Alibaba’s Tmall Global now features goods from 14,500 overseas brands, 80% of them selling in China for the first time.
It’s not just coupon sites, and there are ways to control your brand and gain incremental sales when working with affiliates.
Many retailers with business models that would fit perfectly with affiliate marketing do not have programs. But why do so many often express disinterest in establishing one?
Unfortunately, such negative sentiments often result from bad experiences with network-based affiliate program management and the conflict of interest inherent in that type of arrangement.
That said, affiliate marketing has seen considerable growth and transformation over the past few years. When managed properly, an affiliate program can account for up to 16 percent of online revenue and have a higher ROI than most other online channels. In fact, the direct and indirect value of affiliate marketing is projected to top $4.5 billion this year.
So why are some companies reluctant to launch or relaunch affiliate programs? Our best conjecture is that they’re basing their decisions on three inaccurate but ingrained myths:
1. Coupon sites are the only path to success in affiliate marketing.
The notion that the only way for a brand to have a successful program is by working with coupon affiliates is false. Many different types of affiliates comprise affiliate marketing programs, including coupon sites, loyalty sites, content bloggers, publishers, and even nontraditional affiliates, such as schools, nonprofits, apps, and individual professionals.
Each partner can be approved manually based on the program’s criteria. Programs can also be invite-only and private (e.g., Nike’s affiliate program) or run as scalable business development platforms with large partners.
As you establish an affiliate program, it’s important to evaluate affiliates in terms of whom you want to be associated with and which ones make the most business sense. For example, if you don’t offer coupons and your goal is to build a program with high-quality content publishers, excluding coupon sites is a rational strategy.
Try to clarify overall business goals before selecting which types of affiliates to work with. If the goal is to drive incremental sales and gain new customers, working with content and select brand-aligned partners is likely the best approach. However, if the goal is to drive an increase in overall revenue through the channel, it may make sense to work with coupon and loyalty affiliates. That choice is yours. No two affiliate programs are the same.
2. Affiliate marketing means little to no brand control.
Affiliate programs can be highly effective channels for putting your carefully crafted brand messaging and promotions in front of influential bloggers. The key is to partner with publishers and bloggers who align with your brand. A top retailer of children’s apparel increased affiliate program revenue by 67 percent year over year — 99 percent of the retailer’s affiliates are content bloggers.
Focus on partners by vertical and type, including bloggers, platform tools, mobile, shopping sites, and content sites that attract audiences similar to your own customers. Providing them with the messaging you want them to share will allow you to connect with a new audience of interested potential buyers.
In addition to evaluating and recruiting high-quality content publishers, you control how affiliates can and cannot use your brand’s trademarked names and phrases. Your custom program terms and conditions can dictate what affiliate behavior is permitted, what is not allowed, and what needs pre-approval.
Affiliate marketing is actually one of the few channels where merchants can prevent bidding on their brands’ trademark terms and phrases — assuming the program is properly and actively managed. Monitoring affiliates on a daily basis can help thwart violations of your terms and conditions.
Partnering with high-quality content sites and bloggers through your affiliate program will get skilled writers who are knowledgeable and enthusiastic about your industry writing about your brand, products, and promotions. Furthermore, adept affiliate managers will feed those affiliates content that aligns with your larger marketing goals and brand guidelines to make sure what they’re writing is brand-supportive.
3. Sales won’t be incremental with affiliate marketing.
When evaluating an affiliate marketing channel and a sole partnership, advertisers understandably want to know which are pushing accumulative sales to optimize relationships, as well as the channel itself.
To determine incremental value, ascertain what constitutes incrementality. Of course, you’ll get three different answers from three different people. Customer journeys are complex and can vary from sector to sector. Rarely, however, are 100 percent of any partner’s sales incremental. The key is determining what percentage is incremental and what that means for your business.
One big misconception about incremental marketing is that only new customer sales qualify as incremental. A reasonable goal for a small company would be for affiliate efforts to steer new customers to its website. But affiliates aren’t as likely to drive large numbers of new customers to established brands, so companies like Amazon should look for affiliates who can drive sales that wouldn’t have happened otherwise.
For those brands that need to get rid of products, they can trade margin for new-to-file customers — this will drive demand on the brands’ sites. Take Reebok, for example. The shoe company created a temporary outlet store, cut its retail stock down by 50 percent, and provided its affiliates with exclusive discounts. The result? A great offer for customers, large earnings for affiliates, inventory clearance, and a wave of new clientele.
The primary reason most advertisers cannot measure incrementality is because they are only getting affiliate-centric data from their affiliate management providers. To determine actual incrementality, marketers need data from all marketing channels, as well as all affiliate partners. While data from an affiliate network can indicate what happens across the channel, only when you incorporate additional channels can you understand the true picture.
The Retail Reality of Affiliate Marketing
If you are a retailer — especially if you have $5 million or more in online sales — with an active online presence and you don’t have an affiliate program, you’re missing out on sales and brand awareness opportunities with a channel that is only paid after the sale.