable is very attractive, but it doesn’t mean they cost any less than a display advertising campaign,” she adds.

B&Q’s Meredith adds that affiliate activity often reflects and supports what is happening in other digital channels, as well as above the line activity, so it is imperative that it is integrated and timed well.

Although there are obvious benefits from affiliate marketing, particularly when it is linked to news content, some critics have suggested that editorial integrity could be compromised if it is not done in an authentic and transparent way that fits both brand and publisher objectives.

Meredith says: “This is a potential issue that all brands should be aware of. We would never work with a publisher that doesn’t reflect our brand values.

“Editorial content displayed on affiliate sites for B&Q is used primarily as an awareness-driving tool [as opposed to sales-driving]. Although a publisher’s objective may be to generate sales, the editorial needs to be of high quality and beneficial to the customer, otherwise it would poorly represent our brand and would erode our reputation and values.”

argos-product-2013-460
Argos strongly believes in affiliate marketing, saying relevant content can help brandsreach a wider audience of potential customers

However, if these requirements are adhered to, Ed Lovelock at Argos does not believe affiliate initiatives like this should generate too much cause for concern.
 
“As long as it’s used wisely, I don’t believe there’s a risk to editorial integrity,” he says. “After all, articles need to be written for the customer’s benefit, meaning it should be very credible and relevant content anyway.”

In order to draw consumers attention to the links included in MailOnline stories, the publisher highlights the ‘Femail Fashion Finder’ tag at the top of the story and asks consumers to click on it further down the page, which goes some way to prevent readers from being misled about the intention of the link. However, it does not suggest that this is a commercial proposition.

The IAB’s Affiliate Marketing Council has called for increased transparency in the industry and continually reviews the standards that exist, as well as building new ones.

As part of this move, it created a consumer-facing website last year that maps how the business model works and encourages publishers to include the link in their terms and conditions.

The affiliate marketing industry has worked hard to clean up its so-called ”grubby” image (as referred to by Asos co-founder Nick Robertson in 2007), leaving in its place an altogether more glossy facade, particularly considering the potential return on investment.

As digital marketing continues to mature, so too will the affiliate channel. There will always be concerns over the integrity of editorial content that has an overtly commercial interest, but as long as quality is not compromised and publishers are upfront about the business model, there is every chance it will be a lucrative undertaking for both parties.

Q&A

Amy Meredith, affiliate co-ordinator, B&Q

Marketing Week (MW): What are the main objectives of B&Q’s affiliate marketing activity?

Amy Meredith (AM): We use the affiliate channel for two main reasons: to generate sales revenue and to raise awareness of particular product areas. By communicating B&Q deals through affiliate sites, we are able to target price-conscious customers with money-saving offers.

As we have an evolving product range to meet customer needs and wants, we partner with affiliates, via their content areas and use of social media, to convey this message to people who may not necessarily know that B&Q stock a particular type of product.

Additionally, we have used the affiliate channel to drive specific campaigns, such as increasing average order value and acquiring customers for The B&Q Club.

MW: How do you measure the success of an affiliate marketing campaign?

AM: The key performance indicators (KPIs) we look at depend on the campaign we are running. If it’s simply sales-driving, then we’ll judge its success on the profit generated.

It’s easy for anyone to offer a discount code to increase sales revenue, but we always focus on the profitability of what we’re doing, especially the incremental profitability.

If we are communicating a new or extended range, we look at the amount of interactions with those category pages on diy.com compared to an average in the weeks leading up to it.

We also run competitions as an awareness-driving activity through a combination of affiliate blogs and their social media channels. Over Easter, we ran several competitions showcasing B&Q’s new décor style houses. One particular competition saw a significant increase in visits to the ‘home’ section of diy.com, orders and revenue. The KPI of raising awareness was reached with promising results in sales too.

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