Affiliate has evolved into a leading channel for customer acquisition and revenue generation. And it plays a critical role throughout the customer-controlled purchase path. To discuss how affiliate serves as the most versatile, efficient and cost-effective channel marketers can leverage—Internet Retailer spoke with Maura Smith, Chief Marketing Officer at Pepperjam, an affiliate marketing technology solutions provider.
Why is affiliate marketing the sophisticated marketers’ secret channel?
Sophisticated marketers understand that being omnipresent in today’s customer-controlled purchase path is imperative, but they also know how expensive it is to rely too heavily on primary, pay-for-access channels like paid search and paid social. They need a scaled, transparent solution that offers the ability to pay for outcomes vs. paying for audience access. They’re finding that solution with affiliate. The combination of scale, new technology automating historically manual processes, and a pay-for-performance model are delivering a material subsidy to the cost of pay-for-access channels. It delivers operating leverage in unit economics needed to maintain growth trajectories without sacrificing profitability.
How is affiliate marketing versatile, efficient and cost-effective?
Affiliate’s unique versatility is that it encompasses all forms of marketing including media publications, influencers, review sites and savings destinations. Affiliate’s efficiency and cost-effectiveness lies in its composition; its pay-for-performance model enables marketers to pay partners upon conversion. Affiliate revenue can guarantee the ability to self-fund the program and can generate a return that offsets costs to remain in other primary channels. Affiliate is credited with a 12:1 return on advertising spend, according to the Performance Marketing Association—something no other channel can claim.
Do retailers understand the potential impact affiliate can have on their business?
Sophisticated marketers that actively leverage affiliate understand the impact it has on new customer acquisition and revenue generation. They invest resources into affiliate strategies—they don’t just “check the box” and think their work is done. BI Intelligence reported that more than 80% of marketers will be investing or increasing their investment in the channel. But still, too many marketing organizations overlook the category’s evolution, plagued by legacy perceptions that scale is isolated to coupon and cash-back publishers, that tasks are manual, and attribution data is not available for export into a marketers’ single source of truth. While legacy network models continue to perpetuate those practices, that model is dead. Marketers who understand this have an advantage over those who have failed to challenge legacy perceptions.
What are some of the challenges retailers face with regard to affiliate marketing?
A lack of education leads to a misinterpretation of the channel’s opportunities and strengths. All perceived challenges— including affiliate as a last-click channel, marketers lacking affiliate expertise and the inability to quantify its incremental contribution to overall revenue—can be remedied by learning about affiliate, and what individual providers offer that best aligns with marketers’ needs. Marketers must stop settling for the status quo, allowing historical inertia to stymie strategies that realize the best returns.
How can they overcome these challenges?
Marketers should revisit their affiliate strategy and ensure they’re working with the right partner to help cultivate expertise needed to unlock the channel’s potential. They must educate stakeholders and socialize channel fundamentals and facts so they can leverage affiliate as a primary channel to derive immediate value.
This Q&A was originally featured as part of Digital Commerce 360’s report: Internet Retailer 2020 Leading Vendors to the Top 1000