Offline Affiliate Marketing – Affiliate Summit West 2009 Session Report

In the grand scheme of the marketing/advertising world, affiliate marketing still holds the spot of the redheaded-stepchild — if only because many mainstream publishers and advertisers don’t really understand what it is. While some of that is slated to change as the economy coaxes advertisers into looking more at ROI-driven campaigns and less at CPM buys, there still remains one daunting obstacle for affiliate marketing, and that’s the brick & mortar (B&M) world. In other words, if Affiliate Marketing could break into the B&M world (and offer conventional retailers the cost-benefits of a performance-based model), the industry would both gain the legitimacy of which it’s worthy and experience explosive growth.

Well, on day 1 of Affiliate Summit West 2009, the CEO of RevTrax, Jonathan Treiber, delivered a presentation (Powerpoint slideshow below) called the Future of Affiliate Marketing – Offline. In it, he discussed:

1. Offline Affiliate Marketing Models
2. Tracking
3. and Implications for the Industry write large.

Overall, offline affiliate marketing is neither rocket science or a distant prospect. Rather, it uses some methods that are a few decades old, is very much in full swing, and seems poised to undergo some considerable growth in the near future.

Offline Affiliate Marketing Models
There are essentially three offline affiliate marketing models, and they are all compatible with CPA and CPL incentives: (1) offline-to-offline referrals, (2) offline-to-online, and (3) online-to-offline. The offline-to-offline consists in traditional media such as newspapers or radio running ads with either coupon codes or specialty 1-800 numbers that let the advertiser track conversions. Similarly, the offline-to-online model consists in traditional media running ads with specialty URLs.

Where the near future gets interesting for internet marketers, however, is with the online-to-offline model. This model offers affiliates two new opportunities: (1) to make commissions on the kind of B&M sales that they have been generating for years, and (2) work with an entire new array of brands and in niches that haven’t been available to them before.

First, you have products that consumers research thoroughly online, but prefer to purchase in a B&M environment where they can touch it before buying. In essence, then, affiliates help these consumers make a purchasing decision, and then lose the referral. By offering consumers coupons for those items, however, affiliates can retain the referral.

Secondly, you have a variety of fast-moving-consumer-goods (FMCGs) that consumers never buy online — such as coffee and fast-food. Buy offering coupons and gift cards for these items, affiliates can get in on a massive new set of opportunities.

Tracking
When it comes to tracking referrals offline, the technology isn’t all that hi-tech. In the case of coupons, barcodes can be used to include affiliate IDs. Similarly, gift cards with a magnetic strip can also be programmed to include an affiliate ID. And, of course, in the case of phone-in offers (CPL), custom 1-800 numbers can be set up to correspond with an affiliate account.

These tracking methods also open affiliate marketing up to a variety of offline businesses. While any point-of-sale (POS) that scans merchandise can track referrals through barcodes, any POS that is set up to swipe cards can track referrals through the magnetic strip on gift cards. This makes affiliate marketing possible for both retailers and restaurants — e.g. while a Starbucks or McDonalds can’t scan barcodes, they can swipe cards.

Industry Implications
The ability to take affiliate marketing offline has three major implication for the industry. First, it opens things up to a variety of new publishers and advertisers.

On the one hand, print media, TV, and radio can avail themselves of a performance-based revenue model. On the other hand, FMCG merchants (such as restaurants) can now tap into an entirely new marketing channel — which is considerably important when you consider geo-targetting and local search. As there’s an influx of mainstream publishers and B&M brands into the world of affiliate marketing, moreover, the industry as a whole will reach entirely new heights of legitimacy.

Second, and more importantly for current affiliate marketers, publishers will be able to capture a lot of lost revenue. As consumers take site deals into stores, affiliates will be able to receive commissions on B&M sales that they’re responsible for generating.

Finally, there will be a whole new level insight and analytics. By tracking the user from online to off, we’ll have an array of new intelligence on consumer behavior and how it affects B&M performance. This will result in a win-win situation for merchants and affiliates because they’ll be in a much better position optimize their respective campaigns.

Offline in 2009
As the economy works out its issues, consumers will continue to go online to find savings. For products that they can’t buy online or prefer to purchase in a B&M location, gift card and coupon opportunities will become increasingly important verticals for affiliates.

More importantly, though, as mainstream media and multinational B&M brands adopt affiliate marketing, the industry is going to receive a new level of legitimacy. That legitimacy, in turn, is going to fuel considerable growth through a multiplier effect: more brands, attract more agencies, attract more brands, etc. In a nutshell, then, offline offers are something that serious affiliate need to start giving some serious thought to when planning their strategy for the next two years.