“Outcome-based marketing will represent more than 50% of online marketing spend five years from now”
Affiliate marketing is experiencing a renaissance. The size of the industry is growing and more publishers are focused on building commerce-first strategies. CMOs, brand marketers, and advertisers are demanding that more of their spend be focused on conversion-based or outcome-based marketing that guarantees profitable returns, especially in this economic climate. Yet, the infrastructure built decades ago is still supporting this channel today. That’s changing rapidly as companies are adapting and evolving to spend smarter.
Our Co-Founder and CEO Michael Jaconi sat down with Sam’s Club’s Head of Product and Growth Marketing, Drew Frost, and Acceleration Partner’s Founder and CEO, Bob Glazer, to discuss the trends and developments that are going to make a great impact on the affiliate channel in the coming months, and years.
Growth drivers in the affiliate space
On a macro level, brand budgets are shifting alongside the momentum towards direct-to-consumer brands. Ten years ago, a company like Gilette would have a big media spend push with its retailers to do product awareness. Now that Gilette is focused on pushing its subscription shave service, it has inevitably shifted to paying for an “outcome”. Meaning, a consumer signing up for the service.
With the current pandemic, we’ve also seen how brands have turned off their paid search channels but left their affiliate channels on. Affiliate marketing has historically done well through big recessions—it remained resilient through the 2008 financial crisis due to its pay-for-performance, low-risk model.
At the micro level, affiliate marketers are getting more versatile and able to flex towards different goals as priorities shift between top-of-the funnel vs. bottom-of-the-funnel activities. They’re getting savvier with data, in a hybrid role between a technologist and a marketer, to translate data into actionable steps.
Shifting to a solution-first mindset to solve for personalization
Whether you’re looking to getting more people on your app or buy more in a particular category, or acquire a customer that's new net or churned, you’ve got to get better at intelligence, adopt a more product-marketing mentality, and championing your customer in order to figure out the best path forward. For example, at Sam’s Club, you’re looking at making an impact on the lifetime value of a customer and membership renewals. Through testing, getting directional feedback, getting the messaging right, and learning quickly, and not being afraid to fail, you’re going to be able to push the business forward and grow incrementally.
Predicted changes in the affiliate marketing over the next few years
Affiliate is going to get more programmatic and include more data management. It’s going to be easier to shift spend with velocity like other advanced channels such as social and search. A programmatic future with trust and transparency as the foundation of this channel is going to be key to keep the channel effective.
With Google, Facebook, and many major players moving towards the CPA model today, the prediction is that outcomes-based marketing will represent more than 50% of online marketing spend five years from now.
For deeper insights from this conversation, and more predictions on the key changes that we’ll witness in the affiliate space, check out the virtual panel discussion by clicking this button below.