The affiliate channel has been charged for years based on the turnover achieved. The “No cure, no pay” principle is inextricably intertwined with affiliate. This is partly because the Cost Per Sale, Cost Per Order or Cost Per Action fee is the rule rather than the exception within this marketing channel. Many therefore regard affiliates as an accessible, “plug and play” addition to the channel mix. This leads to situations where the affiliate campaign is set up, started and then unfortunately no longer receives the attention it deserves. After all, it doesn't benefit, it doesn't hurt. Right?
However, by approaching an affiliate in such a way, you are not doing the channel enough. A well-designed affiliate program adds value to the entire customer journey. Not only on the basis of the turnover resulting from the channel, but certainly also from a branding perspective. In addition to generating a turnover, Affiliate can also be used as a branding accelerator. After all, the affiliate channel is not only suitable for generating as much turnover as possible at an attractive ROI. To use an affiliate as a branding accelerator, it is necessary to approach and assess the channel in a different way.
Where it is common within other marketing channels to reserve a budget for optimal use, this is not the case within an affiliate. Indeed, the channel suffers from a few entrenched principles, the largest of which is the settlement based on CPS, CPO or CPA. Although the affiliate channel has traditionally been based on this principle, this same principle is at the same time the biggest danger with regard to the future of this channel.
The starting point of no cure, no pay is one of the major causes of affiliate's somewhat dubious reputation. Because advertisers have stuck to the “No cure, no pay” principle over the years, many affiliates have started to focus more and more on the lower funnel, as this increases the chance of getting commission. In addition, this development has meant that it has become increasingly difficult for upper-funnel publishers such as content sites and bloggers to earn income in the form of commissions. As a result, notabene due to one of the 'pillars' of the affiliate channel, there has been a skew in publisher offerings.
Over the years, various attempts have been made to turn the tide. For example, Tradetracker's Real Attribution solution makes it possible to distribute the commission evenly among all publishers who contributed to an order. Distributing the total commission evenly based on one of the available attribution models should ensure that upper-funnel publishers also participate in the commission. So that these publishers are also rewarded for their contribution.
Although this solution is interesting from the advertiser's perspective - after all, the total commission costs remain the same - it is not equally relevant for all publishers. For example, an order with a commission of €5 may have to be divided between 10 different publishers. Upper-funnel publishers such as content sites, bloggers and influencers can share the income in this way, but this low income is often not interesting enough for the publishers concerned. In other words, an attribution model alone is often not enough to use the full potential of upper-funnel publishers.
Partly due to the aforementioned skew, more and more content publishers have therefore switched to offering specific promotions at fixed fees. Although this principle is logically explained by the absence of income based on a CPS structure, this is also contrary to how the majority of advertisers approach the affiliate channel. From an advertiser perspective, the “No cure, no pay” principle goes overboard. And let that principle be exactly why the affiliate channel is so interesting for many advertisers. For example, one of the foundations of the affiliate channel is at the same time the biggest threat to its survival.
It should be clear: to ensure the quality of the affiliate channel and for the channel to remain a full part of the marketing mix, something needs to change. What many advertisers may not immediately realize is that they are the key to success.
In recent years, in the fourth quarter (in the run-up to Black Friday and the holidays), you have seen that there is actually a budget to buy positions or reserve mailings from relevant publishers. Where making additional budgets available around this annual turnover peak is the rule rather than the exception, few advertisers take these additional budgets into account throughout the year. Throughout the year, affiliate “No cure, no pay” applies, but around Black Friday and the holidays, this principle is simply jettisoned. This does not only happen to achieve as much turnover as possible. It often happens just to stand out from the crowd. Because suppose a competitor does participate in a large-scale mailing for Black Friday, and you don't! In short: branding, being visible, is perhaps just as important as turnover. It is interesting to note that advertisers in the run-up to and during the fourth quarter are apparently able to assess the affiliate channel on multiple facets, where this only occurs sporadically during the rest of the year. Even outside the proverbial high season, however, it is more than interesting to use the branding potential of an affiliate.
To turn an affiliate into a branding accelerator, a number of steps are necessary. For example, it is first necessary to define the term “success” of the affiliate channel differently.
Of course, affiliate can still be paid based on turnover. However, traffic numbers also play a role that should not be underestimated. For example, a non-direct conversion by an interested consumer on a banner on a blog page can of course still lead to a purchase at a later stage. In this way, the affiliate channel provides an assisting role in establishing an order via another channel. For example, an affiliate could be assessed in a somewhat similar way to, for example, Social.
An easy way to use the full potential of an affiliate is to rate the channel as both a performance and a branding channel. Of course, a large marketing budget can be reserved on a monthly basis, for example for TV commercials, but you can often use branding very effectively via an affiliate against relatively small budgets.
For example, affiliate positions that may be less interesting in the first place, with a view to increasing conversion numbers in the shortest possible time, can be more than valuable in the longer term as part of a solid branding strategy. In addition, prices for such positions can often be reduced by applying a hybrid compensation model, for example by combining the fixed fee with a Cost Per Sale fee.
Simply sticking to the “no cure, no pay” principle does not do the added value of an affiliate any good. This fact will not encourage upper-funnel publishers to share the brand's story to inspire consumers to think about buying. By sticking to the usual strategy, the success of the affiliate channel will depend (too) heavily on brand awareness or market position as garnered through other online channels. Affiliate will not be able to live up to its full potential this way. Without a cross from the upper funnel, publishers can only score by focusing as much as possible on the lower funnel. Let this be the reason for the bad reputation that affiliate has acquired over the years.
The “blame” for the bad reputation cannot be fully blamed on the publishers. After all, they have to make do with what they have. In fact, to provide the affiliate channel with the necessary boost, focusing on a two-pronged review of the affiliate channel by advertisers is actually the key to success.
With this broader approach, the focus will be on both turnover and branding. This can be achieved by reserving part of the affiliate within the branding budget. This can then be used to claim positions with relevant upper-funnel publishers. For example, advertorials for large online magazines or takeovers at large, relevant communities. In addition, part of the branding budget can be used perfectly to reserve mailings on a monthly basis via the higher quality mail publishers. This way, as an advertiser, you can continuously provide brand exposure via affiliate. This allows the affiliate channel to be used effectively as a branding accelerator.
Shifting from a purely revenue-driven focus to a broader focus, where the affiliate channel is also calculated on the branding factor, offers countless opportunities.
As mentioned earlier, the added value of the affiliate channel within the entire marketing mix can be significantly increased by focusing more on the upper funnel. Here, collaborations with media companies such as Hearst and Mediahuis are extremely interesting options. Such media companies have an extensive portfolio of online titles that can be used as an affiliate. Thanks to the extensive portfolio, matches can almost always be made between the various titles and the advertiser's webshop. Such agreements make it possible to approach consumers who are looking for information within a very concrete target group.
Here, it is important that the advertiser shows the willingness to move away from the familiar CPS model. 'No cure, no pay' is often not profitable enough in such agreements. The challenge for advertisers is therefore to let go of the familiar commission agreements and test them with a hybrid solution. The combination of a fixed fee plus a performance-driven commission is often required to complete such promotions.
Yellowgrape has carried out such a construction for XXL Nutrition. XXL Nutrition is a provider of a wide range of sports supplements. One of the labels that seamlessly matches XXL Nutrition's target group is Men's Health. After all, this label is an authority for men when it comes to a healthy and sporty lifestyle.
In consultation, an article was prepared, aimed at athletes who are looking for tips for daily intake of sufficient protein. Within this article ('8 quick recipes with protein powder') multiple affiliate links were processed to XXL Nutrition's protein articles. This made it possible to target a highly relevant target group with the products that are most relevant to them. And even at a time when the chance of conversion is as high as possible. After all, there is no doubt that the reader of the article in question has an above average interest in information about proteins.
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This construction is an excellent example of how abandoning the traditional CPS model offers space for high-quality forms of promotion, where the authority of, in this case, Men's Health can be used in an excellent way to increase the added value of the affiliate channel. The ability to reach consumers at the most valuable moment with a message that seamlessly matches the intention is of great value and well worth the initial additional investment in the form of a fixed fee.
Affiliate marketing roughly involves three parties. Where both advertisers and publishers have already been mentioned, the affiliate networks in this regard are the “pink elephant in the room”. Of course, the networks play a facilitating role, but it is also very important for them (in the longer term) that the situation changes. Continuing to build on the current status quo does not improve both the reputation and added value of affiliate marketing. This is therefore the point where networking comes in. From a network perspective, it is of course more than interesting to stick to collaborations with lower-funnel publishers and to keep the focus mainly on generating as many conversions as possible. Purely because of the fact that the networks communicate in the committees through the network margin. Here, too, one of the most important pillars of an affiliate hangs around the neck of the channel like a millstone. By focusing more on branding, this is expected to mean that less turnover will be measured via the affiliate channel - and therefore immediately less income for the network.
Networks not only charge margin or mark-up over the measured commissions, but also over advanced fixed fees. This includes payments for additional promotions such as advertorials and banner placements. By sticking to these margins even in these cases, it is not attractive for advertisers to arrange fixed fees via an affiliate network. It is therefore clear that flexibility from the networks is imperative in order to increase the added value of an affiliate.
This required flexibility could be translated into concrete actions in several ways. By charging margin over the amounts needed to purchase additional exposure into the upper funnel - and thus directly increasing the added value of the affiliate channel - the networks are in practice raising the threshold for advertisers to pay such fees at all.
The networks are pleased to distinguish between the margins they calculate over fixed fee agreements and regular commissions, such as with CPS. After all, the networks simply share in the proceeds. By charging no or lower margin over additional budgets, the threshold for looking beyond the basic agreements on a Cost Per Sale basis can be significantly reduced. Something that everyone can reap the benefits of in the long run: the advertiser, the publisher and the network.
It is clear that change is essential for the survival of the affiliate channel as a full part of the marketing mix. To prevent affiliate from getting bogged down in thirteen a dozen forms of cooperation with publishers that only focus on getting the conversion, it is necessary to anticipate. By continuing to approach the channel as a black box, the 'shit-in is shit' principle remains the order of the day. Testing with the use of additional upper-funnel fees is necessary to use the full potential of an affiliate. And to ensure that in a few years, there will still be a marketing channel that, thanks to its versatility, can add value to any marketing mix.
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