Challenges and Opportunities in Affiliates

Published by Chris Tradgett 7 April, 2020

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Developments in the Affiliate Sector

The current global crisis has impacted affiliate marketers in an increasing number of ways. There will be both challenges to be faced by affiliate managers – and opportunities opening up. This past week or two we have seen affiliate programs paused for a series of major brands. Many of these are quoting they have “run out of affiliate budget”. That was a phrase we’d often heard back in 2004, from advertisers who’s CMOs and CFOs couldn’t grasp that the affiliate payment was a cost of sale – and not a marketing cost.
Using the term ‘advertiser’ to refer to affiliate merchants will only continue this confusion for some, reinforcing a misguided belief that it is a marketing spend. Perhaps we should revert completely to ‘Merchant’ and make the difference clear; an extension of the affiliate/partner debate that’s still ongoing.
the GuardianWe are reading that “some brands have been told from the top down: pause everything, we’re in completely uncharted territory, we cannot afford to overstretch ourselves and/or send out the wrong message“. It’s not just affiliates who are affected, as the Guardian reports, mainstream newspapers stand to lose £50m in the UK alone from pulled advertising inventory.
We also have heard that where there has been a large spike in sales, some advertisers are cutting back on a lot of inbound marketing activity as they are having problems with both product supply and distribution. We also hear of finance campaigns that have to pause because there’s a concern that customers are panic buying products that aren’t designed to do what they believe them to do. There are quite a few ways in which this can be a real problem.
Where advertisers are up against these issues along with other challenges in affiliate, much of the wisdom from leading OPMs is to be as transparent and open with your affiliates as possible. For advertisers whose ‘inventory’ is not affected by supply and demand issues, as with software or subscriptions, this should not be an issue.
Kevin Edwards of Awin has noted “the majority of impacted programmes have made changes on Awin for non-budgetary reasons“. He adds, in terms of the scope that at present “there are still only about 5% of programs that have been impacted“.

 

The Guardian points out, “while national and regional newspaper publishers are gaining record numbers of digital readers seeking to keep up to date about the pandemic, publishers are struggling to make ad revenue from their interest“. For those of us in affiliate, the source for replacement advertising inventory is obvious and no doubt we will start to see the spaces filled with CPA ads.

The Path to Recovery

 

The affiliate partners who are finding their income streams being cut off completely, while seeing merchants continuing to trade are naturally feeling that the relationship is not that strong a ‘partnership’. We have heard from several of these affiliates that they will be re-evaluating which partnerships will be worth re-kindling once business starts to return to ‘normal’ – whatever normal becomes. As one commentator said in an online forum: “This could be a good opportunity for affiliates to flex their muscle and send traffic to competing merchants“.

From a network standpoint, Kevin Edwards makes the point: “For any brands making cynical cuts, I suppose it’s like any industry in that there are always bad actors. The biggest ally a network can have is a set of publishers who vote with their links and refuse to promote them“.
For any affiliate manager, communication with the affiliates on the challenges being faced will be key. From that at least something of the previous relationship can be salvaged once business starts to improve. 
There are a few like FMTC who are publishing a brand directory for their publishers to identify alternative merchants who aren’t in shut down for publishers to promote. We are seeing a considerable number of other advertisers who are researching and discovering affiliates for their own programmes. Recruiting a paused competitor’s partners will of course be easier at the moment; they need a new income stream – and quickly.

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Chris Tradgett
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