It’s time for part two of our Affiliate Marketing blog series! In our first post, we covered a brief overview of affiliate partnerships and their growing role in the world of marketing. If you’d like a refresher, you can click here to find that post. Today, we’re going to talk more about current trends in affiliate marketing, the different types of affiliates, and finding the right partners for your business.
The popularity of affiliate marketing has grown steadily year over year, and 2020 is no exception. In a recent study from Digital Global, nearly 90% of advertisers stated that affiliate marketing is an essential part of their overall marketing strategy. With affiliate partnerships becoming an integral part of most companies' growth strategies, affiliate marketing spending in the United States is estimated to reach $6.8 billion in 2020.
Affiliate marketing is quickly changing and evolving, and with so much competition in the market to contend with, it's critical to be informed on new trends and be among the first to implement them. We’re here to help bring you up to speed.
As social media continues to grow in importance, and additional platforms become popular, affiliates have more ways than ever to promote products and services. Unless you’ve been completely tuning out any news on marketing trends, chances are you’ve heard about TikTok's popularity among younger consumers. With over 800 Million users, 41% of which are between 16 and 24, if you’re trying to find affiliates who influence the next generation, this channel offers an unprecedented growth opportunity.
The proliferation of new platforms and the advanced demographic breakdowns they offer has allowed many affiliates to expand from purely business-to-consumer campaigns to include business-to-business. Advanced targeting within these platforms opens up the opportunity to direct their voice to industry professionals.
These changes have also caused a shift in focus from larger, more generally-focused coupon and deal sites to more specific niche influencers. Especially for products with high consideration customer purchase journeys, expert trusted influencers can provide invaluable incremental lift to your affiliate program, as well as overall brand reputation benefits.
Ironically as the world becomes more accessible at our fingertips through social media and the internet, focusing on localization is becoming a bigger trend for a good reason. Localization is more than just sharing content in the native language; it is about understanding your audience’s local culture, mindsets, and priorities. Having affiliate partners who focus on a specific local area, your company can offer a local voice that resonates with prospects in that region.
Types of Affiliates:
- Content Affiliates: Including blogs, magazines, and influencers, these partners create content that people consume for entertainment or education. They can provide a trusted voice and extend your brand to incremental audiences that may not have otherwise heard of your product.
- Coupon Affiliates: These partners offer coupon codes to savvy discount shoppers. While they provide the benefit of large followings and high-ranking SEO for deal-related terms, they may provide less incremental volume as shoppers often seek coupon codes late in their purchase decision.
- Loyalty Affiliates: Partners like Rakuten Rewards and Ibotta offer shoppers rewards in the form of cashback or other perks when they make purchases by passing some of the value of their affiliate commission on to the shopper. Activated at the very end of the shopping funnel, these partners are often the least incremental, but can drive increases in your site visitor conversion rates.
Finding the Right Affiliates
Affiliate partners prefer to promote between 1-10 products. Knowing that affiliates are very selective about which companies and products they promote, it’s more important than ever to find the right partners for your brand.
Not all affiliate partnerships are created equally. It’s essential when vetting new partners to find the right fit for your company. You should keep in mind these main key factors when vetting new partners: scale, return on investment, incrementality, elasticity (can the partner scale up efforts at crucial times of year).
The scalability of your partners is the most important factor when evaluating a new partner. If you want your affiliate marketing program to move the needle for your company and drive your growth goals, you need to partner with affiliates who can get your brand in front of a broad and engaged audience. If you only work with smaller affiliates who each drive a handful of leads, you will need to recruit and manage a much larger number of partners to achieve your growth goals.
Paying your affiliates on performance rather than posts or clicks ensures the program is a relatively low-risk marketing strategy that can provide significant rewards. Affiliate partnerships can drive a return on investment of up to 12 times the advertising investment, according to a 2019 study from PwC and the Performance Marketing Association.
Incremental sales from your affiliate program are sales driven by your affiliates that your company would not have seen otherwise. This is a highly important consideration, as today’s consumer will often encounter multiple touch-points on their journey to purchase, and it’s vital to limit costs to only those partners truly capable of moving the needle. For example, a sale driven by a paid search ad for your branded terms can be considered less incremental than a deal driven by an influencer’s video reaching a completely uninitiated customer.
Lastly, it is essential to find partners who can elastically scale and reduce their volume as your business needs and goals change. This is especially important for companies that experience regular seasonal sales patterns and those that rely on sales and other discount events.
By finding partners that excel in these areas, you’ll set your program up for success and open up opportunities to grow your business and customer base. We’ll talk more about popular affiliate platforms and the direction affiliate marketing is heading in part three of this series, so be sure to check back in next week!