These days we’re more accustomed to talk about performance marketing rather than affiliate marketing. CPA model defines performance marketing. Affiliate marketing is a part of performance marketing. Previously, the sale was at the heart of everything that we did for advertisers. We used to be able to say that affiliate marketing was for those that preferred a sale to an impression or a click. The idea that you only pay when you got a sale was very compelling. CPA was the model we worked on, and it was the USP of the affiliate channel.
Now CPA is at the centre – everything, all online activity, regardless of how it’s paid for up front, is worked back to an effective CPA. Affiliate is just one channel amongst those, and in this sense has lost its USP.
Just as CPA is no longer only about affiliate marketing, so the sale shouldn’t be considered the only activity that affiliate marketing can deliver on... even if whatever activity it performs is still remunerated on a CPA. Affiliate marketing might be a part of performance marketing, but does it only ‘perform’ in terms of sales? We used to say that affiliates were your ‘virtual sales force’. In this presentation I am going to put forward some reasons why affiliates should be considered a branding force as well as a sales force.
Traditionally, the campaign objective dictated both the channel and the payment metric.
At the top is the campaign objective: on one side, branding, on the other, the sale or DR. Below that the payment metric associated with each. And at the bottom the channel traditionally associated with these. These had always been treated as discrete entities, but in the affiliate channel, from the very start, we have seen paid search affiliates able to arbitrate between the CPC that they pay to Google, and the commission payments that they get back as CPA from their advertisers. But now we also see that those working in display and are used to a CPM model are attracted to the affiliate channel because networks offer the ability to get instant access to hundreds of brand clients.
Anyone working on a CPA is remunerated only on the sale. But we have to ask at what point the affiliate appears in the customer’s path to purchase, and what value they add at that point. An affiliate might be an introducer of the customer to the brand, initiating the path to sale by getting the first click. But they would not be remunerated for that introduction to the brand, only for the introduction of the customer. Any branding support that affiliates lend in support of the sale is effectively free. So we have to look at everything that happens around the click. Before it, after it, around it.
Affiliate marketing used to involve an uneven relationship. There was a mass of affiliates, and an advertiser had little knowledge of how to differentiate them. So advertisers would take a top-down approach, disseminating promotional material and communication, with very little flowing the other way. Any partnership they did with affiliates would involve them plucking the affiliate from this mass, selecting them for exclusivity on a particular deal or offer, for example.
Now the best affiliates have risen to the top. Respect is mutual between advertisers and affiliates. It is not just advertisers who have the marketing plans that they disseminate to their affiliates; affiliates themselves have marketing plans that advertisers compete to be part of.
The affiliate channel has developed to the point where affiliates are now brands in their own right. So we can say there has been a process of evolution from affiliate relationships to affinity partnerships which are brand-to-brand.
We can see the rise of brand affiliates if we look at the Hitwise list of the top 100 retail sites in the UK. Many of these are publishers as well as advertisers.
Affiliates have achieved brand recognition through multiple specialisms This has resulted in the blurring of promo boundaries. So for example a cashback website might have simply done cashback only a few years ago.
But in order to build a brand they had to be more than just a cashback directory. They had to develop multiple specialisms through which they could prove to advertisers that they were adding value beyond their cashback core.
Whilst cashback might be still at the core of their business model, the customer engages with them across many areas. These areas represent new opportunities; they constitute a branding opportunity for advertisers.
Previously, co-branding was the extent of the branding opportunities advertisers had used. Even this is still relatively under-utilised.
One of the surest signs of a ‘brand’ affiliate is their ability to master many different promotional methods. So let’s look at one example, one of the biggest voucher code sites in the UK, vouchercodes.co.uk, and all the promotional opportunities advertisers can take advantage of. Rather than just providing a ‘directory’ of codes, we can start to wonder: what kind of affiliate is this? How should we categorise them? - Multiple branding opportunities on their websites – can be about deals, sales, free delivery, not just money off the basket value. - Email database of 1m – does this make them an email affiliate? - Partner with The Guardian newspaper – monetising their content through a white label. Does this make them, in a way, a content affiliate? - Partnering with Confused.com, a major comparison site, again a white label solution – does this make them a comparison affiliate? - Also produce unique editorial content themselves in the form of a lifestyle magazine – far better quality content than many supposedly ‘true’ content affiliates. These are all efforts complementary to the sale, but for which the affiliate is not directly remunerated. So when we think about using affiliates to support advertisers’ brands, we have to question or perhaps even abandon the traditional modes of categorising affiliates.
And the commercials for this additional activity are very appealing if we compare what branding exposure advertisers would get from old media versus affiliates. These figures are for the Guardian newspaper in the UK, a major broadsheet.
But branding not about exposure/coverage – it’s not about being able to blanket as much of the web as possible with your message. Instead branding is about targeting. This is a general online trend. Indeed, we are moving to a micro-targeted web. All aspects of the web are targeted – search results, Facebook feeds, ad space via RTB platforms. So targeting s the key to branding. Targeting is the way that affiliates can expect to be measured in future. Why are affiliates particularly well-placed in this respect? Three reasons.
Affiliates are experts in micro-niche targeting – mastering areas beyond advertisers’ reach. This is the real value of the long-tail and the real value of the size of networks’ databases.
Affiliates contribute to branding beyond simply display of banners. For example, one of the sites listed on the Hitwise top 100 retail site list is MoneySavingExpert.com, which whilst it works as an affiliate, all its content is editorially-driven.
Dependence on conversion for payment means they have an incentive to find potential customers – again, targeting over breadth of exposure.
Quality rather than volume is the challenge for affiliate managers today. Advertisers are asking for more than just volume: they want to know about the types of customers that their affiliates are bringing in and whether they are high value for them. That value can be decided in many different ways and there are great differences in the way that different affiliates in the same sector and with the same promotional method will respond to them. This is why advertisers value a diversity of affiliate activity. How are affiliates responding to the demand for quality over volume?
Affiliates are joining advertisers in becoming more sophisticated in how they collect and use data about their customers. Customer data – e.g., on demographics Transaction data – e.g., on spend, frequency, persistency, redemption rates. Mobile data – e.g., geo-specific
All the different ways in which the customer interacts with the affiliate’s brand.
So how can advertisers develop branding opportunities with their publishers?
This is how one advertiser in the UK has chosen to look at their affiliate programme. They are taking into account not just sales volume, on the Y axis here, but whether or not the affiliate is a good brand fit, on the X axis. The numbers in the blue here represent the number of affiliates that fall into each quadrant. Advertisers can go further and decide what criteria represents a good brand fit. What might be good measurements of branding beyond the sale? E.g., bounce rates from affiliate traffic. Networks need to facilitate the recognition of affiliates as branding partners both at the level of the programme description for advertisers, and the publisher profile for affiliates. The latter need to showcase: Traffic Demographics Targeting All promotional activities Case studies/testimonials, etc
Several challenges that have to be addressed at the level of the industry before affiliates can be taken seriously as branding partners in the fullest sense. There are two I want to mention here.
The first is around advocacy versus compliance. For affiliates, branding is chiefly about content rather than banners. But who should control this content? One of the hardest things for brands to get right is tone of voice. The trust and the authority that affiliates have built up with their members or visitors is based on getting this right. This is precisely what makes them so valuable to advertisers. But there can sometimes be compliance aspects to this. In the finance sector for example. This is more front-of-mind now thanks to the UK’s extension of the Advertising Standards Authority’s digital remit. MoneySavingExpert.com are a perfect example of this. They insist that they write the copy that is displayed on the site. The site is editorially-driven and they select deals on their strength, rather than charging for it.
The second debate we have to address as an industry is on plurality vs control. There is almost a tacit assumption on the part of many affiliate managers, more especially on the advertiser side, that a large programme weakens the advertiser’s control. The more affiliates you have, the more hassle it is trying to control them. This is again another debate in the UK. Some advertisers have reacted to this by ‘culling’ affiliates from their programme. Others by hiding their programmes and accepting affiliates on an invite-only basis. Many are now asking for a great deal of resource to perform affiliate audits. This is why I, along with others in the AMC, have been working on a best practice document around affiliate removals and audits.
Before, After and Around the Click: Publishers as a Branding Force and a Sales Force Owen Hewitson, Client Strategist – Affiliate Window & buy.at