Future-gazing tends to be reserved for the end of a given year. However, considering the pace at which affiliate marketing continues to evolve, an assessment of industry direction at just beyond half-time seems apt.
So far in 2015 we’ve seen the launch of new tools, huge company purchases and our usual delivery of innovation within campaigns. Affiliate marketing is a channel that aims to position itself at the centre of changing buyer habits and punishes those unable to adapt.
In the below you’ll note a clash of opinions, but debate is never a bad thing in something where a ‘tried and tested’ formula for success remains hard to come by. So, grab a coffee, settle down and take in future of affiliate according to some of its key figureheads.
Our panel is:
Helen Southgate – UK MD, affilinet
Jeff Johnston – VP of Product Management, Tradedoubler
Claire Davenport – UK MD, RetailMeNot
Erik Mikisch - VP of Marketing, Performance Horizon
In fewer than 100 words, explain to us the direction you think affiliate marketing is heading.
Claire Davenport: Partners who can offer significant scale combined with strategic planning and a mobile/in-store component have evolved into viable marketing channels. The majority of consumers are now more price-savvy and less brand-loyal, so affiliate marketing will continue to evolve as it delivers increasingly tailored and targeted messaging along with engaged customers to brand partners.
Erik Mikisch: We were actually ahead of the curve when we built our platform that allows brands to directly connect with all marketing partners – from traditional affiliates to apps, social, and offline. The types of advertising under the performance umbrella continue to grow, which is why we exclusively talk about digital partner marketing, not affiliate marketing.
What do you see as the big ‘disruptors’ to what we have at the moment?
Helen Southgate: I think currently this falls to other channels working on a CPA or performance basis and joining the fight for that last-click attribution, particularly display and retargeting. As these models are based on the last-click model, the affiliate channel is at risk of declining and I think we are already seeing evidence of this.
Jeff Johnston: When it comes to the next big ‘disruptors’, the ability to optimise multi-channel performance marketing by using insights from customer journey data will be critical to the future success of key digital players. Understanding the roles that different channels and publishers play in individual user journeys also has significant implications for the way in which publishers are remunerated and for the way in which advertisers assess ROI.
CD: Mobile and multi-channel is undeniably the most prevalent disrupter at the moment for the whole of retail and so for us, as a strategic marketing partner. Mobile is the crux between digital and in-store, and it influences all channels. Retailers must be able to reach a large mobile audience, something that they struggle to do with their own apps. Therefore, they must engage with the right partners.
Do you see as many ‘one-man band’ publishers operating as we do at present? What challenges are they likely to face in a ‘new’ climate?
HS: The growth of the ‘one-man-band’ won’t be possible unless we adapt the way we measure and attribute value to affiliate activity beyond only giving value to sales on a last-click basis. Although many sales can still be attributed on a last click, many are being overwritten by other channels – display, retargeting, brand search etc. In order to promote the value of affiliates, we need to show how they are helping support sales and branding further up the funnel.
JJ: New players are always entering the market and growing the publisher eco system. For small publishers one of the biggest challenges is to reach their target audiences in an already noisy market place. A cohesive mobile strategy is key to success, and I believe there are opportunities for small players to gain traction in this mobile vacuum. ‘One-man band’ publishers will continue to enter the market, as despite challenges the barriers to entry are very low – this means that anyone with a good idea and the PHP Cookbook has the potential to be successful in the field.
Priorities will naturally vary between publishers, but is there any one thing you feel sites will need to implement in order to future-proof themselves?
HS: I think variety is key; don’t do what everyone else is doing. Try and carve out a niche and offer advertisers something different and valuable, particularly with regards to content and what type of customers publishers drive. For example, an advertiser is going to place much more value on a customer that is loyal for 10 years than one that is only loyal for a year, and that will affect how the advertiser works with publishers in the future.
JJ: Future proofing is a constant issue for publishers and currently mobile is the most pressing issue. Google’s “Mobilegeddon” has had a huge impact on publishers that haven’t adopted a mobile-first approach. Google estimates that 50% of searches are conducted using mobile devices and our research shows people have on average 4-7 devices. In this environment, it is surprising that so many publishers have been caught out by what’s happened.
EM: Digital marketing partners need to recognise that they contribute to a brand’s business success and that their contribution increasingly can and will be measured on entirely new levels of granularity. Partners fighting against detailed measurement have already lost the battle and are not establishing a model for long-term success. That said, successful partners have always been the intermediary between consumers and brands, and the ones that make it easy for brands to connect with their consumers will win.
CD: I’d say there are two interconnected priorities; mobile and understanding your customer data. Consumers with 24/7 access to brands via multiple touchpoints are increasingly discerning and able to filter out brand noise. So, to future-proof your business, invest in understanding your customer, be prepared to open a dialogue with them, respond to their demands, localise and personalise your message as far as possible and associate with partners who will do the same.
Affiliate marketing for advertisers in 2020: will we still be seeing the same rates of growth in spend or is this likely to plateau with maturity?
HS: Not if things don’t change. We need more active publishers delivering quality traffic and customers and we need to show advertisers the wider value of the channel outside its current measurement. If we don’t, we will simply lose sales and budget to other channels. We also need to get better at managing publishers at scale, being more targeted and offering better tools, content and services. They are the life-blood of our industry yet the IAB OPM study revealed that the number of active publishers has not increased since 2013. This is a key concern and we as an industry need to do more to attract publishers to work in the channel and make it more accessible for all.
JJ: Affiliate marketing will continue to evolve, although the market is maturing and is unlikely to return to levels of growth previously recorded. For many advertisers affiliate marketing will continue to deliver a significant percentage of transactions. We expect to see growing use of performance-based metrics across different channels, with an increased focus on results rather than managing budgets. We believe that this will be a watershed moment for performance marketing in the same way that real-time bidding revolutionised CPM activity.
EM: There is no projected slowdown in digital ad spend, with analysts predicting budgets to increase across all channels from social to mobile to video. This goes back to our premise that ‘affiliate’ as a model is being applied to all of these channels and that increasingly all advertising is becoming performance based – even offline. Therefore, we believe that we are far away from a plateau or maturity.
In light of Google’s movements in the price comparison space, is there a worry that some of the tech giants will look to assert their dominance in certain areas of affiliate marketing?
HS: People have been doing this for years and the affiliate channel always survives. It’s a channel that has been around for over 20 years and seen heavy change in the digital and economic landscape. It is a robust, versatile and agile channel that will continue to adapt, survive and grow regardless of what others are doing.
JJ: Typically, when the tech giants diversify away from their core competencies the results are mixed. However, Google is a special case. The advantage small players have is that they are nimble and can innovate and keep pace with the rapid changes that we are accustomed to in performance marketing. Most importantly, all players need to stay focused on keeping up with technology and innovation.
EM: Of course, Google and Yahoo already are, while Facebook will shortly and a few others (maybe AOL, Adobe, Oracle, Salesforce) could in the future significantly impacting the performance marketing space. However, marketing technology is pretty sophisticated, requires a good global infrastructure, and probably most importantly, is an enterprise technology sale. The last consideration is very relevant since brands tend to make enterprise technology decisions based on merit not just marketing might.
Nothing like this could go without a mention for attribution… Rewarding publishers across the purchase journey – a bonafide game-changer for affiliate marketing or simply another way that a select number of brands will do business?
JJ: Attribution has been a hot topic for some time. User journeys are complex (some may include over 500 clicks before the point of purchase) and recording these clicks and attributing value for each interaction is not an easy task. In many cases rewarding a number of publishers for clicks in the user journey doesn’t increase the performance of a programme, simply because a greater understanding of the data is required to calculate the value each publisher contributes along the purchase journey. We are therefore seeing more complex ways of working out the value created, such as game theory, because a one-size-fits-all model doesn’t work.
CD: The industry as a whole is still struggling to solve the attribution challenge. Progressive retailers and publishers are working together in conjunction with attribution measurement companies to solve this challenge. By working together and sharing and analysing data, we can connect the consumer shopping journey across multiple touchpoints to create a holistic view of what has influenced a sale.
Finally, what do you feel is the most-exciting thing about affiliate marketing at the moment?
HS: What it has always been. The agility and innovation within the sector through publishers and networks alike, which keeps us one step ahead, overcoming challenges and continuing to grow the channel. There is no other channel that offers the range, breadth, diversity and promotional tools that the affiliate does. I wish we would shout about this more. Affiliate marketing is a great channel!
CD: We are evolving beyond affiliate marketing into a disruptive channel and, to me, that is still the most exciting thing about being a business in the retail marketing space. The industry is still relatively young and is therefore agile, allowing lots of the major players to develop new technologies quickly to meet consumer and partner demand. As a fast-moving company in a fast-paced industry, what’s next will be just as exciting.
JJ: The entire digital marketing ecosystem is changing and exciting new opportunities are emerging. We believe the successful players will be those that can capitalise on the complexity of this rapidly changing environment. They will be the ones who are able to harness the power of data to drive insights that allow the optimisation of performance-based marketing spend across multiple channels.
Was there anything we missed? Have your say below.