April 6, 2020
Observations and Opportunities for Affiliate Marketers for the Rest of 2020
This is a difficult time. And that’s an understatement. But one of the hardest parts of all this is the unknowns. There is little verifiable information, and most predictions are useless. If there’s any silver lining, it’s this: past recessions have laid the groundwork for innovation—and those seeds are being planted now.
We can already observe this happening in ecommerce. So, I want to focus on the long-term opportunities, and ignore what I think are short-term trends. (That coupon sites are seeing huge growth during a dramatic economic downturn is neither surprising nor sustainable nor interesting.)
Granted, this all comes with a big caveat: I have no idea what is going to happen in a macro sense. Will supply chains even exist? Will people have jobs that allow them to buy things? Will we remain confined to our homes for the rest of our lives? Are dragons actually real? I’m in no position to guess. But, thanks to data and years of experience, I can make some educated predictions.
Observation: Affiliate revenue will continue to grow in importance for content/legacy publishers.
As more purchases are made online, more people will be looking for high-quality reviews written by publishers that maintain journalistic standards. Quality reviews will filter to the top, and new standards will be codified.
Opportunities for Affiliate Managers
Expand your skill set—make sure you can capably and credibly evaluate content and publishing brands that are accretive to your product. Try to think of which publishing brands can enhance the value of your product by association, rather than just by clicks or sales. Which publishers have similar values to your brand? Work with them to develop a credible story.
Push the networks to develop standards of transparency and quality for publishers. Affiliate managers are paying the networks—it’s up to you to push the networks to develop standards.
Opportunity for Publishers
Develop stronger relationships with your brands by thinking of ways to increase the value of the product. Focus on brands where brand values are aligned. Spend more time with fewer brands.
Observation: New standards for affiliate publishers need to be codified.
As demand for quality reviews increases, and new users are attracted to reading quality reviews, the need for industry standards will emerge. At its core, affiliate is just another publishing model that has potential to sustain publishing, but it lacks trust. That can be fixed with the right leadership.
Opportunities for Large Publishers
Band together and create affiliate industry standards. Communicate with consumers to build trust. Customers should know that links are affiliate links, that the content is high quality, and how affiliates get paid.
Large publishers with quality reviews should band together and push back against the “last click” model. Approximately half of affiliate revenue goes to ebates, and 80 percent is last click. As long as that model dominates, content publishers will not extract appropriate value.
Observation: The last-click model will continue to be questioned.
With almost all research and purchasing activity focused online, tracking and attributing will be easier, and the value of different types of publishers will be exposed. With more data, brands will more easily identify where value exists in the user journey. With more data on the user journey and more publishers writing quality reviews, it will be more difficult for ebates and retailmenot to kick brands off their sites for implementing their own attribution models.
Opportunity for Brands
When the data show that certain publishers are meeting your KPIs, compensate those publishers accordingly, and focus on building the relationship. They can then further increase the value of the partnership by telling the story of your brand.
Opportunity for Publishers
If the data show you are driving incremental sales, set higher rates and stick to them. Push brands to work with platforms that provide the appropriate data and transparency.
Observation: Brands’ management will swing back to a single manager, and away from the siloed, channel approach.
With more data flowing from channel to channel, and brands needing to cut costs, CMOs will insist that marketers consolidate resources.
Brand managers will start to think of their digital media spend like a financial planner—with a holistic allocation theory. Technology (and people) that can truly understand attribution and apply it across channels will thrive. If you’re an affiliate manager, understand your brand values well. Ebates will be a lot less important when a brand manager in charge of all digital marketing is thinking about a holistic allocation theory.
Observation: Boomers will stick with ecommerce.
It’s an old (and untrue) trope that boomers don’t use the Internet. They do. A lot. (Facebook. Need I say more?) But thus far, boomers haven’t been a big focus for ecommerce. Now is the time to get ahead of the curve. The recent shelter-in-place orders have forced huge, and, thus far, untapped portions of the population to rely on ecommerce in a way they never had to before. In the coming months, boomers will begin to use ecommerce to meet their everyday needs. This will create more comfort among this demographic with ecommerce in general—they’ll be reading online reviews, making significant purchases online.
Extend your brand to a new target audience. Can you leverage your ecommerce expertise to target boomers online?
Boomer-focused publishing. There is too much reliance on social media among boomers—can a BuzzFeed or reddit for boomers emerge?
I have a daily chat with my ecommerce friends who work across social, gaming, and retail, and we often talk about the data we see. Two thing are clear–
The growth in Tik Tok during the downturn will last, and they will take the lead in social as an ecommerce channel. This mirrors their growth in China, and will eventually make them a more important channel for CPA than Facebook. Bow down to your new Chinese overlords.
Amazon will come back even stronger. Amazon Web Services is the backbone of gaming, video conferencing, and ecommerce. All of the individual companies you can think of as thriving in this time are cutting a check to AWS.
Any time a new platform grows, there is an opportunity for expertise (usually from young people) and an opportunity for arbitrage. I’m sure both will happen.