E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
At my house, the remote control typically produces more TV channel surfing than actual TV watching. We’re not big TV viewers to begin with. But many nights, our search for mutually pleasing programming leads us to a series of five-minute segments from a half-dozen networks-and an early lights out. We fall asleep with these scattered visions dancing in our heads: polar bears in mid-hunt, half-shingled houses, Lucy and Ethel stuffing themselves with chocolates in order to keep up with the conveyor belt in the candy factory. Good thing I’ve already seen the ending to that one.
I think of this near-nightly exercise as the shotgun approach to TV viewing: We seem to change channels as fast as possible in hopes of making a good connection as soon as possible. But we rarely strike gold. Maybe the content just isn’t that compelling. Maybe our technique is off. Probably a bit of both is going on.
So it is with the traditional approach to affiliate marketing on the Web. Many e-retailers aren’t alone in having created as many links as possible with corporate and content sites. In the end, marketers say, the 80/20 rule applies: 20% of affiliates drive 80% of sales.
Pressed for time, few e-marketers sit down to analyze how and why the top 20% work out so well-or use that information to hook up with more of them. Or put their heads together with the existing 20% to drive even more sales. Largely because of the scattered nature of affiliate links, worries about linking with unseemly sites, and the lack of a dedicated affiliate marketing staff, some brand-sensitive e-retailers have forgone the technique altogether.
But as our cover story relates, change is afoot in affiliate marketing. In a bid to turn their affiliate links into a true direct-marketing tool, a few e-retailers are targeting partnerships with sites whose visitors have an affinity with with their best customers. What’s more, they’re reaching beyond the obvious audience overlaps to find demographic similarities with new affiliate sites, then cherry-picking merchandise offers with the greatest potential to drive sales.
Developments such as this recently led Forrester Research to predict that the maturing of affiliate marketing will represent more than 20% of e-commerce sales by 2003. The current scatter-shot approach developed by Amazon.com and widely copied by others won’t disappear. But we’ll see more cross-marketing deals between Internet merchants. Already companies that manage affiliate networks and craft custom promotions are popping up.
It will be interesting to watch how and whether these alliances bear fruit by producing higher sales. And maybe, just maybe, I’ll pick up a few tips for sharpening my channel surfing at home. Then again, if experience is any guide, I’m likely better off with a good book or 20 extra winks.