Affiliate marketing has come a long way since its early days on the internet. Strategies, technologies, and partnerships have grown more advanced and sophisticated, from how brands work with affiliates to tracking commissions and sales. Not only can affiliate marketing help brands drive sales, but it can also help build brand awareness by increasing exposure to customers the brand may not otherwise be able to reach. It’s cost-effective, and in a time of growing e-commerce, brands need to take a strategic approach to budgeting for their affiliate programmes.  

Affiliate marketing drives 16% of e-commerce sales. Meanwhile, e-commerce exploded during the pandemic, surging from $598 billion in the U.S. in 2019 to $791 billion in 2020. As a result, companies have re-evaluated where they’re spending their advertising dollars and doubled down on channels that deliver results – especially partnership marketing, which has become a much more critical marketing channel for brands.

Social media created an affiliate surge

Thanks to TikTok and influencers, partnership marketing gained a lot of steam over the past two years. Consumers spend more time on TikTok than Snapchat or Twitter, and partnership marketing proved to be a natural fit. Creators leveraged affiliate partners and linked to designated storefronts to earn commissions on their featured products. They’re able to sign up for different affiliate programmes and earn commissions with a plug-and-play deep link, sending consumers straight to a brand’s real-time product feed.

Meanwhile, these creators have given brands a way to test trends with minimal risk. For example, as Buy Now, Pay Later grew in 2021, brands partnered with multiple Buy Now, Pay Later partners to test the waters before fully integrating their checkout pages.

Why partnership marketing makes financial sense 

One of the most significant financial advantages of partnership marketing is that it is low risk. Because it’s performance-based, brands don’t have to pay for marketing costs unless an action or transaction occurs. 

Additionally, brands can get their marketing costs back if the consumer returns the product later. If a consumer buys through an affiliate link then makes a return, the affiliate partner doesn’t earn the commission. Right now, this is particularly beneficial; the National Retail Federation confirmed that U.S. retailers can expect more than $761 billion in merchandise to be returned, up 10.6% over 2020.

Partnership marketing also enables brands to meet demand, particularly during the global supply chain crisis. This past holiday season, the problem resulted in six billion out-of-stock messages. Brands that optimise with affiliate partners can promote the products in stock.

Consumers also place more trust in content and influencer partners than in generic ads. These partners will speak to their experience using a product and become credible sources of information. For example, a parent may trust a parenting blogger’s stroller review.

Partnership marketing also brings in new customers through promotions. Consumers are savvier than ever and take the time to look for the best deals. They’ll often go to a deal partner to see if a product they want is being promoted or if a trusted influencer has something to say about it. Clients of Acceleration Partners saw a 96% increase in new customer revenue year over year in 2021.

How to get the most out of partnership marketing

Partnership marketing isn’t just a lower-funnel marketing channel; it touches the consumer from start to finish. And partners do most of the work; some will pay to ensure the brand gets maximum visibility in social media feeds.

To maximise partnership marketing, brands need to test, review different data types, and be transparent with partners. For the testing component, brands can play with different landing pages and promotional messages, then look at the resulting actions and transactions to measure effectiveness. This is where data comes in; brands can examine first touch and last touch to see where traffic converts and data from partners. If the goal is to bring in new customers, brands can look at the data to see which channel is performing, including first touch and last touch.

Being transparent with partners is also critical. If a partner asks for a commission increase, brands need to be open with their data to show whether this is a reasonable ask. For example, the partner might not be driving profitable revenue or the type of customer the brand wants. Ultimately, partners want the brand to be successful because it helps them, and brands will need to build relationships by learning what works with different partners.