August 11, 2020
Creating a Framework for your Affiliate Paid Placement Spend
One of the trends we’ve seen in the Affiliate Marketing ecosystem is the growth of what is commonly referred to as “Paid Placements”. As the industry has matured and publishers' businesses have grown, advertisers seek to get even more out of these relationships. This happens through paid placements, additional inventory that publishers offer on their sites to advertisers, oftentimes at the cost of a “flat fee”, an increase in cost per action (CPA), or a combination of the two. This offering provides an opportunity to enhance the value of the channel, leverage the unique skills affiliate marketers offer, and give advertisers transparency into where their brand or product will be featured.
An example of this would be an advertiser who wants to get more exposure for their brand through the affiliate channel. To do this, they would work with their publisher partners to find out what additional inventory the publisher can offer, and how much it might cost for this. Simple examples of additional inventory could be a banner on the top of a homepage or a category page or having the publisher send a newsletter to their subscriber base featuring that advertiser and/or a specific product or product category the advertiser is looking to promote. These placements, the banner or email, are usually only available to the advertiser if they’re willing to pay an additional fee and are often marketed to the advertiser via the publisher’s media kit and/or rate card that will feature these opportunities.
As the affiliate space has matured & more budget has moved into the channel, there are a lot of these types of placements available for advertisers to gain this type of increased exposure. It ranges from the simple, as outlined in the example above, to the more complex - targeted promotions, segmented emails, personalized rewards, sponsored content, and more.
The traditional publisher media kit has evolved to provide an advertiser the insight they need into these opportunities and the way they can enhance a partnership. This is where business development skills come into play & a strategic approach to how best to work together is required. In doing so, there are a lot of things to consider on both sides of the equation, but I’ll try to highlight some of the things most important for an advertiser as you think about using this as a lever for program growth in the channel.
Define Your Paid Placement Budget
To start, you need to figure out what type of budget you’re working with. Do you have dollars allocated for flat fee spend, or can you only work on increased CPA? If so, this will impact who you work with and how. You should think of the flat fee as part of a blended strategy. It is a way to not only get increased placement but also cover potential revenue gaps for the publisher who might be driving up funnel traffic and not getting the full benefit of an increased CPA.
In some cases, the flat fee might even come from other departments, outside of affiliate marketing, depending on how the advertiser views this type of inventory and what goal or objective it supports internally.
When you look at performance - factoring in this flat fee spend with your CPA will give you a full picture of what it cost and what the return was to make sure you hit your ROI goals. This blended picture is critical when looking at your bottom line return.
Define Clear Goals for Your Paid Placement Strategy
You know your budget, now it’s time to think about what your goals are. What are you trying to achieve? It is to just grow topline sales? Or are you looking to push a category of products, feature a new product release, clear out inventory, attract a different demographic? It’s important to do discovery and align with your partners here. What do you need, and what can they provide. Are there specific goals you have that certain publishers can support better than others? And what are the KPIs you look at internally that you will measure success by?
This is important to create alignment and transparency upfront and will avoid painful conversations later on if the performance isn’t what you expected. But if the publisher doesn’t know what’s expected, it makes it harder for them to optimize. As well, this helps you create a balanced portfolio of partners with different levers allowing you to work towards achieving mutually beneficial goals.
Do the Right Discovery Up Front
It’s important to note that unlike other channels, affiliate is still very much one to one. Meaning, when selecting partners and inventory to purchase, you’re going to need to look at them individually, and then zoom out and look at the overall mix of partners & placements.
The next step is working with your potential partners on forecasting out what success looks like. One of the most common things I hear is that advertisers want to see a pro forma on their spend - if they invest X, what will the return be? Doing this helps align on goals and talk through specific approaches and strategies when you’re doing a flat fee spend. It also helps level-set expectations based on what the agreed-upon economics are.
Some publishers might also be able to use different tracking methods and benchmark data to look at success. For example, they can A/B test to show how the placement did vs. users who didn’t see it. Additionally, in cases where the end consumer gets a reward, what it looks like with vs. without that reward. Looking at year-over-year and month-over-month data is another way publishers can help you benchmark and see directional incrementality on spending.
Don’t Forget The Details
As an advertiser, there are some details of the campaign you will want to clarify to make sure nothing slips through the cracks. Things like understanding how your spend will be optimized on different devices. You’ll want to understand traffic splits by device and operating system and how that will impact exposure and potential conversion. You also want to understand if the publisher has a strong social following that they can leverage to support your campaign. You should consider what platforms they will use (mobile, email, etc.) because each will require different strategies & measurements.
Lastly, the most important thing is the data you’re going to get back. The good news is that the networks & platforms are doing a much better job giving publishers the ability to carve out specific link tracking which should help you get a very granular view of performance, so make sure if something needs to be set up in advance, this is covered so there’s no additional leg work needed after your campaign launches.
Types of Publishers to Work With
You may be thinking, “Okay - this is great, but what should I be thinking about when looking at different categories of publishers?”
As I’ve said before and I’ll say again - when you dig in, each publisher truly has its own unique value proposition and there are different ways to harness the power of their inventory and audience to help grow topline - but to keep it simple, I’ll highlight the general opportunities at a category level on how to look at each type of Publisher when allocating budget.
The following chart is meant to give you a high-level framework of publisher categories as well as considerations for execution & measurement. But remember, it’s always important to look at the specific partners in your portfolio as each one is unique in what they offer.
Publisher types and their features
Evaluate how each publisher type goes to market and what to watch out for
The Bottom Line
Paid placement opportunities are abundant in the affiliate marketing space and in my experience, I’ve seen publishers and advertisers have mutual success working on this type of media spend above and beyond the baseline affiliate revenue shares. It’s a great opportunity to leverage and unlike many other channels, there is transparency on who your partners are and a great opportunity to goal set and create alignment to reach mutually beneficial objectives.
Remember, publishers are your strategic partners and this is just another great lever to work closely with them, grow your brand, increase sales, and strengthen your relationships.
Adam Weiss has more than 20 years of successful leadership experience in various forms of online marketing & advertising with a focus on the Affiliate & Performance channel. Adam is the former SVP/GM of the Rakuten Affiliate Network and currently runs his own consulting practice, Weiss Digital Consulting, where he helps a wide variety of Publishers & Technology solutions in the Affiliate Marketing space with strategic direction, partnership development & monetization strategies.