Using data to drive marketing decisions is more important than ever, and there is a huge amount of value to be unlocked within the affiliate marketing channel. The model is evolving, enabling brands to better recognise partners that are delivering the type of customer that is valuable to their business.
For many retailers, their digital marketing spend is dictated by upfront costs – per click or per impression. The affiliate model has always set itself apart with a payment model focusing purely on cost per sale. It’s a £1.3bn industry, and while it continues to grow, there are changes underway.
The adoption of technologies that have emerged from affiliate networks in recent years have enabled advertisers and publishers to use data to drive decisions in a more sophisticated way than ever before. An example of this is cross-device tracking technology, enabling advertisers to securely track and reward publishers for sales derived from a customer browsing on one device and purchasing on another.
The premise of an affiliate marketing programme is based on partnerships. Although the traditional cost-per-sale payment model is suitable for cashback and voucher code sites, advertisers recognise that not every partner is suited to a payment-on-sale metric, and there are opportunities to broaden their mix of publishers, to include content sites and influencers, beyond the ‘last click wins’ model.
Advertisers have therefore diversified the way in which they reward partners. Content writers, social evangelists and comparison engines typically form a third of any affiliate programme, and need to be rewarded for influence alongside the sales they drive. Advertisers can use affiliate technology to reward these publishers for their influence in a sale, and it stands to reason that brands which are flexible with their payment model are reaping the benefits; on average they attract 67% more partners to their affiliate programme than those who don’t pay for influence.
In addition to diversifying payment models, the affiliate industry is starting to truly embrace automation. The affiliate model is based on relationships, and while this element of human connection will always be important, there has been a light shone on the potential efficiencies, particularly when looking at display’s shift into programmatic and paid search’s adoption of bulk editing and automatic optimisation.
Advent of automation
Networks have started to integrate with the booking systems of advertisers to enable faster sales reconciliation, and therefore quicker payment to publishers. There are signs that other areas of the industry are adapting with changes to the way that new partners join programmes. With a huge volume of publishers applying to join an advertiser’s affiliate programme every day, having human approval of these can be time consuming. Applying pre-qualified parameters for publishers, which are then automatically approved to join a programme if they are relevant to that brand, would be a welcome element of automation. An example of these parameters might be publishers that are already partnered with an identified competitor, or have websites that contain keywords that the brand recognises.
One of the key advancements in the affiliate industry is the ability to place emphasis on the long-term value of a customer, rather than focusing purely on sales volume. Value comes in many different forms, and there are some universal metrics relevant for specific sectors. In the retail and shopping sector, value is often defined as being based on metrics such as frequency of purchase, margin of product and if a customer is new or existing.
In telecommunications and utilities, this changes to include initial contract length versus actual contract length; for travel the lag time between booking and staying; and for groceries it could be the location that the product is being delivered to. All of these data points can be fed securely between the advertiser and partner through an affiliate network.
Meanwhile, brands can also specify metrics that are specific to their business, such as shifting excess stock from a specific product range or engaging with customers in a new territory. Affiliate marketing is proving adept at being malleable enough to accommodate any brand’s needs by feeding back these data points for each partner on their programme. The role of the affiliate industry here comes in the form of personalised reporting, to review on a per publisher basis who is achieving the goals that are important to a brand. Knowing which partner is helping export a product to a new territory can be more important than how many sales that partner is delivering.
Using data to drive decisions is not a new concept to marketers; what is important
is the sophistication and the speed at which this can be done in partnership with a trusted technology partner in a brand’s local market and across borders, particularly now when UK brands and products are so sought after internationally.
An affiliate programme has the flexibility to report and reward on the specific metrics important to any brand in any sector, and that is exactly why it will continue to grow far beyond the £1.3bn it is currently valued at.
Edwyn McFarlane is business innovation director at Awin.