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The Hidden Value of Affiliate Marketing

The Hidden Value of Affiliate Marketing

When affiliate marketers make the case for the virtues of their channel, traditionally it has been the payment model that is at the heart of the pitch. The idea that as an advertiser, you only pay when a sale is made is a simple principle which is easy to grasp and immediately attractive.

Yet there is recognition amongst affiliate marketers that more can be done to raise awareness of the channel and secure greater investment from advertisers. How then might affiliate marketers better represent their industry, and what can they do to educate decision makers about the value of the channel?

Affiliate Marketing Is More Than CPA

Whilst the CPA model means that advertisers only pay on a sale, one aspect of affiliate marketing which is under-appreciated is that advertisers actually get much more than just the sale for their spend. All of the efforts that go in to making that sale – exposure on high-traffic sites, banner space, exposure on generic search terms, coverage in newsletters – are effectively free: the advertiser never sees them on their invoice as they are included in the cost they are willing to pay for the sale.

This is essentially free advertising that through other channels would be paid for upfront. Through affiliates, advertisers are able to market to a greater proportion of the web and, as experts in micro-niche targeting, affiliates can master areas beyond advertisers’ reach.

This contrasts sharply with everything affiliates do for which they are not directly remunerated.

Paradoxically then, the very transparency offered by the CPA model can obscure the value of the activity that goes on around the sale. Partially this is due to the ‘last click wins’ model: it is no accident that some of the largest affiliates today have business models premised on capturing the user’s last click (cashback and voucher codes being the most obvious examples). This contrasts sharply with everything affiliates do for which they are not directly remunerated. The simple message that affiliate marketing can bring in sales, but also add value in terms of free branding and user engagement (not to mention customers who later return, either directly or through other channels) is a compelling but often neglected feature of the channel. Indeed, it could be argued that working on a CPA means working harder: those affiliates that choose to work as affiliates and get paid-per-sale forsake revenue they could make from display or CPC.

Affiliates - Showcase Your Users

Affiliates should emphasise this aspect of their work. By gathering and sharing information on their traffic with advertisers they can demonstrate their ability to offer partnerships that go beyond simple sales. To do this, affiliates should showcase everything they know about their users: how much traffic they have, where it comes from, how it arrives at their sites, and what they can do to target it towards advertisers.

Equally, advertisers who believe in the CPA model should be prepared to ask whether the commissions they pay are solely intended to reward on the volume or cash-value of sales produced. Instead, could affiliates be judged on additional indicators – for example, users’ engagement based on latency rates from click to transaction – and could these be recognised in the commission payout? Whilst only paying out on the sale itself, there is no reason why the commission should be the same for all sales referred by all affiliates. Recognising the added value affiliates contribute around that sale is something that should perhaps be given greater acknowledgement by advertisers and affiliate marketers alike.

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Owen Hewitson

Owen Hewitson

Owen Hewitson is Associate Director in the Performance team at Starcom MediaVest. He oversees the management of performance marketing campaigns for some of the world’s biggest brands and a team of experienced affiliate specialists focused on clients' acquisition-based activity. He began his career in performance marketing in 2007 at Affiliate Window, working first in the account management teams and later as a Client Strategist. He has spoken at a number of events in the UK and Europe and contributes regularly to industry sites and publications.

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