Incremental Value: Holy Grail of Affiliate Marketing – By Geno Prussakov

by Sara Szado on November 24, 2015

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Earlier this year, a TechCrunch article by Tom Goodwin noted: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

As I read this, I felt a glow of pride for the industry in which I have an honor of working because affiliate marketers have been doing all these things since 1994. As a good friend of mine, Chris Sanderson, puts it – for over twenty years affiliates have been “doing merchants’ marketing better than they can…, profiting from it.”

Our industry, however, has been focused on the incrementality of the business that affiliate efforts bring. And, let’s face it, some affiliate programs find ways for affiliates to bring incremental value, and others don’t; ending up shutting their affiliate programs altogether.

I believe, the three chief obstacles that prevent advertisers from seeing their affiliate programs yield incremental value are:

1. Failure to understand affiliate marketing’s place in the digital marketing ecosystem. Contrary to popular belief, affiliate marketing is not a channel of marketing. It is a marketing context , where the marketer is compensated based on the referred performance, regardless of the channel of marketing that the affiliate uses.

It is integral for advertisers to understand that affiliate marketing exists at the crossroads of all online marketing channels.

2. Failure to manage the affiliate program, actively steering your affiliates’ marketing efforts. Once advertisers realize how all-encompassing affiliate marketing really is, the next step is to leverage affiliate expertise to power their marketing in the areas where they can add value. This will ensure that affiliates will complement their company’s marketing efforts.

3. Failure to police (and enforce) compliance. Finally, it is integral to understand that prohibiting unwanted affiliate behavior never prevents it, but only gives grounds for advertisers to take action should the rules/policies be broken.

Monitoring and enforcing compliance is crucial for two main reasons: (i) it prevents low/no-value affiliate activity, and (ii) it safeguards the good affiliates in your program from having their cookies overwritten by violators.

Well-developed and closely managed affiliate programs yield an ROI that is, generally, higher than that of any other type of online marketing. During Steve Denton’s Affiliate Summit West 2014 keynote speech, he indicated that in over 20% of cases, affiliates are “introducers”, or the first touch point in paths-to-purchase; and nearly half of affiliate-referred customers appear to be new customers.

Additionally, according to “The Value of Online Performance Marketing” study, conducted by PwC for the Internet Advertising Bureau UK (IAB); affiliate marketing programs yield £14 for every £1 invested by advertisers.

The choice is yours; either manage your affiliate program in a way that encourages incrementality or let your competition gulp down your piece of the pie.

Prussakov runs AM Navigator affiliate management agency, chairs Affiliate Management Days, speaks, writes, blogs, consults.

This article appeared in issue 31 of FeedFront Magazine, which was published in August 2015. http://issuu.com/affiliatesummit/docs/feedfront-31

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