We need to talk about affiliate marketing

Matthew Higgins

Managing Partner for Affiliates & Retail Media

I have just hit the milestone of one decade in the affiliate industry, and throughout the last ten years I have seen some brilliant pieces of work, innovation, and positive changes within the industry.  The channel provides some of the strongest ROI within digital marketing at 16:1 in the last IAB PwC report, and offers access to a wealth of different partners to engage creatively with every target demographic you can think of.  In addition, the cost per action (CPA) model is an inherently low-risk payment model for brands, backed up with a validation process that ensures spend is directly linked to business success.

With all these benefits, a newcomer to the industry might expect affiliates to be a behemoth of Performance Marketing.  And yet, it remains in the shadow of the ad tech giants, under-utilised and with relatively low growth.  In 2021, UK affiliate marketing spend grew 7%, while Paid Search grew by 32%.  That is an incremental spend in Paid Search of over £3.2bn in the UK alone, that is around four times the size of the entire affiliate investment.  

So, why do advertisers continue to overlook the (in my eyes) huge benefits of the affiliate channel?  How can we secure more client investment alongside the other channels, and more importantly, how can we be better? 

I am not writing this because I know all the questions we need to ask, let alone all the answers to them.  Rather, this piece is intended to stimulate debate, because I firmly believe it is time that we collectively reflected on the channel.

Can we make it easier for businesses to use affiliate marketing?

Comparatively, it can be much simpler to access other channels for marketing efforts. If I use examples from Meta, as an SME you can easily convert your social presence into a business account/page.  From here you can access simple ad builders, set daily spend limits, campaign duration, and align activity to your chosen KPI (site visits, page visits, etc.) all within a matter of minutes.  We often cite reach as a benefit in the affiliates channel; however, contracting, tech integration and onboarding add barriers to SME adoption that don’t exist with platforms such as Meta. It might be worth thinking about how publishers can also help SMEs – for example, different areas on site, or a commitment to regular SME placements in a newsletter.?  The barriers to entry do not just sit with networks but with publishers too, and removing these could unlock a significant increase in investment in the channel.

Could we work with flexible budgets and forecasting processes?

Google, Bing and Meta all make forecasting and budgeting easy to manage.  My colleagues in Paid Search and Paid Social may laugh at this claim; however, while there are nuances and foibles within their respective processes, when a client has extra budget to invest in a month, both Search and Social make it easier to forecast clicks, interactions, impressions and conversions within a given budget than affiliate publishers.  Many publishers are unwilling to give forecasts, or security of spending, and many clients need more certainty than is currently on offer in the channel.

Given that affiliates account for just over 3% of the digital ad spend in the UK, suggesting to clients that our channel should not use fixed monthly budgets like everyone else but instead (due to the CPA model) allow publishers the flexibility to over/ underspend could seem above our station. One solution here could be performance agreements rather than placements – for example, a commitment of performance delivery rather than booking placement options, in a similar way to lead volumes work in Lead Generation.

Can we tag up publisher placements?

Transparency is something we hang our hat on in the channel, and quite rightly so.  The ability to reward based only on valid sales that aren’t returned or cancelled is one of, if not the primary benefit of the channel.  But I believe we could be far more transparent for our clients?

When you can see performance down to a keyword on Google or Amazon, and by audience and placement through Meta, there is an expectation from clients to see granular performance information.  Booking newsletters with publishers and not understanding the performance of the placement is a big stumbling block for brands.  If the data is pointing to the fact that a placement isn’t performing, that should not be seen as something to be hidden.  Giving transparency here means that the client can invest in other activity on site, while the publisher can improve how that placement performs.  

A better future for affiliates?

I appreciate that not everything should or could be changed.  I recognise there are limitations in tracking, technology and time that exist within our channel.  I agree consumer experience should remain at the forefront of our minds.  

At the same time, I also see all the untapped potential in this channel.  Affiliate marketing grew 7% last year, while the digital ad industry as a whole grew 41%.  Now is not the time for us to be complacent, or defensive about all the reasons affiliate marketing works differently to the rest of the performance industry. 

With those numbers ringing in our ears, now is the time to start a new, industry wide conversation. Let’s take a look at our channel, look at what we can learn from other channels, and then ask ourselves again: “How can we be better?”

Written by Matthew Higgins, Managing Partner, Affiliates & Retail Media, dentsu UK&I and originally published on performancein.com.