E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
From Twitter to TV, retail marketers find new ways to capitalize on their affiliates.
Affiliate marketing has come a long way in the past year or so, becoming more interactive and social, like much else in e-commerce.
"Affiliate marketing used to be bland, mostly push marketing," says Kristen Fox, manager of new business development at Gaiam Inc., a web and catalog retailer of health-related and eco-friendly products. "A retailer would push a promotion out to an affiliate, and the affiliate would push it out to its customers."
It's different today, she adds. With both retailers and their affiliates tied into online social venues like Twitter, Facebook and ShopSocially, and retailers deploying more videos and other forms of interactive online merchandising and marketing, affiliates and their retailer partners are finding new, powerful ways to extend their brands, engage consumers and grow sales.
"Affiliates have power today to be much more interactive and listen to what their followers are asking for," Fox says. "It's such a great time to put our brand in front of folks who may have never heard of us before."
Many of those folks are online bargain hunters looking to informational web sites and consumer advice bloggers for tips on where to find the best deal. That puts affiliates with a loyal following in a strong position to bargain with retailers, and puts a premium on retailers providing engaging content and compelling discounts to get the best placement on affiliate sites, experts say.
"It's becoming a very cutthroat business with limited prime space on affiliate sites," says Kenny Dayley, global affiliate manager for footwear manufacturer and retailer Crocs Inc. "Having a good relationship with affiliates is a crucial part of a successful affiliate program."
And a successful affiliate program in crucial for many e-retailers. Affiliate marketing was rated among the top three customer acquisition tactics by 50% of retailers, up from 41% last year. That put it second this year behind paid search advertising, in the annual survey by Forrester Research Inc. and online trade group Shop.org, part of the National Retail Federation Small retailers responding to the survey said they spend 11% of their marketing budget on affiliates, while midsized and large retailers spend 13%, putting affiliate marketing third in marketing spend after paid search and e-mail.
That spending is paying off this year at Gaiam, which sells items like organic cotton bedsheets and unusual exercise equipment. Gaiam says affiliates help the e-retailer connect with consumers likely to have a strong interest in its products but who may not be familiar with its brand. The retailer, No. 254 in the Internet Retailer Top 500 Guide, is coming off a year of relatively soft e-commerce sales in 2009, when they grew a modest 5.3% from 2008 to $37.7 million, and relying more on its affiliate channel to generate growth in 2010.
"It's an important channel for us, and we've seen strong year-over-year growth through it," Fox says. "This year especially, it's a winning channel for us and helping us to beat sales forecasts."
It's not only niche retailers that are banking on help from affiliates. Such companies as footwear manufacturer and retailer Crocs and mass merchant and e-marketplace company Buy.com also count affiliates as a key part of their growth strategies. Crocs, for instance, is counting on affiliates to help it grow internationally. "In addition to the U.S., we're rolling out affiliate programs in nine countries," Dayley says.
Crocs works with several affiliate networks, including LinkShare in the U.S., Canada and Japan; Affiliate Window in the U.K., Zanox in the rest of Europe and ClixGalore in Australia. It manages its affiliate programs through Gen3 Marketing, whose services Crocs receives as an extension of its e-commerce platform from Demandware Inc.
Those retailers are encountering an affiliate marketplace that is evolving rapidly. Today, affiliates with the clout to influence online traffic and sales are as likely to be an at-home blogger with passionately loyal followers as an established content site operated by a product manufacturer or publishing company—a development that gives retailers a much broader affiliate base to target.
Independent blogs can bring a new level of effectiveness to advertisers, as they tell the story behind products as well as offer web links to deals posted by advertisers. Crocs, for example, works with about 40 mom-hosted blogs, including DealSeekingMom.com and Hip2Save.com, where personal advice on shopping and links to recommended coupons are dished out among dozens of search marketing ads posted by major retail brands. "It's pretty mind-boggling, the power a mom blogger can hold in bringing about brand awareness," Dayley says.
A search for "Crocs" on Hip2Save, for example, shows several blog postings about deals for Crocs products available on the web. Those posts show up alongside sponsored search and display ads by Crocs and other retailers and shopping portals.
As seen on TV
Crocs will also work with blogs and other affiliate sites to get prime exposure on their sites with discounted offers. That enables Crocs to move excess merchandise without having to offer discounts on its own site, Crocs.com, Dayley says. It also makes available multiple types of creative web content, such as banners and "As Seen on TV" video ads that affiliates can download directly to their sites.
At BradsDeals.com, a site that offers daily links and tips for getting coupons and special deals, for instance, Crocs has worked out terms to get better placement of its product images. "If I can give them product offers at a sharp enough discount, they'll put us in a premium spot on their front page to help drive more sales," Dayley says.
Even the largest online retailers must work hard to get the most out of their affiliate relationships. At mass merchant Buy.com Inc., where affiliate sales have been its weakest-performing sales channel, the retailer is seeking to improve that performance with an aggressive strategy to share merchandising and marketing content with affiliate partners, says vice president of marketing Jeff Wisot.