As with many people in the industry, I stumbled into affiliate marketing having only previously heard about it via one slide in one university lecture. This meant I had no preconception of what the industry was like other than what I vigorously researched prior to my interview. One of the first things I came across during this panic-stricken morning was a quote (hopefully everyone can guess which one!), which at a basic level criticised the industry for its lack of incrementality and professionalism.
I cannot comment on the truth of this as I was not in the industry at the time. However, I do remember during my first few months as a marketing executive calling up my account manager and various affiliates naively asking “If I don’t have any voucher codes and I can’t do commission increases, how can I drive extra demand?” The responses I got tended to fall into two camps: a) send out a communication; or b) upload a skyscraper. I have no doubt my peers on the other end of the phone were perfectly competent and this was largely accurate.
Of course, I don’t say any of this to criticise the industry but rather to show the contrast compared to how we work today. Last month, a new starter sat at my desk (standard Shop Direct procedure for when someone new joins the wider ecommerce team) and I enthusiastically spouted about how great I think the channel is, opening up Darwin and explaining the relationship we have with around 30 affiliates. As a humble marketer talking to a UX and onsite design expert, I expected to be met with a shrug of the shoulders and a polite thank you before the new guy went away and produced a brilliant piece of code that upped conversion by 20%. Instead I was greeted with equal amounts of enthusiasm and intrigue about the logistics of each campaign. This caused me to reflect on what Shop Direct and the industry as a whole has achieved within the channel in the past two years and the answer was A LOT. Here are a few of my highlights:
Personalising customer journeys
The success of retargeting and remarketing companies has caused a shift within the affiliate space; it is now proven that treating customers as individuals produces results. Shop Direct flags personalisation as the single most important short to medium term development within ecom. Those companies who do not adapt to this customer need will ultimately be left behind.
Paying Beyond the Last Click
A large proportion of the industry has accepted that the last click model does a disservice to many affiliates, which in turn will affect the growth of the channel. For this reason, advertisers are increasingly taking out tenancy options and some are even considering paying on alternative attribution models to last click.
Truly Understand Affiliate Value
No longer does Shop Direct make investment decisions based on last click data. The development of a sophisticated attribution model that takes into account customer time, click positions, time between click and purchase as well as a channel score (based on years of analysing how customers interact), means that Shop Direct is able to provide a value to all channels in a conversion that ultimately gives a fully attributed ROI score to each marketing channel. This is ultimately what drives investment decisions within Shop Direct marketing.
The Emergence of the Super Affiliate
Affiliates are now brands in their own rights; this has caused a huge shift in the power balance, creating less of an affiliate-merchant ‘supplier relationship’ and much more of a partnership. Affiliates have advertisers queuing up to work with them and if advertisers don’t act fairly and responsibly then they no longer just risk a negative forum post; they now risk losing significant demand and, in some cases, market share.
Affiliates tend to be smaller than the merchants they promote; this creates an ability for the affiliate to be much more adaptable and agile. Ultimately, this nature enables affiliates to occasionally provide marketing services more efficiently than the merchant can achieve itself. Because of these efficiencies, affiliates are able to provide the service on a CPA that makes what would have been otherwise unprofitable activity for the merchant profitable for all parties.
It’s quite hard to put my finger on exactly what has driven the speed of change in the performance marketing landscape - it may be results driven, or as a result of increased tech capabilities, or even just the cyclical environment. I just hope my next two years in the industry are as dynamic and challenging as my first.