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What’s Stopping the Affiliate Channel from Going Programmatic?

What’s Stopping the Affiliate Channel from Going Programmatic?

Digital marketing has made some remarkable changes over the past five to six years. New methods have been introduced to the industry, making the space efficient, accurate, targeted and cost-effective.

Programmatic solutions and high-tech platforms seem to be the tools of the future. A great number of discussions have arisen around the benefits programmatic can bring to marketing channels, however, things seem to be a bit more complicated when it comes to affiliate marketing. The special characteristics of the channel seem to make the transfer into programmatic more challenging than we first thought. How easy will it be for affiliate marketing to go programmatic?

Tech implementation

Educating the whole industry might be a bit challenging. Programmatic has a new mindset, which works in a very different way to traditional affiliate marketing. Affiliate is built around personal relationships between two parties - affiliate and client - and that’s what makes it special. It’s not just about generating sales and producing a high ROI; personal relationships have a key role on many levels.

This is not the case for programmatic, where a targeted campaign is set up on a platform and you let the algorithm do its magic, matching the best offer with the best publisher, with the best customer at the best time. The account manager role is minimised, and so is the negotiation game.

Affiliate managers need deeper training in the programmatic mindset, working on different platforms to be more connected with the technical part of the programmes. They will have to try to do the best for their campaigns by reaching the right volumes through programmatic algorithms.

Need for change

Many agree that there is a need for a change in the affiliate industry to try different approaches and include programmatic into the channel. The industry has been monopolised by 10-20 ‘super’ affiliates; big brands with big budgets tend to get all the attention. Programmatic might be the solution and salvation for smaller affiliates and brands, which, due to their workload, don’t get the chance to show off their capabilities. With programmatic, they can get the same chances as bigger affiliates. It can help to grow programmes effectively in the long term and enable management of thousands of affiliates.

Real-time decisions and execution is also something that has been addressed as problematic in the affiliate industry. Negotiations over phones and emails take more time as compared to the programmatic real-time bidding. The slow processes are believed to be a big issue since the longer the negotiation and execution processes take, the less time is available to work on the long tail.

New tools will be developed to make processes easier and faster. Metasearch and email affiliates are the two categories best fit for programmatic; the former can provide the most relevant and personalised results to users, while the latter provides access to more personalised and targeted audiences.

Challenges ahead

The discussion about including programmatic in the affiliate channel has been going on for a few years, so why isn’t it happening? Mainly, the affiliate industry has a unique culture. The affiliate managers build personal, professional and profitable relationships. Programmatic is “threatening” the uniqueness of the channel. Interpersonal relationships and negotiations won’t dominate the channel since the processes will be automated. On the one hand this will give the opportunity for programmes to grow quickly and at a scale, but on the other hand, the most challenging part of the programme will be down to account managers.

Training an entire industry can also be challenging. Affiliate marketers work in specific ways, often different to programmatic. For some people automation is not a necessity, because the affiliate channel is performing well as it is. There are areas for improvement through look-alike targeting and personalising ads/creative. There is also an argument around the extent to which programmatic can feed to affiliates.

As previously mentioned, we cannot change fundamental principles of the affiliate channel such as relationships, partnerships and allowing publishers to choose the best way to market to their customers on behalf of advertisers. Maybe programmatic should be introduced to the affiliate channel in some of the areas that need improvement. There is no doubt that there are huge amounts of poorly-monetised inventory, because the industry has been monopolised by the big affiliates. Programmatic could be a good solution for smaller affiliates to get their share of the market.

Finding a compromise

Not everything needs to be black or white, though. There is always the option of not going fully programmatic. The diversity of the affiliate channel won’t allow generic programmatic implementation across the board. There could be a programmatic solution for content affiliates, where they can sell their inventory on a CPA basis, but a different approach will be needed for voucher codes and cashback sites.

The current programmatic solutions work mainly on impression-based technology. Knowing that the affiliate channels is click/sale/lead tracking-based, the whole set-up needs to be adapted to the affiliate structure in order to be helpful for the channel. The amount of resources required to buy into this concept is also a challenge and currently this subject is under discussion, since there are many details that are dividing the opinions.

There needs to be an assessment as to how reluctant the industry might be to these changes and a handful of networks have already tried to embrace programmatic concepts in certain areas, such as Tradedoubler's acquisition of Adnologies, which shows there is place for testing and experimenting before the industry makes its final decision.

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Stella Agapiou

Stella Agapiou

Stella is the affiliate planner at MediaCom. She peviously worked at Fularo Holdings in Cyprus for two years as a media buyer. Previous working experience includes affiliate and display programmatic.

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