The last few weeks has seen companies adjusting their strategies, relocating ad spend and responding to consumer purchasing behaviours in response to the Coronavirus pandemic, which has seen the volatility of the performance marketing landscape change in one way or another.
With multiple sectors impacted and partners and clients seeking vital information during these unpredictable times, we are working hard to ensure that we are bringing the industry fresh perspectives on the ripple effect that is taking place across the ecosystem.
As part of our roundtable series, we spoke with key stakeholders at Acceleration Partners, Awin, eBay and MediaCom to discuss the overview of the performance marketing industry in today’s climate, how they themselves and partners are adapting and what the future may hold.
PerformanceIN asked Helen Southgate (managing director, EMEA and APAC, Acceleration Partners), Kevin Edwards (group strategy director, Awin), Richard Lane (UK lead, eBay Partner Network) and Jessica Chapplow (head of digital transformation LVHM Maisons at MediaCom) a series of questions.
Is it possible for performance marketers to be conserving budgets without affecting long-curated relationships?
Helen Southgate: I’ve been reading a lot of forums where publishers are highlighting reduced commissions or programs being stopped. We need to take a step back and understand the different reasons why this is happening. It could be to conserve jobs because demand has fallen or they have to scale back costs. We’re in a different world now, so there has to be an element of understanding that these are not normal times.
As a brand, it’s an important decision to make. There’s going to be lots of factors involved, but if you’re honest and open about why you’ve made the decision, then I think in general people will be supportive.
Will this harm longer-term relationships? Potentially. In my experience, if you treat people with respect and you tell them why you’re doing something, this will help preserve the relationship.
Richard Lane: Communication is the key throughout this. During these times, the human element is more important than ever. As long as you’re communicating throughout, justifying the changes and doing them for the right reasons, it shouldn’t be an issue.
If you have an ongoing relationship with a partner, there should be enough empathy there for them to understand the reasons why you’re doing it.
Kevin Edwards: There are two elements. One of them taps into publisher concerns about commissions and the other is accepting that we’re living in exceptional times and the ramifications this has for affiliate programs.
There is a multitude of reasons why businesses are making changes. For example, we’ve had circumstances where brands have approached us and said: “we need to pause our affiliate program because we’re suspending our marketing and incidentally, my job’s being furloughed”. So we’re actually dealing with people who are pausing their affiliate program as well as saying goodbye to their jobs for a while. Therefore, there are all these unchartered factors to consider and I don’t think anyone can take issue with those. This isn’t just about affiliate marketing, this is something much bigger.
“We’re in a different world now, so there has to be an element of understanding that these are not normal times”
The other area is when people are assuming brands are being cynical in that they’re using this as an excuse to reduce commissions. I haven’t seen any evidence of that happening but that isn’t to say there are isolated cases. There might be examples where affiliates feel very strongly that it is happening. In reality, there’s probably a middle ground whereby some people perceive some brands are doing this but in reality, they aren’t being particularly effective at communicating. So overall, the transparency of messaging is critical.
Jessica Chapplow: There are a couple of sides to this. For instance, wherewith publishers, we’ve seen a new commercial model come in where they’re just revamping the ability to act, to change the added value and the kind of incentivisation that comes through campaigns. That’s something that I know a lot of the publishers are pivoting towards but in the current parameters they’re able to offer.
Then there’s the line between protectionism and opportunism. Opportunism is obviously blurring and I think with longstanding relationships, knowing how to navigate that tight rope is something that is much easier. That’s because we’ve had these relationships and if you fostered them over a long period of time, you’re able to have those kinds of open and frank conversations with each other because that’s what it comes down to at the end of the day.
When you’re partnering with a client or publisher, it’s about being a partner through challenging times and this is definitely something that’s coming through on the client-side. Being flexible in these few ways will help drive relationships through the storm.
Is there a way for brands to use performance marketing for social good?
Kevin Edwards: I’ve been surprised by how few publishers have changed or curated content around what’s currently happening. If you go to some of the biggest affiliate sites in the country, it’s almost as if nothing has changed.
Whilst people want to be very careful about what they communicate and they don’t want to be seen as taking commercial advantage of a difficult situation, because publishers have such large audiences, they can have a more open conversation with them about what’s happening and give the appropriate advice where necessary.
One affiliate that’s doing a good job at the moment is VoucherCodes.co.uk. They’ve featured a lot of freebie offers and free trials for people that are currently working from home. They’ve also got a dedicated section on their website that highlights brands that are pushing NHS discounts. There are very few publishers working hand-in-hand with advertisers to do that. However, some are doing things behind the scenes, for example, offering reduced rates or enhancing the position for brands that are doing the right thing.
Richard Lane: From a publisher side, the conversations we’ve had are more to do with “what we can do to benefit the situation” rather than “what interesting content we can create”. It’s an interesting dynamic as brands are experiencing cuts elsewhere but that’s another conversation entirely.
From a business perspective, we’ve taken the decision to suspend seller fees for registered businesses for 30 days and for any new businesses registered on the website, there are no seller fees until the end of May. It’s having an appreciation of how things are with the world at the moment which goes back to the human element. It’s these sorts of changes that keep things going.
“It’s about serving, not selling right now in the performance marketing industry”
Jessica Chapplow: Within the performance marketing industry, where there are data points and people, we get too caught up with winning and optimising on CPA and CPCs. We need to take a step back and realise that everyone is losing the battle. It’s about serving, not selling right now in the performance marketing industry. Knowing when to pull your efforts, whether paid or not, will determine where a brand’s integrity will be later in time.
Helen Southgate: I noticed TopCashback is pledging to match member’s donations so you can donate some of your cashback to the NHS charity, Heroes. If publishers have the ability to do these sorts of things then that’s a good sign.
It’s difficult for publishers to know what they can actually do or know the kind of products to sell to consumers. If there are additional things they can do, such as the donations idea from TopCashback, that’s great. However, it’s not in a lot of people’s remits to execute such ideas.
What channels are projected to see a rise in popularity?
Jessica Chapplow: Gaming has seen a massive uplift in popularity. Twitch has also seen more content than usual being streamed. This is consistently increasing, especially across Europe. It’s not about the channels however, but the type of content people are consuming.
Whilst we’re still seeing these peaks across different channels and platforms, it doesn’t necessarily guarantee sustainability or a quick win. It’s about understanding in these times and authenticity loses its meaning without the right context involved. How do we deliver content that aligns with the audiences in a way that’s meaningful? With the current messaging we’re pushing out there, it has to have meaning that resonates with the audience. It’s about how we create those intelligent experiences that have those intimate contexts right now.
Kevin Edwards: If you’re talking about specific sectors, womenswear significantly dropped in the last two weeks before bouncing back again. The sense is, everything was initially disrupted with everyone naturally pausing their usual buying patterns, but now people are slowly returning to normality. For those currently in jobs and with disposable income, they’re trying to recreate shopping experiences again at home. We’ve seen massive spikes of sales in beauty and skincare, DIY and homeware as people are now at home and adapting to their new domestic lifestyles.
However, there are currently two problems at the moment: we either have brands who have nothing to sell, or brands that are experiencing too much demand and therefore can’t fulfil the orders. It’s either feast or famine for many brands.
“It will be interesting to monitor whether the coronavirus will act as a catalyst, pulling other markets up to the levels that we’ve seen in the UK”
Another thing to note is the activity across Europe. The UK is the most advanced digital market where 20% of revenue is driven online and via e-commerce. What will be interesting once all of this has settled is whether other markets have caught up with the UK. For instance, France has been severely affected by logistic issues as a result of the pandemic and therefore you might expect fulfilment and e-commerce to fall. However, we’ve seen some of the biggest increases in France during this period. Our numbers in March were up 30% there. Neilsen published a report recently that also found that e-commerce was up 32% year-on-year there. It will be interesting to monitor whether the coronavirus will act as a catalyst, pulling other markets up to the levels that we’ve seen in the UK. So retail trends are not just cutting across sectors but different territories as well.
Helen Southgate: Some brands are reducing their marketing budgets but an opportunity could be to move budgets into performance and affiliate. I can see a potential movement towards using affiliates to do traditional marketing, for example, using affiliates to do search or email, or using influencers on a performance basis. That’s really interesting and could be great for the channel and brands.
Richard Lane: Some markets have been hit at different times in terms of severity in their local regions. Italy was the first one to spike and everyone was looking at them to see what categories or verticals have changed over the course. The country was a leader in terms of how we were going to react to the different trends within the platform. Seeing how Italy’s trends were, it felt like a micro-season period in which every single announcement that was made within the local government triggered a huge surge in one vertical to another. Easter weekend also passed and where we normally see patterns dip or grow steady, there was a lot more traffic as people didn’t travel and were at home.
I find it fascinating as the current climate has created dynamics we haven’t experienced before and seeing different regions being affected at different times, especially with local trends and when and where people are buying.
What are the worst affected sectors, and is there a way for these to mitigate the effects?
Richard Lane: We’ll probably see some affiliate partners enter into other sectors. We might see more diversification as a result.
Kevin Edwards: If brands want to continue investing in their affiliate programs, they need to be very clear on what is required from them. If you need them to remove affiliate links, recognise that this can be a difficult task.
Furthermore, try and do a lot of Business as Usual (BAU) work as possible to keep things moving. I suspect one of the fallouts we’re going to see will be in the travel sector. There are probably millions of pounds of pending sales in these accounts that will probably be declined on mass. That is revenue affiliates are still seeing and hopefully will receive but the chances are that they won’t. Offering as much visibility on this now is important.
Helen Southgate: Until the health and financial situation turns around, travel companies could be on lockdown for months. What we’re trying to do is plan for when the upturn comes and where. There’s already talk about Germany opening back up again in May so we’re supporting our clients there. However, other sectors are going to suffer as a result of the economic situation and some fallouts may occur.
Jessica Chapplow: The mitigation we’re doing is setting up brands to bounce back; essentially balancing the short-term with the futureproofing of the business post-pandemic. It’s an area we’ve seen lots of brands seeking to create a strategy on without crossing the line between serving and selling. Brands that turn off their activity will have twice the work to do when generating their campaigns after the situation. Brands who play it right can come out of the other side of this climate better than they were before.
Do brands need performance marketing more now than ever, to ensure that they are getting ROI?
Kevin Edwards: Recent stats from eMarketer said that search is particularly well suited to weather a recession but they were suggesting a 20-30% dip in spend. We’re not seeing that at all in affiliate, so from that perspective, the channel is being pretty resilient during this period. Whichever way you look at it, this will focus a lot on ROI and affiliate marketing is the original ROI channel.
Helen Southgate: A report in the US showed an increase in affiliate marketing between March and the start of April, which suggests that the channel is going strong. If you’re going to pay on something, invest in a channel that’s got a guaranteed outcome.
Affiliate marketing has always managed to weather these kinds of storms. This is largely because of the performance model, which is less of a risk and has a better return on investment. There’s also value in partnerships relying on the trust and goodwill you have built during these times. It’s a good channel overall to go to when things are tough.
Richard Lane: It is an important channel, however, in times like this, I’d argue that the social side for brands and advertisers are just as important due to their messaging, which could make or break a brand at the moment.
Jessica Chapplow: Before jumping down on performance, it’s making sure you’ve defined your KPIs in this current climate and even so, it’s not guaranteed it would be received correctly. Configuring your set up and analytics is important as it will inform how your position and how you’re building up your customer profile in response to consumer behaviours, which continue to fluctuate. It’s covering off all of those points which will become key to ensuring data is really driving efficiency as well as ethics.
With everything moving online, how can we ensure we protect the human element of performance marketing?
Jessica Chapplow: What we lose sight of when it comes to performance marketers is the more technical marketing gets, the more human it has to become. That’s all part of the fundamentality to succeed.
Where everyone is using the same platforms, technologies, APIs etc, emotional marketing and intelligence is a big advantage. This type of marketing appeals to people’s emotional intelligence, which is vital to driving brand connections at a time where mental health and wellbeing is being stretched even further.
Helen Southgate: Affiliate marketing has been around for 30 years and there has always been a good balance between data and relationships. It’s become more apparent going through this period just how important affiliate relationships are. Having good partners, trust and being transparent with them about what is happening is something you don’t get in other sectors. I hope this continues as it’s vital in how the channel works.
“I’d argue that the social side for brands and advertisers are just as important due to their messaging”
Kevin Edwards: In one respect, the debate in the last few years has been about how manual the affiliate channel is but in times like this, it’s actually about the importance of human relationships and being able to do business by video meetings or picking up the phone that helps connect us. We obviously have to be more efficient but the human element has always been critical and what makes performance marketing so special.
One example which has struck is Amazon’s recent decision to cut the majority of its affiliate program commissions as well as some affiliates. As the UK’s largest affiliate program, you now have publishers with lots of inventory and space to fill. What we’ve seen in the last couple of weeks is a number of new publishers and partners asking how we can help plug the gaps in their websites. That’s been great to see from our point of view.
Will this pandemic play a part in creating a leaner performance marketing industry?
Kevin Edwards: We’ve always been an efficient channel. Hopefully with what is happening right now, it’ll focus more attention on the channel and how we can get better at what we do.
We’re working as a business on a number of efficiency projects and the direction has always been to have natural attrition where you don’t necessarily replace functions. Whether what we’re going through affects that, we don’t know, but if we see the affiliate channel taking a centre stage then it could mean people want to upscale what they spend on the channel. It’s still efficient but emerging in a positive way.
Jessica Chapplow: Coming at this from a programmatic/e-commerce perspective, performance marketing has already cleansed the online process for a lot of brands and businesses. For performance marketers, the industry will still be accelerated by the use of data that will be used to tighten up the target and messaging we’re seeing, making it more accurate for how we engage with customers. So in terms of accountability and agility, those are the areas performance marketing will see an improvement in.
“When you have disruptive events like this, people look for answers and those often come from the variety of data available. If the pandemic focuses companies’ minds in investing more in data and analytics and making that available, then that has to be seen as a good thing and integrates into the points everyone has made about driving efficiency”
Richard Lane: I’d like to say that we’re moving towards a smarter industry. I’m looking at data that I’ve not crossed before and this can only be a good thing. It’s working out how much we’re spending, where and why. It’s working out all of this sudden activity and as a business how we are going to optimise it to our benefit with those new customers that have driven from the activity.
Helen Southgate: When you find yourself in a recession or tight spot, you realise your inefficiencies. Companies have now figured out how to work from home, which is a game-changer for a lot of people and it will be interesting to see how this continues after the lockdown.
An impact of the lockdown is that there’s more focus online, particularly for retailers who’ve closed shops, they have become completely reliant on the online channel. Some retailers have quickly realised that their websites are not good enough and therefore should put money and investment into making them work better, improving the user experience, strengthening delivery and operations etc, which can only be a good thing for the affiliate channel.
Thanks again to the experts for sharing their answers and insight. Let’s continue the conversation on how the current pandemic is affecting the performance marketing industry.