You might think that after working in the affiliate space for over 11 years that the answer to this question would roll off my tongue with ease. But you’d be wrong. I’ve asked this question to a lot of my peers recently and all of them stutter and stammer over an answer before admitting defeat. And who can blame them really.
The reason that defining affiliate marketing is so problematic is that in today’s digital world, technology, networks, advertisers and publishers have all advanced at such a rate that traditional marketing and digital channels have converged. In my opinion, affiliate marketing is a microcosm of digital because it utilises all digital disciplines in order to drive the ultimate reward; sales. Whether you’re talking about SEM, display, social, native advertising, traditional marketing, discounting or comparison, affiliate marketing houses them all under one roof. But what does that all mean exactly and why should you care?
Not just about CPA
It could have been argued in years gone by that the uniqueness of the affiliate channel was in its payment model – risk free, no hassle, Cost Per Acquisition (CPA) deals. Reading that back now I realise it sounds like the sales patter you’d get from a dodgy car sales man who is trying to sell you that nice new BMW on 0% finance but is actually going to cost you thousands of pounds in the long run. In retrospect, we’ve probably not enhanced our reputation in the way in which we have sold the channel in the past
Paying on a CPA model is still something that the channel holds as unique and although all digital disclipines work back to a CPA, very few predominantly use the CPA as a payment model like we do in the affiliate channel. Most other channels are paid for regardless of whether a sale is made, for example CPM in display and CPC in search, but the value of the channel and measurement of budget is still worked back to a CPA.
I think this payment metric in the channel has been something of an own goal. By looking more in depth at the customer journey, we’ve been able to establish that affiliates have a key role to play higher up the purchasing funnel and in supporting brand strategies. However, we’ve struggled as a channel to do much about that as our reward metric is based on the last click CPA model, so if affiliates are adding value, they are not necessarily getting paid for it. If my theory earlier that affiliate marketing is a microcosm of online then it should harbour all the different payment models and it can. Armed with insight about the customer journey a number of programmes use flexible reward models that run concurrently with the CPA metric, just as you would in any other channel. Many forward thinking advertisers are starting to look beyond CPA as they understand that affiliates can help to fill the top of the customer journey funnel, as well as close the sale at the bottom.
A story of two tails
Whilst affiliates are experts at closing sales, CPA isn’t – and shouldn’t be – what defines us anymore. So, if it’s not about the payment metric then it must be about the way we market and how we market. The uniqueness of the channel comes down to the publishers, which largely fall into two categories – the short tail and the long tail.
The short tail is populated with publishers that we’ll all be familiar with such as cash back, price comparison, large portal sites and vouchercodes. Their objective is to drive good quality, incremental, high volume sales and certainly this is an area where the affiliate channel has been extremely successful. On the flip side however, nurturing these relationships takes a lot of time, resource and innovation so this has tended to be where networks have focused their resource over the last few years, understandably. However, the net result is that many brands find that they are overly reliant on a handful of affiliates for the majority of their sales.
You don’t need to be a business guru to deduce that this is risky because it significantly reduces your growth options. Whilst I firmly believe that the short tail needs to be continued to be engaged and nurtured, I think as an industry we need to widen our remit and look for more towards the medium to long tail in order to extend brand reach and engage consumers outside of a conversation based purely on price.
In the past when brands have looked to engage the medium to long tail, primarily made up of content sites such as blogs, they haven’t been able to get programmes off the ground. There are two key reasons for this. Firstly the one to one relationships they have with the short tail don’t work in the medium – long tail. Instead there is a real need for automation as it is not possible to effectively engage and mobilise thousands of publishers on any other basis.
Secondly, we need to get with the digital programme. Giving a publisher a text link or a few choice banners is not effective engagement that is going incentivise the publisher or inspire their customers. Leveraged correctly, the medium to long tail can help bring your brand to new audiences and drive real, tangible growth but this can only happen if publishers are empowered to present customers with content that is relevant to them and based on their known behaviour. For example there is no point me being served an ad for an iPhone from a company that I just bought an iPhone from online 1 week ago. In any other channel we wouldn’t do this, so why do we still do it in affiliate marketing? The key to making the medium-longtail work is to target the customer through intelligent data capture and automation.
So, back to my original question. Just what is affiliate marketing? It’s a channel that gives advertisers exclusive reach across thousands of websites and allows them to intelligently optimise publishers within that reach according to customer behaviour. It allows brands to reach their customers at the right time, in the right place, with the right message to achieve their objectives. By doing affiliate marketing well and understanding that it’s not always about closing the sale you will drive more sales and have a sustainable, healthy, growing digital marketing strategy for years to come.
For more advice on how to get the best out of the affiliate channel email email@example.com.
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