In affiliate marketing, an emerging convergence of infrastructure, technology, platforms, service, measurement and analytics is a welcome force for healthy change.

Matt Gilbert

Matt Gilbert, CEO at Partnerize

The affiliate marketing category is going through a long-overdue disruption. And that’s a good thing for marketers.

For two decades or more, affiliate marketing has been defined as a “last-click” transactional channel. And that’s been fair. Marketers looking for performance have long used the channel to drive sales volume relative to short-term goals—relying on coupon and cashback tactics. Yet, steeped in its own scrappy legacy, doing marketers a great disservice, the channel itself has been unwilling to embrace professional measurement, unlike other active paid channels, where it is standard. That reluctance, if not arrogance, held it back.

Sheer activity volume for many years drove reasonable revenue growth for affiliate marketing. But the lack of measurement and accountability to the marketer’s dollar created headwinds, keeping legacy providers from generating the growth they needed in their own businesses. In turn, without that growth, legacy providers have been unable to operationally deliver the solution that today’s marketers have in recent years come to realize they need. 

Within the new era for affiliate marketing now upon us, the emerging intersection of infrastructure, technology, platform and service—not to mention a commitment to measurement and analytics—is a welcome, collective, driving force of healthy change.

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You’re starting to see brands that have historically avoided the category enter the channel. The brands steered clear previously because they didn’t perceive themselves as discounted-oriented brands and would not partake. Take luxury, for example. Before the past 3-5 years, these marketers were not active in the space. Now, they are some of the most active, and spending is trending up in the past couple of years alone.

As the evolution of affiliate marketing dawns on marketers

Coming out of a long stretch when marketers have been chronically dependent on Facebook, Instagram and Google, performance marketers recognize the need for scale and automation. Brands want automation like that the paid channels offer, but they seek a performance-based model that outfits them with the operating leverage they need to win. The best of today’s affiliate marketing offers that.

For so long, that measurement-adverse, legacy network model was, albeit awkwardly, preserved as status quo through its protectionist attitude. That’s finally being challenged—and you can see that positive tension reverberates across the category and spur an evolution.

Upon this greater comfort level and the broader state of overall stability and maturity in the space, we see marketers in any number of verticals expand their approach to affiliate marketing. One of the first moves you will see—and that automation facilitates—is the diversification of revenue-generating partner types. As new brands enter the category, the emergence of new partner types is accelerating. Whether brand to brand, content, or influencer, the combination of innovation, transparency, and accountability have set the category on a path to permanent residency in the CMO’s playbook.

In prior times, the category would have seen revenue derived from the coupon and cashback partners, and marketers would limit themselves to that type. Flash forward to today, and content publishers have been a notable entrant as just one example of diversification. As newer entrants to the space, seeing pronounced growth over the past year alone, content publishers have become an even more significant and productive contributor within the affiliate mix. Content publishers contribute 64% year-to-date revenue growth on Partnerize’s platform alone. That’s mainly been at the expense of the cashback and coupon publishers that would have historically been in that last click position and credited for sale in that old world. This shift and displacement signals wellness in the space, boding well for the future of it.

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Today, in its more evolved state, the power of this channel resides in the performance model and the automation that allows a marketer to scale with it. A marketer doesn’t pay a partner if the partner doesn’t generate an attributable conversion. The marketer sets the value of that conversion. It’s a fundamentally different commercial dynamic than a pay-for-access channel, where you’re paying for an impression-based view or even a gateway performance model, such as a cost per click—where you’re paying for the traffic distribution. Still, the burden of conversion rests with the marketer. And it’s worth noting that this conversion is never guaranteed, only access to the possibility.

The dual imperative makes measurement non-negotiable

Marketers’ increasing focus on messaging omnipresence fuels the evolution, too. As the consumer has gained control, it’s incumbent upon the marketer to be everywhere. That dual focus on brand and performance is expensive. So, the ability to automate partner diversification and measure and compensate it on a performance basis is smart marketing and smart business. It’s a winning career move, if nothing else.

“If you can’t measure it, it doesn’t exist (or it can’t be improved)” is a common mantra for a reason. Our industry has had this prolonged, most unseemly practice of behaving like a walled garden when it comes to attribution. It’s the inherent baggage of being a last-click channel and having a concern, paranoia even, that incrementality or contribution from the channel’s performance would be marginalized, ignored, or somehow absent if marketers left the measurement to others. And that’s conceivable, but it’s no reason to build a higher wall.

The technology is here to understand and measure the role any partner plays in that customer journey—so, why wouldn’t a performance marketer, with an appreciation for the value of revenue partnerships, do that? Providers in the affiliate marketing space writ large should be opening APIs and allowing the export of the measurement data into systems of record measured alongside marketers’ other active channels. This is the only way marketers can understand how to deploy dollars across their active mix and drive the highest yield out of their spending. That’s how we finally fully shake this last-click perception. Rest assured, the obstacle to progress is no longer technology. It’s a historical bias to the status quo and a continued failure on the part of some legacy providers in the category to open those walled gardens that I referenced before and stand up and be measured.

Now that the industry is making it happen and marketers are clear in their desire for subsidization and operating leverage with their mix—the evolution is on.

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Coupon and loyalty programs are essential components of an overall successful partner strategy—but they should never become disproportionate or be left unmeasured. The isolated dependence on these programs became problematic over time and limited the channel’s potential. Plus, by reputation, that dependency kept wary brands away. Now that the table is set for affiliate marketing to operate at a more evolved state of play, we acknowledge that those partner types certainly are not dead. They need to be a part of a broader mix aligned with the overall business objective. And, of course, the sophisticated marketer is strategic enough to operate that way as a starting point.

Partnerize offers software and services for brands engaged in affiliate and partnership marketing programs.

 

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