If the chaos of 2020 has taught us anything, it’s that trying to predict what next year holds for the affiliate industry feels somewhat of a futile exercise.
Another consequence of such a disruptive year is that it has required every business, regardless of their fortunes, to be more introspective and assess, root and branch whether they’re not only operationally resilient but nimble enough to react to fast moving events.
A much touted statistic this year was US ecommerce’s market share, growing at roughly one per cent annually for the past ten years, which then recorded that decade’s worth of growth in the space of eight weeks when the country was plunged into its first lockdowns.
Professor of Marketing at NYU Stern, Scott Galloway, points to the food sector as indicative of the wholesale change that such shifts are having on the entire retail ecosystem: “Online grocery, which was about 1.8% in the US; is about to jump 15-20%. Think about what happens when $100-150 billion of grocery transitions from tertiary to online: you’re talking about cold storage, logistics, pick and pack automation. This is going to create tremendous disruption and tremendous opportunity as online grocery accelerates.”
Affiliate marketing has its own chapter to write in how it has helped play a role in supporting this daunting change which will, no doubt, spring further surprises in 2021.
Here I’ve picked a handful of insights gleaned from Awin experiences in 2020 that, if nurtured and supported, can sustain the affiliate channel in 2021 and beyond.
New customers driving affiliate success
Probably my favourite trend of this year has been the acceleration in new customers the channel has driven. At the start of 2020 our network data showed around one in four shoppers were new to the brands they bought from through affiliate links. At the peak of the UK lockdown in April this surged to 37% and has remained consistently above 30%, hitting those spring peaks again this month.
This was obviously anticipated. Fraud protection company ClearSale analyzed e-commerce customer data in the U.S., Canada, Australia, Mexico and Argentina, all countries where some form of lockdowns were in effect. They found the average number of brand-new online shoppers rose by 12% between March and April.
But affiliate marketing seems to have outstripped general trends. While cashback sites drive high quality customers, their incidence of new to file shoppers tend to be amongst the lowest. However, proportionally these numbers increased 50% to close to one in three.
In April 2019 discount and coupon sites were attracting around 26% new customers. By April 2020 this had exceeded 41%.
If you’re looking to tackle the ‘incrementality’ in affiliate marketing dilemma, this is a useful place to start.
While context and additional datapoints are necessary for a more three dimensional view on shoppers referred by the channel, 2021 will require a concerted effort to retain these customers, both for publishers and advertisers.
And think of the opportunity for travel companies; the rebound should happen in 2021 and with it a new swathe of shoppers to tap into for the first time.
Pivoting to the publisher model
Necessity was the mother of invention for advertisers who found revenue streams drying up in 2020 and that has seen some embrace the publisher model in a further blurring of the lines between what we label a publisher.
The most notable Awin example this year is tastecard, the dining membership card business, which runs an affiliate programme on the network. Faced with restaurants shuttering across the country, the company built a customer loyalty scheme for members to drive retention.
Identifying ‘good fit’ Awin advertisers, in the space of two weeks, tastecard had partnered with a dozen new brands, offering deals and exclusives to their members.
tastecard is not alone in pivoting their business and looking to the affiliate channel to drive that growth. Anecdotally from an Awin perspective, it is filtering through and becoming one of the most requested strategies from clients across the network.
There are two additional considerations that will need further clarity in 2021. Firstly, brands are not necessarily looking to build additional revenue streams through commission payments from other advertisers, but they are looking for compelling offers that bake in customer loyalty. This requires a mindset change away from our classic last click, cost-per-acquisition approach to affiliate marketing.
Secondly, the affiliate landscape is already crowded, and with brands now competing against traditional publishers for the credit in driving sales, we need a more nuanced view on how we apportion revenue and sales. As ever this remains one of the key roles of a network, to arbitrate the interests of multiple parties in the affiliate relationship.
In-app is a must-have
About a year ago the then newly formed Publisher Board published a code of conduct focused on core areas they felt needed to be addressed to ensure affiliates are fairly treated in an industry that historically has always focused more energy on advertiser needs.
One of the themes they highlighted was the need to track all sales across the path to purchase. Mobile analysts Sensor Tower estimate UK consumers will spend more than £3bn on non-gaming app purchases by 2021 and across Europe AppsFlyer found a 35% increase in ecommerce app installs in Europe during this year’s lockdowns from March to April 2020.
There remains a curious dislocation between what we think is acceptable or unacceptable to track through the affiliate channel. We talk expansively about how we can theoretically track anything and everything, yet ecommerce enabled mobile sales are a traditional blind-spot that is seen as technically separate.
Perhaps it’s the legacy of many programmes being integrated and launched in days when they didn’t have transactional app functionality but the days when app-tracking can be shunted to the bottom of a technical to-do list seem numbered.
Awin’s November 2020 results showed a 14x annual increase in app sales. Progress of course, but there’s much to do. And that will require us to formulate a compelling narrative for brands about the benefit of tracking these sales.
A surge in SMEs embracing digital marketing
Awin has made no secret that 2020 has been the year of the SME. Launching Awin Access in January; our service targeting micro-SMEs, start-ups and entrepreneurs, saw more than 500 signing up to the network. SMEs are a largely untapped opportunity for affiliate marketing.
With businesses scrambling to mitigate the damage from closed physical stores, the importance of not only a fully functioning online shop but also the ability to connect consumers is notable.
In June the IAB found that more than half of SMEs consider digital advertising crucial in their future survival.
But marketing to this cohort of companies requires a rethink. Traditionally successful publisher models may not be a natural or easy fit for many SMEs, necessitating we offer easily found alternatives. Similarly the positioning of an affiliate network needs to be as a vendor that enables a business to easily track online interactions and iterate out their own network of partners.
Next year we must work to make the channel relevant to small businesses. For these companies the networks and personal relationships beloved of the channel may be less important than the automation and plug and play aspect of our technologies. Time poor and potentially strapped for resource, they will be looking for partners who can fast track their ambitions with minimal fuss.
Publishers pushing affiliate marketing into the mainstream
The affiliate channel has spent years convincing brands that they need to align affiliate marketing with their other digital channels. I’ve lost count of the amount of times I’ve heard people say we should be at the top table when campaign planning.
More recently however that discussion has been resonating strongly with media publishers who are experimenting with their affiliate efforts, and recognising the halo effect the channel offers other revenue streams.
Digiday reported this month that Cyber Weekend saw Wired drive its second and third biggest days for subscription sign-ups, noting that affiliate content had been instrumental in driving traffic and interest to their site across peak trading.
Wired’s affiliate content is not behind a paywall but for subscriptions, the affiliate e-commerce pages used display ads and contextual marketing in the stories to promote the publications’ own subscription deal. As such affiliate commissions and subscriptions now drive 30% of Wired’s revenue, up from 20% as reported in the first half of the year.
Similarly BuzzFeed’s decision to launch their gift guide weeks earlier than 2019 saw revenue soar more than 575%, thanks in part to producing more than 200% more gift guide content.
As these in-demand publishers grow their affiliate revenues so 2021 should see the channel positioned as a commercial front-runner than a way of plugging gaps between more important streams. They will also bring new brand led-strategies to the table, melding the words of acquisition with rich content.
by Kevin Edwards