Publishers face strategic choices to drive growth


Martech Record has written about the wave of investment in the affiliate marketing industry, a sign that top-tier firms are making a bet on the continued growth and potential of performance marketing, particularly as ecommerce becomes more ubiquitous. But what does that investment – and resulting consolidation – mean for publishers and how they should be setting themselves up for the future of the industry?


Summary:

  • Digital advertising is commoditized and expensive, so building commerce into your DNA to diversify revenue is vital.

  • First party data is crucial as the market moves away from third party data. This will drive consolidation.

  • A publisher’s authenticity is its differentiator. Be careful to not dilute your publisher brand as you scale.


Just a few years ago, it was nearly unthinkable to imagine global media brands using affiliate links throughout their content. But that is changing, representing what Hanan Maayan calls the “third wave of global transformation” in the affiliate marketing industry. Maayan is the CEO of Trackonomics, which was recently acquired by Impact.


“Once you see these [media brands] making a real move into the industry, that is a tectonic change,” Maayan said.

Many publishers are “built for commerce” and are finding ways to use the consolidation to “build up their affiliate marketing engines,” said Marshall Phelps, a managing director and member of the Telecommunications, Media & Technology group at Lazard.


“It’s hard to find a pure-play digital media company of scale that doesn’t have a substantial affiliate presence,” Phelps said.

Now that publishers are accepting affiliate marketing as a part of overall strategy to diversify revenue, they must find effective ways to scale while holding onto editorial integrity. Trending strategies focus on maintaining authenticity, including adding commercial links into content that was already set to be published, said Dave Yovanno, CEO at Impact. That allows publishers to stay within a circle of a customer’s trust, he said.


Even as affiliate becomes an increasingly programmatic channel, Maayan predicts that publishers will hold onto some element of editorial control. Still, as publishers find ways to scale, there’s potential for a stratification of the affiliate content, particularly among reviews, said Blake Saunders, a managing director of investment banking at Methuselah Advisors.


“The compromise between the affiliate and editorial teams at publishers could lead to more nuanced ratings, allowing more brands to ‘win’,” he said.

Consolidation among publishers themselves could present additional advantages for tracking as well as managing new data privacy regulations.


And in a world where third-party tracking is more challenging than ever, getting direct access to the consumer is becoming increasingly relevant, pointed out Vincent Karachira, Chief Operating Officer at Rakuten Advertising.


“Whenever there are new privacy laws, it always kind of hits the publishers first, because they are the gateway to the consumers,” said Gary Kibel, a lawyer specializing in digital media, technology and privacy. Publishers can get “caught in the crosshairs” because the ad tech industry needs publishers to adopt new rules to be compliant.


With the “death of the third-party cookie,” it’s in a publisher’s best interest to have a first party relationship with a consumer. The bigger a publisher’s network is, the more first party data they can have access to. That desire for valuable data could potentially push more partnerships within the publisher space.


As the “third wave of digital transformation” continues to wash over the affiliate marketing industry, publishers will be challenged to continue to scale and innovate. The next phase will require publishers to get smart about growing their affiliate channels to meet customers where they’re at, particularly as they push back against more traditional forms of advertising online, Yovanno said.


“Ads are disruptive,” he said. “Now publishers are learning there is this new channel to monetize content outside of advertising. That’s created a lot of new opportunities.”


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