With skepticism ever increasing around advertising fraud, transparency, and even programmatic, a long-standing marketing model has risen to the forefront that’s a win-win for everyone: performance marketing.
According to eMarketer, affiliate marketing spend will reach $6.8 billion by 2020. According to Business Insider, 15% of all revenue driven by the digital media industry comes from affiliate marketing. But why is it that we’re seeing such a rise in performance marketing, and how is it one channel that seemingly benefits everyone involved?
Performance as a monetization channel
Throughout the years, publishers have tried a number of models to monetize their content, from subscriptions to sponsored content to video ads to memberships and events. But each of these models comes with their own challenges.
Videos, for example, are becoming increasingly selective when it comes to running ads, as YouTube continues to set stricter rules for who can monetize their videos. And with sponsored content, publishers have to walk a fine line between generating income and losing authenticity with followers. No one wants to be seen as hawking something in public that they may not use in private. On the other end of the spectrum, advertisers have to risk their budget on sponsored posts, which may or may not translate into new customers.
When publishers win, everybody wins
Enter performance marketing. Where publishers have more control over what they promote, and advertisers only pay when they score a new customer or lead. Through channels like affiliate marketing, publishers can link to products they know, love, and use. And they can do so in a very natural, almost native way — as they mention the products in blog posts, Instagram Stories, or review pages.
Whereas sponsored posts can feel overly constructed and unnatural, affiliate links can be small, subtle, and discrete. They can also be inserted directly into copy, avoiding old models like banner ads (which consumers tend to be blind to these days).
And this model is just as much of a benefit to advertisers. Instead of shelling out thousands of dollars for mega-influencers, or hoping to find a diamond in the (niche influencer) rough, advertisers can trust publishers to self-align with the partner programs and products that fit them — and their audience — best. There’s no risk to advertisers because they only pay a commission when they generate a new customer. The better the affiliate performs, the more the merchant sells.
Performance marketing even gives new brands a better shot. Instead of needing to compete with massive advertising budgets, they can be effective with a grass-roots approach and a stellar affiliate or referral program. Just take a look at how brands like Blue Apron have grown. It’s one reason why affiliate marketing programs are increasingly referred to these days as partner programs. That’s exactly what they are: a publisher and an advertiser partnering together in a mutually beneficial relationship.
But publishers and advertisers aren’t the only ones winning in this equation. Even consumers get a better experience. Instead of display ads interrupting every video, feed, or scroll, they can simply consume uninterrupted content from the creators they enjoy most. This nurtures an environment where consumers actually want recommendations for products and brands. Who wouldn’t prefer that over the feeling of being chased down by advertisers?
Looking to the future
So what’s next for this chapter in performance and partner marketing? As technology offers more personalisation and publishers are able to hone in on their niche audiences, conversions will increase. More and more advertisers will likely leave the risky view-based (CPM) and install-driven (CPI) models in favor of the true value of cost per conversion (CPA) models.
To make themselves more lucrative options for publishers, brands and advertisers will need to have their partner marketing game on point. This includes purpose-built partner marketing technology with reliable tracking across app and desktop, flexible payout structures, real-time data, transparency, automation, and finally, optimisation tools to see which kind of content performs best.
Performance marketing has been around for over a decade. Even so, with emerging technologies, partnerships, and social media channels, all feels new again. For perhaps the first time in the industry, there’s an opportunity for a win-win-win for publishers, advertisers, and consumers alike.
And that’s good news for everybody.