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Why Affiliate Marketing Is The Most Failsafe Marketing Channel in the Current Economy

In volatile economic times, businesses worldwide are faced with tightening budgets— including within the marketing function. CMOs globally are grappling with strategic decisions around which channels to prioritize. 

Affiliate marketing in general has increasingly gained recognition as a sound investment, allowing businesses to work with partners on a cost-per-acquisition (CPA) basis rather than sinking huge upfront fees into other channels, such as paid search.

Now a multi-billion-dollar powerhouse, affiliate marketing has become a global industry safeguard and a life raft for businesses hoping for sustainable, measurable growth from marketing. Before we dive into the many benefits of this channel, let’s first explore the major challenges facing CMOs today—and how affiliate marketing can respond.

Challenges Facing Marketing Departments

In an adverse economic climate, CMOs naturally find the purse strings tightening, while expectations for marketing performance remain high. The instinct is to cut back on things that may, at first glance, seem superfluous, such as paid placements. But this leaves competitors free to buy up the inventory instead, giving them a leg up not only in terms of visibility but more likely, converting new customers through the affiliate channel. 

In a similar vein, the effects of siloing have plagued marketing departments since long before the current economic outlook. The risk of becoming overly enamoured with one channel is that businesses miss the reality that an individual customer is likely to interact with multiple marketing touchpoints before converting. Focusing too much on one area could mean losing out on potential traffic and bypassing a touchpoint that could positively impact other channels.

Partnership Marketing and Affiliate Marketing

Affiliate marketing may be part of an overall partnership marketing strategy, but partnership marketing can be a broader strategy that involves more than affiliate marketing, such as referrals, co-selling, whitelabeling, subcontracting, etc.

Partnership Marketing

Partnership marketing is a broad term that encompasses various types of marketing collaborations between businesses. It involves two or more companies working together to achieve common marketing objectives, such as increasing brand awareness, driving sales, or entering new markets. These collaborations can take various forms, such as joint promotions, co-branded products, or shared marketing resources.

Affiliate Marketing

Affiliate marketing is a performance-based marketing strategy in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts. In this model, affiliates are typically independent marketers or influencers who promote a company’s products or services in exchange for a commission on sales or leads generated through their promotional activities.

Why Affiliate Marketing Is The Preferred Solution

With these challenges in mind, what solutions does affiliate marketing offer that other partner marketing programs or other marketing channels miss?

The most obvious benefit is a guaranteed return on investment (ROI). Because affiliate marketing uses a CPA model, there is no need to pay until a transaction has definitively occurred. This kind of performance-based revenue puts the risk on the partner rather than the marketer, such that every dollar spent is accounted for — or returned.

Around 90% of affiliate programmes feature a reversals or corrections feed. In practice, that means the partner is not paid until the return period expires, ensuring the marketing budget isn’t taken up by those cancelling their transactions. Brands can then reinvest the returns into the channel.

It’s worth remembering as well that affiliate is not a walled garden. You’re not stuck in one ecosystem as you might be with Google or Meta. Instead, with affiliate marketing, companies are free to work with millions of potential partners and customise the experience each time. This agility lets brands pulse partners and tailor the message to meet the consumer while capitalising on key seasons and campaigns. For example, brands looking to drive website traffic at the outset of a product launch can work with partners who are already working with similar brands in the space–sidestepping the time spent researching keywords or building an audience.

Best Practices For Affiliate Marketing

Affiliate marketing is not some panacea that can be magically applied to deliver marketing success instantly, however. There are some clear guidelines to follow to get the most out of the channel.

It starts with taking a bespoke approach to partners. Indeed, one of the reasons affiliate marketing is increasingly known as partnership marketing is because of the ever-growing importance of tailoring your approach to specific partners. It’s best practice to have a conversation with every partner you work with to ensure you’re aligned on factors like commission breakout and specific remuneration in exchange for website traffic.

While the temptation might be to enlist as many partners as possible, it’s important to tailor the partners to your message to avoid diluting it. For instance, different partner groups may be more adept at reaching different audiences. Among the spectrum of partners are:

  • Loyalty or reward partners
  • Coupon or voucher partners
  • Content partners
  • Mass media partners
  • Technology partners

Having made a choice, you’re not locked in, however. One of the major benefits of affiliate marketing is the ability to quickly pivot to different types of partners to reach audiences more effectively. 

That’s why when we work with a brand at Acceleration Partners, we ask what type of customer they want to acquire and what type of customer they want to retain, to guide the kinds of partners we contract.

The Future of Affiliate Marketing

We’ve seen how partnership or affiliate marketing has proven its worth in the present. Looking ahead, several ongoing developments could further drive its consideration as a vital part of any successful marketing strategy.

For one, the reputation of partnership marketing is rapidly evolving. Historically, affiliate marketing has been associated with coupon deals, garnering a reputation as a discount channel. Over the past several years, the industry has increasingly woken up to the fact that consumer behaviour has taken a turn in favour of this approach.

Looking at customer data, we see that the customers are driven to a brand’s site through affiliate marketing, and those that convert tend to make more repeat purchases. That means that the lifetime value of a customer attracted through affiliate marketing is often much higher than those from other marketing channels. 

Affiliate marketing is also gaining ground with younger generations, via the confluence of affiliate and influencer marketing. While influencer marketing previously relied heavily on flat-fee payments,  brands are increasingly turning to an outcomes-based approach. This trend is being driven by advances in technology that enable brands to effectively measure performance and accurately attribute conversion and revenue from influencers. When integrated, influencer marketing and partnership marketing can amplify each other. And with the need for cost-effective marketing,  we can expect influencer and affiliate marketing to become increasingly intertwined.

Succeeding With Affiliate Marketing

Affiliate, partner, and influencer marketing strategies are increasingly attractive marketing channels thanks to the effectiveness of a performance-based model and the opportunities for exposure to new customer groups, so much so that even prominent media houses that once scoffed at traditional display placements are now leveraging affiliate marketing as a core marketing channel.

In today’s landscape, these risk-free, performance-based streams are increasingly overtaking rival channels.

In the US last year, affiliate and partner marketing were the second most effective sales drivers for retailers on Cyber Monday, behind only paid search.

Adobe

This is only the beginning of the growth curve for partnership marketing, and businesses looking to optimise marketing spend and focus investments on measurable growth would do well to afford this trending option the respect it deserves.

Affiliate Marketing Platform Features

For a company to be successful in its affiliate marketing efforts, it should look for an affiliate marketing platform that offers the following key features:

  1. User-friendly Interface (UI): A well-designed, easy-to-use interface is crucial for both affiliates and merchants. This helps in easy navigation, campaign setup, and tracking, which saves time and enhances productivity.
  2. Tracking and Reporting: A robust tracking and reporting system is essential for measuring the performance of your affiliate marketing campaigns. The platform should offer real-time tracking, detailed reporting, and data analytics to help you optimize your campaigns and make data-driven decisions.
  3. Reliable and Accurate Tracking: The platform should provide reliable tracking of clicks, impressions, conversions, and other performance metrics to ensure that affiliates are credited fairly for their efforts.
  4. Support for Multiple Commission Structures: The platform should support various commission structures such as cost-per-click (CPC), cost-per-sale (CPS), cost-per-lead (CPL), or revenue sharing to accommodate different business models and marketing goals.
  5. Affiliate Recruitment and Management: The platform should facilitate the recruitment and management of affiliates, providing tools to screen potential partners, monitor their performance, and communicate with them effectively.
  6. Fraud Detection and Prevention: A good affiliate marketing platform should have measures in place to detect and prevent fraudulent activities, ensuring that affiliates and merchants are protected from potential losses due to fraud.
  7. Integration Capabilities: The platform should easily integrate with your existing e-commerce, CRM, and analytics systems to streamline data flow and campaign management.
  8. Flexible Payment Options: The platform should offer flexible payment options, including various payout methods and currencies, to accommodate the needs of affiliates and merchants globally.
  9. Support and Training: A comprehensive knowledge base, training resources, and responsive customer support are essential to help affiliates and merchants make the most of the platform and address any issues that may arise.
  10. Scalability: The platform should be able to accommodate your business’s growth, allowing you to expand your affiliate marketing efforts without technical limitations.

By choosing an affiliate marketing platform with these key features, a company can improve the efficiency and effectiveness of its affiliate marketing campaigns, ultimately driving more revenue and building stronger partnerships with affiliates.

Affiliate Marketing Platforms

Depending on the products and services that you’re attempting to sell, different affiliate platforms target different audiences, industries, and provide specific features.

  • Amazon Associates: One of the most popular and extensive affiliate marketing programs, Amazon Associates allows affiliates to promote a wide range of products available on Amazon’s website and earn a commission on qualifying sales.
  • Awin: Awin is a global affiliate marketing network that connects affiliates with a wide range of advertisers, offering a variety of products and services to promote.
  • ClickBank: ClickBank specializes in digital products such as ebooks, software, and online courses. The platform is popular among affiliates looking to promote digital products with high commission rates.
  • Commission Junction (CJ): CJ is a well-established affiliate marketing network that connects affiliates with a large number of advertisers. The platform offers advanced tracking and reporting tools, making it a popular choice for both affiliates and merchants.
  • Impact Radius: Impact Radius is a performance marketing platform that supports various partnership types, including affiliate marketing. It offers advanced tracking and attribution tools, as well as automation features to streamline campaign management.
  • Partnerstack: PartnerStack is a partnership and affiliate marketing platform that helps businesses manage, scale, and optimize their partner programs.
  • Rakuten Marketing: Rakuten Marketing is a global affiliate marketing network that connects affiliates with reputable brands and offers a variety of promotional materials and tracking tools.
  • ShareASale: ShareASale is another popular affiliate marketing network that caters to a diverse range of merchants and affiliates. The platform offers a wide selection of products and services to promote and provides useful tools for tracking and managing campaigns.

Affiliate marketing is cost-effective, low-risk, and scalable – providing brands with increased visibility and increased sales through relevant partners.

Kelly Ground

Kelly Ground is the Senior Director of Strategy & Insights at Acceleration Partners, the premier global partner marketing agency that sets the standard for how brands efficiently grow and refine their marketing partnerships anywhere in the world. Her 15+ years of affiliate marketing experience gives her a unique perspective on how to provide strategic guidance and support to AP's global affiliate program management teams. Prior to joining AP in 2016, Kelly was a Senior Digital Marketing Manager at HSN for over seven years, driving profitable revenue and significant growth through their affiliate and display programs. Before HSN, Kelly promoted a marketplace for a publisher as their Marketing Manager and has additional experience in the manufacturing and telecommunication industries. Kelly earned a political science BA with a journalism minor from Clemson University. She lives in Tampa, Florida, with her husband, two kids, and a dog.

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