What's the Importance of Affiliate Marketing to Ecommerce?
The start of 2020s has been a pivotal moment for retail as ecommerce has outperformed the high street. We've seen newspaper reports since 2014 heralding that retailers were abandoning the high street and moving online. The recent pandemic has seen a huge escalation of that process.
A 2020 CBSNews article shows pictures across the USA and around the world of abandoned shopping malls. The same is happening across Europe and established high street names like Debenhams and Top Shop are disappearing or going completely online.
Changes in Advertising
There have been changes in the pattern of advertising spend over the last two years as well. Many ad budgets were cut, sometimes completely as lockdowns were introduced.
Online publishers, from bloggers to the mainstream media embraced the performance based affiliate monetisation model to replace impression based programmatic and native advertising.
Chloë Thomas of Ecommerce Masterplan recently shared her view on this with us. "It's great to see Affiliate marketing having a resurgence - it's such a powerful channel when used well. With the changes to cookie tracking and increased competition pushing up CPA on ad platforms, partnerships as a way to tap into interested audiences is a key marketing channel retailers should be exploring in 2022 and affiliates is a great way to start getting into partnership marketing".
In Publisher Discovery data we saw evidence of the trend reported by Awin and Partnerize of an influx of bloggers and influencers, in an increase in our own data. We're also seeing increasing numbers of advertisers and OPMs using our tools to find the best new publishers to recruit.
Here we cover why affiliate marketing has become such a perfect partner for almost any ecommerce business.
1 • Affiliate delivers a strong ROI
As Jamie Birch of JEBCommerce has written, affiliates can deliver the best ROI of any advertising medium as it's usually entirely performance based. It's also worth noting that ROI and ROAS aren't necessarily the same metric. Read more in his article.
Morgan Bell-Schildt in the Acceleration blog stresses that successful B2B affiliate partnerships lead to a higher ROI that other models. This may be as a result of the higher quality of referral due to the endorsement by the complementary brand.
The same can apply across any quality affiliate publisher website; users of Publisher Discovery predominantly are searching for content affiliate websites, bloggers and influencers, as these are the most likely to deliver the highest ROI.
2 • Every metric can be tracked
Most affiliate systems offer real-time tracking, letting you know exactly when a link is clicked (and which one) and a visitor goes to your site and makes a purchase.
With the rolling out of attribution modelling across many affiliate networks, you can also see all the referrals from initial referrer, through review affiliate sites to a final purchase. If that was via a coupon affiliate, you can then manage the proportion of commission each receives.
3 • Reach new audiences and scale
As Adam Enfroy stresses in his article for EcommerceCEO.com, an affiliate program can give an online merchant scale and distribution opportunities. SaaS platform TUNE also stressed as far back as 2017 that internet advertising is steadily moving beyond display, to native and increasingly affiliate, which can be managed across all vertical channels.
Affiliate relationships can offer entirely new audiences for your brand, especially if you think creatively and engage with publishers in your own vertical as well as complementary areas. For an example, a rail ticket website may also promote hotel, car hire or taxi services for each destination.
In some verticals such as fashion, sports, tech and health, some of the key social influencers offer new ways to target audiences and drive valuable sales in new sectors.
Strong relationships with bloggers and influencers can create brand ambassadors in some significant audiences. Effective management is of course crucial to develop a program to this level.
Growth at Scale
Accessing new audiences can also have the potential to rapidly scale ecommerce revenues. The Master of Malt case study demonstrates the value to an online commerce operation of expanding into new markets by leveraging affiliate audiences.
In this case, the MoM affiliate recruiting campaign uncovered new a lucrative potential new markets in the Nordics and Germany previously untapped. That led to a huge double digit increase in overall website sales - just from these new audiences
Acceleration Partners outline the importance of these partnerships in their series of blog articles. Their 'performance partnership' concept has been a central thrust of their operations, and driving significant results for agency clients. So, its a model that is well worth studying and emulating.
Morgan from Acceleration also highlights the potential that lies in developing strategic alliances in the form of performance partnerships with complementary advertisers. This can provide for a higher quality of referred customers. Acceleration offer a selection of excellent examples of how this can work.
4 • Integrate affiliates into your channel mix
It pays big dividends when you realise that affiliate is a business model rather than a channel. As such the rich variety of potential affiliate partners can be managed in an integrated way across all your vertical marketing channels.
As this example shows from the Bloomingdales affiliate program, there is a well diversified affiliate base. Integrating the affiliate partners with your own strategy brings dividends.
Having the affiliates working alongside a brand's own PPC, coupon and deal distribution efforts will ensure a far stronger overall and connected ecommerce presence.
Similarly planning your mailing campaigns to include your affiliate email specialists can give a broader distribution of messages at key times, such as Black Friday or even product launches.
5 • Social proof
For a brand - particularly any new ecommerce brand - recruiting affiliates to refer to you can add to the brand value. Consumers who see other influential publishers referring favourably to your products or service can be a source of social proof.
As mentioned above, this provides proof to new audiences and enables a brand to engage a following through this connection. Just look at how some of the great fashion bloggers and influencers like Wendy Nguyen are almost their own brand.
93% of consumers report a purchase being influenced by online reviews according to Qualtrics, so engaging with these affiliate blaggers and influencers can be a route to overall sales growth.
6 • Advertising cost only comes after the sale
Of course the real beauty of the affiliate model from a marketers perspective is that you only pay a referral fee or commission when an actual sale has happened. Most can do that in real time so you get immediate stats on any campaign. This is one of the core benefits of performance marketing.
Most affiliate tracking systems, networks and SaaS providers are also able to accommodate product returns, cancellations, different couponing tools and more Most work with a wide variety of ecommerce processes, and integrate with payment and accounting tools to make that all happen in real time.
An affiliate program can be set up to pay affiliates on whatever schedule a merchant needs. For things like travel, the commission will usually only apply after the flight or hotel stay.
7 • SEO benefits
There used to be a received view that affiliate links were not relevant (or even a negative influence) on SEO. Good and effective referral content can provide a real benefit however. Yes, Google understands the relationships but where the content is on a relevant topic and offers value to a reader, that will reflect in the value passed through.
Providing your affiliates with relevant content to feature on their referral pages is important. Make sure that the affiliates with the highest ranking and higher traffic websites are also provided with unique content elements, even a re-wording of similar content can be useful, though encourage the publisher to customise that as well.
Managing the Process
Careful management of this and relevant topic-led landing pages can provide significant benefit, especially where affiliates are driving significant numbers of visitors. To keep their interest of course, there must be an optimised conversion funnel to ensure the volume sales you are after!
Much of the nuts and bolts of how to make affiliate work to it's best effect are covered in some of the other articles on this website. See Affiliate Management and the other resources below.
Try Publisher Discovery for your own affiliate program and see the difference it can make.
2021 Affiliate Industry Predictions >
Affiliate Management Books >
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