PR and affiliate: If you are a PR professional looking to better understand and drive value with affiliate, here's what you need to know.
Years ago, if you asked most people in either the PR or affiliate business about the relationship between the two, you probably would have gotten puzzled looks. At first glance, the two may seem to be strange bedfellows. But go a little deeper, and it's easy to see how the two create a perfect storm of business impact. Each brings unique power. And when combined, they become a powerful force to drive brand awareness, consideration, and, ultimately, transactions.
This relationship is certainly not lost on public relations agency leaders. Many PR firms are working hard to expand their value to clients by demonstrating genuine synergies with the affiliate channel. These agencies are anxious to strengthen partnerships with affiliate teams because they:
Bring "hard" metrics where PR has struggled to measure direct business impact
Provide potential new revenue for agencies with both existing and new clients
Create an avenue into deeper client relationships with the marketing organization
Deliver relatively high margins/fees because you can prove the direct sales impact.
Enable PR teams to grow social marketing dollars to deliver transactions
Reflect publishers’ need for revenue streams due to Google and Facebook growth
Help provide accountability in the burgeoning influencer marketing and media arena
But there's an even more critical reason why PR is moving into the affiliate space. As digital has made most marketing spending more accountable, it has created new demands that PR prove its direct economic value. With all of the available options for marketing investment in 2022, some companies are reluctant to spend dollars on even long-running PR efforts when they can’t draw a straight line to sales. PR isn't competing with huge and unaccountable TV and print budgets anymore. Instead, earned media and comms must stand next to measurable, connected media. Fortunately, PR teams sometimes have pre-existing relaitopnships with editors. As the publisher model evolves and editors must manage both pub-led and brand-led content efforts, this opens an opportunity for PR agencies to potentially manage some programs.
Given all this, let’s answer the most common questions PR agency leaders have about affiliate.
WHAT IS AFFILIATE MARKETING?
In affiliate, brands partner with publishers and technology providers to drive traffic and sales through performance relationships. Generally, the industry refers to brands as advertisers and their partners as publishers. An affiliate program uses tracking links to tie publisher efforts to transactions they helped drive. Affiliate programs award a set fee or a percentage of sales to the publisher that helps drive them. For example, advertiser Acme Widget Company grants $10 for every sale that publisher WidgetWorldNews.com helps drive.
Affiliate commission can also come in a percentage bounty for each transaction or an ongoing bounty for subscription products. Meaning that WidgetWorldNews gets, say, 6% of the total value of the customer transaction. Most affiliate programs award 100% of the credit for a transaction to the last referring publisher. In the example above, a visitor to WidgetWorldNews.com clicks a link for Acme Widgets and makes a purchase. Even if that individual visited ILoveWidgets.com before visiting WidgetWorldNews, all the credit goes to the publisher that drove the last click.
Some programs now split credit for a transaction with every affiliate that a person visited before making a transaction. Publishers/media that are more impactful at the top of the funnel, like influencers, love this trend.
Clicks, visits, and sales are tracked in an affiliate network or platform, a third-party tool accepted by all parties as the single source of truth. The platform records the sales and the referring publisher(s), and the client verifies transactions and pays for them. Payments and rules for an affiliate partnership are agreed by both parties in legal sign-off on affiliate policies -- usually within an automated process in the platform. That's affiliate in its purest form.
WHAT'S THE DIFFERENCE BETWEEN AFFILIATE AND OTHER PERFORMANCE MARKETING? WHAT MAKES AFFILIATE AFFILIATE?
In recent years, affiliate has begun to expand and merge with other performance marketing types, bringing cost-per-acquisition or CPA compensation models to traditional content publishers and even offline retail transactions. Any performance marketing relationship rests on a pay-for-performance agreement. Different people have different definitions of an affiliate marketing relationship versus another type of performance marketing relationship. It can seem complicated and blurry. For example:
Is a tech company that does not drive traffic but is paid through a network, an affiliate?
If an influencer accepts pay-for-activity and pay-for-performance payment, is it an affiliate?
If an "editorial-focused" publication like a newspaper accepts CPA ads, is it an affiliate?
Is "sponsored content" affiliate partnership marketing?
Unfortunately, if you ask ten people about each of these scenarios, you may get ten sets of distinct answers. One way to distinguish an affiliate and a traditional CPM-based publisher is that an affiliate drives all or most of its revenue from pay-for-performance, whereas the CPM-based publisher does not. Though that definition may not work in the future as content publishers increasingly rely on affiliate revenue.
But even that seemingly empirical standard has challenges because Google, Facebook, and Amazon are becoming so dominant in CPM and CPC media that even traditional CPM publications are becoming increasingly reliant on CPA programs.
My suggestion is don't sweat it. PR teams know the difference between editorial and commercial teams at a publication. The key to providing value for affiliate programs is coordinating efforts across these two "sides" for maximum effectiveness.
HOW BIG IS AFFILIATE MARKETING?
Big. Globally, affiliates generate about $15B in fees for the sales and leads that they drive. The Performance Marketing Association reported in 2018 that the industry generated $6.2B in fees for affiliates in the US. That figure was projected to become $7B+ in 2021.
Other major affiliate markets include Britain, Japan, Germany, China, Australia, and other EU countries. Affiliate has grown in revenue in every year since 2001. Even in 2009, during the great crash, Forrester estimated affiliate revenue growth was 5.4%.
According to the PMA, top affiliate categories in the US include:
HOW MANY BRANDS HAVE AFFILIATE PROGRAMS?
According to various data sources, more than 80% of leading consumer brands in the US have affiliate programs. In Britain and Japan, the figures are likely similar. In other countries, the figures are lower but snowballing.
WHAT ARE AFFILIATE NETWORKS AND PLATFORMS?
These are companies that facilitate connections between advertisers and brands. They offer software that creates links to track clicks, shopping, and sales so that advertisers understand the path the customer took before they arrived on their site or app. They also provide easy access to publishers to facilitate new partnerships.
Examples of leading networks and SaaS platforms active in the US include:
Click here to access Martech Record's review of platforms and networks to find which one is right for your program.
The provider business is changing, and brands are consolidating. Many expect the number of providers to decrease to a few "majors" in the next several years.
Platforms and networks traditionally charged a percentage of the publisher commission for their services. Some providers have recently turned to the SaaS model, which offers a flat monthly fee in exchange for a "band" of service.
WHO ARE THE BRAND-SIDE DECISION-MAKERS IN AFFILIATE?
On the brand side, affiliate is usually led by specialist affiliate leaders. These people have often grown up in the industry, have many relationships and connections to leading publishers, and have robust and specialized knowledge of the field. As the affiliate share of total sales has grown, and as the distinctions between affiliate and other CPA marketing programs have blurred, some brands now have dedicated partnership teams who holistically manage affiliate and other programs.
Many leading brands contract with agencies to manage their affiliate programs. There are a variety of reasons for this. Here's why: affiliate marketing is:
Fundamentally different than most paid media management
Partner-dependent and brands choose to delegate control to industry specialists
Often relies on constant recruitment of new partners. Deep knowledge matters here
Labor intensive because your relationship with each partner must be guided
Relationship-driven -- who you know and your relationship to those individuals matters
Increasingly data-driven and requiring time-consuming granular analysis
Both traditional media agencies and specialist Outsourced Program Management agencies ("OPMs") service affiliate programs for companies. OPMs position themselves as uber specialists in both the strategy and execution of affiliate. In contrast, full-service ad agencies position themselves as better able to manage affiliate holistically in concert with other forms of media.
Click here for a list of leading affiliate agencies. Partnership may be a viable option to enter the market.
CAN ANYONE RUN AN AFFILIATE PROGRAM?
Because affiliate marketing is relationship-driven and has its own "rules" and measurement approaches, it is different from traditional media buying or press outreach programs. It would be best to have affiliate specialists on staff to get the best results.
The strength and growth of the OPM industry demonstrate the value of specialization and expertise. That said, there are holistically-focused PR and advertising agencies that deliver strong results in affiliate. It's all about having experts available to maximize performance.
WHAT DO BRANDS WANT FROM AFFILIATE MANAGEMENT AGENCIES?
As with any agency selection, there are various reasons why brands pick a winner. Further, the criteria are evolving as affiliate grows from niche to core marketing channel. In general, the following factors weigh highly on a decision:
People: Any agency selection factors the people assigned to a business. Clients will consider:
Who are the people that will do the work? What are their credentials?
How much time will they devote to my program?
Do they have the ability to bring insight and ideas for growth?
Recruiting: Many brands believe that recruiting more partners is key to success. They will want to understand your process to recruit new partners and your thoughts on their existing affiliate footprint. They'll want you to be able to:
Assess current partners
Identify major partners missing from your program
Discuss how new targets open up new scalable partner relationships
How recruitment and the channel can support key brand initiatives like product launches, regional expansion, seasonal lines, etc.
Potentially bring exclusive relationships to their program
Partner Culling: While not every brand seeks to reduce or rationalize its partner count, a growing number want help in determining whether a partnership is productive and profitable.
How do you spot unprofitable partnerships?
Do you have a strategy/approach to make unprofitable partners more valuable?
New Forms of Partnership: Brands see the blurring of partner categories as a key growth opportunity. They will possibly be interested in how:
You work with influencers
You manage partnerships with other brands
You work with organization partnerships
Tech providers fit into your strategy/approach
Insights and Data: Traditionally, affiliate tracking had limited data available for analysis. As a result, brands often manage it as a side-channel or niche. As data and tracking methodologies have improved, brands want to leverage ]the data to drive insights and optimization.
What tools and methods do you use to analyze data and optimize programs
How do you address challenges like attribution measurement?
Can you assist tech teams with integrating affiliate data into BI and other systems?
What data evidence do you have to bring incremental value to a program?
WHAT ARE THE BEST WAYS FOR PR PRACTITIONERS TO WORK WITH AFFILIATE AGENCIES?
Many PR teams want to collaborate with all brand teams, including affiliate. They may not want to run affiliate programs but simply coordinate efforts with the affiliate team for the best possible client results. Keeping everyone informed of upcoming PR campaign programs and broader brand campaigns can deliver tremendous value. From there, you can find ways to collaborate for affiliate and pr success.
The key is creating mutually beneficial relationships with other agencies that are transparent, mutually beneficial, and accretive for the client. Their ultimate success often lies in the extent to which you can cultivate brand-side and agency-side relationships.
WHAT UNIQUE VALUE CAN THE PR INDUSTRY BRING TO MANAGING AFFILIATE PROGRAMS?
Just as OPMs emphasize their focus and expertise and full-service ad agencies stress the importance of a holistic view, PR firms must define their unique value. Key to this process are your media expertise, specialized operational processes, people, and experience. Here are some of the critical ways that PR agencies focus:
Editorial/Commercial Alignment: Many publications are looking for ways to marry the business of content development and monetization. They want to get more direct value from editorial and editorial-like content and may see affiliate marketing as one of the "avenues in." A combined affiliate marketer and PR team can work both sides of the equation, helping ensure respect for editorial integrity and the win-win of high-quality brand content. Because the lines between all these areas are blurring, you may already have cultivated strong working relationships with many affiliate publishers!
Bloggers/Influencers/Social Media Expertise: Many affiliate programs sprinted into the influencer world but have not cracked the nut on getting scale from this channel. If your agency has cultivated effective processes and engagement with influencers, you can focus on unlocking real value from the channel.
Knowledge of Relevant Outlets: As affiliate and editorial become more closely related, PR pros can identify potential new scalable affiliate partner options
Content Development: Most brands struggle to deliver high-quality content for affiliates, particularly those focused on articles, features, and recommendations. Your content creator team can be a secret weapon to put you over the top with a prospect.
Brand Experience/Expertise: PR agencies can bring a uniquely rich understanding of the target to affiliate. This can help identify new and better partners and craft messages that resonate better. Further brand understanding and excellent communication can help affiliates understand brand objectives and target characteristics better.
Brand Impact Measurement: As brands push more resources into affiliate, they also want to understand the brand impact of the investment. PR agencies tend to be very adept at brand impact measurement.
International Capabilities: Many agencies and brands in the affiliate arena specialize in a single region. If you have genuine global capabilities, that can be a good differentiator.
WHAT VALUE PROPOSITION CAN MY AGENCY BRING TO AFFILIATE MANAGEMENT?
Any agency needs a story -- you know that better than anyone. No one can deliver the best of everything. Here are some ideas on how to define the unique value you can provide:
What is your value prop in PR? What do you say is unique about your firm in a PR pitch?
How can it provide value in affiliate? How does your understanding of quality media outlet processes add value in affiliate deals?
What do your existing brand relationship and familiarity enable you to do uniquely well?
How is your team different? Do they have unique insight into the client's target audience?
What is unique about your process that can pay dividends with affiliate?
It makes sense for your agency to be well connected to the affiliate management team at your clients. Better partnership and coordination of campaigns can deliver both immediate sales and long-term brand value. If you want to work more closely with existing client teams or affiliate agencies, start by explaining to your counterparts how that coordination can be valuable. Make clear that you are focused on client benefit, not incremental agency revenue.
Clarify the value that coordination can bring. Be respectful of existing roles as you build new relationships. And explore ways to demonstrate the value the partnership can bring.
If you are interested in broadening your agency services to include affiliate management campaigns, recognize that the decision-makers are probably not the same. Invest in gaining the team and expertise in affiliate before you pick up affiliate assignments.
Clients well-versed in affiliate can recognize pretenders a mile away. They will likely know you're faking it because they won't know you. It's that tight a world. Then, take the time to clarify the unique value you can provide.
Martech Record has fast become a leading industry voice for the affiliate and partnership marketing industry in the US and globally. By joining our community you can connect, learn, and grow your relationships and business in this fast-growing and exciting arena.
Additional sources of learning and networking: