Like many things born in the 90s, affiliate marketing is now significantly older and wiser. Yet some still see it through the lens of its early beginnings – where a lack of insight and transparency, alongside limited partnership options and questionable effectiveness hampered the channel. Understandably, this led to it becoming a pariah. An unfavored channel in the marketing toolkit. But huge changes in tech are causing brands to reprioritize this underrated tool.
What are the changes driving this reputation revolution? We’ll explore them in more detail throughout this piece. But the headline is this: affiliate marketing has become data-driven, accountable, transparent, relationship-centric, and an incredibly effective discipline. Five years ago, affiliate marketing was growing roughly 10% of brand revenue. Today that number has nearly tripled, driven in large part by the huge opportunities opening up in industries like Finance, Retail and Travel.
A Forrester study in 2019 showed that companies with mature partnership programs generally grow revenue twice as fast as their competitors, adding 28% or more to their bottom lines. It’s clear that affiliate marketing isn’t what it used to be. And there’s huge potential for this channel to become even more profitable over the next 5 to 10 years.
So, affiliate marketing has grown up. Here’s what that looks like.
An affiliate landscape transformed
First of all, the landscape has completely transformed. The traditional, lower-funnel affiliate partners, such as vouchers, cashback and points sites have now been fleshed out with an exciting range of modern newcomers. Partnerships with podcasts, influencers, large-scale publications (think Buzzfeed, GQ, Vice), and countless more tech-enabled channels have created an affiliate marketing revival. Importantly, automation and machine learning are making it easier than ever to implement, optimize, and track partner relationships. So that, for example, partnerships with influencers are now much more accountable than before.
Not only does this new mix of partnerships cover the lower funnel – it now comprises a significant part of the upper sales funnel, too. Plus, we’re seeing more brand-to-brand partnerships, where organizations are joining forces to speak to their shared customer base.
But above all, the biggest transformation comes down to a five-letter word. Trust. As trust in conventional marketing erodes – 84% of millennials don’t trust traditional advertising – people are turning to channels that feel more reliable and relatable. Requiring the cultivation of real relationships and connections between marketer and consumer. And while this is a huge opportunity, it’s one that can be missed if you’re not working with the right partner.
Media opportunities have exploded
Another sign of affiliate marketing’s maturation is the variety of media it can now harness. From SEO-driven content and newsletters to mobile in-app and push notifications and co-branded landing pages. Whichever channels your customers are on, affiliate marketing has an effective, measurable way of reaching them with your message.
The audience journey through marketing touchpoints has transformed, too. In our hyperconnected world, the consumer journey can look labyrinthine. Gone are the days of the linear, awareness-to-action pipeline. The touchpoints your customer moves through to purchase will look less like a simple clickthrough on an affiliate banner ad, and more like receiving an affiliate email, being influenced on an affiliate review site, then shopping around for the best affiliate cashback/points offer. This might sound impossibly complex to plan and budget for, but the secret is knowing your customer well, and choosing the partners that will feel authentic and relevant to them.
From marketing theory to affiliate practice
Of course, everything we’ve discussed so far sounds good in theory. But how do you turn affiliate marketing from concept to concrete capital? Data is the answer. A data-driven approach will unlock your understanding of the partners that introduce consumers to your brand, and those which close the sales. It’ll expose conversion paths that aren’t fruitful and show you the partners that are driving true value. So you know where to invest for increased success over time.
As lucrative as affiliate marketing is, realistically it’s never going to be your only brand revenue. That’s why it’s crucial that you’re able to integrate it into your full marketing mix, eliminating silos, and ensuring a consistent strategic approach and messaging across every channel. All easily achievable with the right partner and the right technology for tracking and transparency.
And just who should you partner with, when it comes to managing your affiliate programs? Brands have three options, depending on brand size and resource. Affiliate networks bring together brands and potential partners, offering reporting tools and other resources to drive effectiveness. Another option is taking it in-house, which can be more time-consuming, but enables more control over the program. Affiliate marketing agencies are a third possibility. Agencies can offer a unified approach bringing together data, services, and tech for the best possible outcomes, allowing multiple teams and channel owners to collectively work together and thus moving away from a siloed channel approach. Do remember that none of these options are mutually exclusive. All three can work in unison.
Growing up and growing brands
Affiliate marketing may have had a rocky start in the early years, but the channel has grown up, and is growing revenue wherever it is well implemented, with the right partner in place to get the most out of this promising revenue stream.