Affiliate Marketing: Redeveloping an Underdeveloped Channel

Online affiliate marketing has evolved from something every brand “must have” into a “love it or hate it” strategy.  The whole affiliate marketing concept is leaving many marketers torn — from Amazon to Zappos and everyone in between.  And now many state legislatures are ganging up on performance marketing as they struggle to find ways to dig themselves out of debt.  This only adds to marketers confusion.

So how can marketers work to grow affiliate-related revenue, new customers and better quality leads in a world that’s already decided “fewer affiliates are better”?  A few bold voices are suggesting that we’re on the cusp of a resurgence in this tried-and-true strategy.  And they’re sharing their secrets on how to get the job done.  Let’s hear more ideas in comments, folks!

Two Distinct Camps

Like many direct marketers, Amazon.com has continually announced changes to its affiliate program — once even disallowing search-based affiliate to link to its site.  But Amazon is constantly investing creatively and aggressively in smaller affiliates to create results.  They’re not running scared.  They’ve worked diligently to curate affiliate relationships.  Something ReveNews Managing Editor, Angel Djambazov has always preached.

“But in the end, marketers are tending to fall into two camps,” says Dr. Amanda Watlington, owner of the Charlestown, Mass.-based search consultancy Searching for Profit.

“Those who all but abandon Web affiliates as a reliable means to acquire incremental sales or new customers, and those who make attempts to work with them with an eye toward the bottom line.  Working with affiliates requires both knowledge and discipline.”

Auditing your own affiliate and search programs to identify inefficiencies is a popular place to start, says Watlington, who also recommends giving more consideration to customer path to purchase.

Time for a new approach?

Ultimately, increasing performance-based transactions or leads requires more distribution partners.  Yet most marketers grab low-hanging fruit — the obvious affiliate partners — and ignore the rest.  The results are stagnant, sometimes shrinking affiliate programs housing a few dozen (or less) performers.

“While fewer affiliates might be more easily managed, you are certainly leaving dollars on the table with this approach,” says Paul Moss , formerly of Insurance.com and the founder/CEO of Las Vegas-based Moss Affiliate Marketing.

Moss believes that the more marketers move toward this “less is more” mentality, the farther they get from the original promise of context-based affiliate marketing pioneered by Amazon.com.

New Customers v. Loyalty

Moss is among a few veterans who believe the predominant approach used by most direct marketers — where the focus is exclusively on top affiliates — is dangerously flawed.  Many who use this strategy suffer symptoms such as flat revenue and flat customer file growth.  Traditional, powerhouse affiliates like Ebates, Upromise and Cashbaq (oh, and FatWallet too!) often act more like retention-focused partners — not affiliates delivering new customers.

This, of course, has been the issue du jour for ShareASale’s Brian Littleton who has worked diligently to find a solution. As he told Lisa Picarille, Content Strategist for the Performance Marketing Association:

“It’s our view that the loyalty channel, which is essentially what most of the download applications are, does not belong in the affiliate channel.  The affiliate channel should be focused on bringing in new customers, new businesses.  Affiliates are able to extend beyond the brand and seek out different demographics.  The purpose of a loyalty marketer is to drive consumer loyalty; it’s a different goal.”

Many believe that focusing on top-producing affiliates is good advice.  Yet they also admit it’s problematic when it’s the only focus — when there’s a lopsided investment in a relatively small number of ponds to fish in.  Plenty of fish swim in these ponds, but this is not a growth strategy on the customer acquisition side.

“While there are few affiliates who are ‘sure things,’ you never know how someone will perform until you try them,” says Moss.

Next up I’ll take a look at how marketers have, often times, chosen to do battle with affiliates… and how this continues today at the cost of growth.  We’ll also look at how marketers thirst to understand “what works” and trim costs has stymied growth.  This is known as the “channel attribution” issue.

And we’ll learn how some bold brands are boldly going where few have gone before with affiliates to ring the cash register and create better leads.

About Jeff Molander

Jeff Molander is the authority on making social media sell and corporate trainer to small businesses and global corporations like IBM and Brazil’s energy company, Petrobras. He’s an accomplished entrepreneur, having co-founded what is today the Google Affiliate Network. He’s adjunct digital marketing professor at Loyola University’s school of business and author of Off the Hook Marketing: How to Make Social Media Sell for You.

Website: JeffMolander.com

Blog: Off the Hook Blog

Answers: AskJeffMolander.com

You can find Jeff on Twitter @jeffreymolander.