Moving the Performance Marketing Industry Up the Value Chain

The performance marketing industry has made great strides over the past few years and has experienced a significant growth in professionalism. With a greater share of budgets being transferred from traditional media to online, there is competition from all online marketing channels to gain a greater share of the pie.

In order for the performance channel to get a greater share of budgets, it is essential it moves further up the value chain. In order to do so, it needs to respond to challenges from advertisers to really demonstrate its worth.

Keep it Simple

There is often a temptation to over-complicate the channel. While it is multifaceted with a wide range of promotional types and methods of driving traffic to advertisers, the fundamental concept remains simple.

A publisher is rewarded a commission for delivering a desired action on an advertisers site. This could be generating leads or delivering sales, either way this is incredibly straightforward. There is no need to over complicate things when selling in the channel to advertisers to gain an increased share of online budgets.

Additionally, it is important to keep things simple when speaking to publishers. There are a wealth of sites out there with significant volumes of traffic that may not be familiar with the concept of affiliate marketing. They are monetizing their sites away from a CPA model when they could potentially work within it. With the technology offered by the likes of Skimlinks and Viglink, it simplifies the process of bloggers entering the affiliate channel.

Education is key and is fundamental to securing greater buy into the channel from both an advertiser and publisher perspective.

The Power of Data

With the increasing amount of investment within the channel, it is only natural for advertisers to put greater emphasis on challenging its performance. The value being delivered and the incrementally of the channel are questions that typically arise.

With the significant volume of data that is available within the channel, it is becoming easier to respond to these challenges. For example, there is a misconception that there is a significant amount of overwriting within the channel, with a number of affiliate touchpoints in the path to purchase. This leads to a myth that incentivized traffic sources are adding little incremental value, merely "stealing" sales from other publishers/channels.

The data suggests otherwise. From within the affiliate channel, networks have provided a number of case studies to highlight how there is minimal overwriting across the network. In fact we see that in excess of 80 percent of sales only have one affiliate interaction, although this will vary from sector to sector. Furthermore, where overwriting of cookies is prevalent, it is typically within the same publisher promotional type - e.g. a consumer will compare offerings across two cash-back sites prior to converting.

Where advertisers are prepared to share their own data, we are able to build a holistic view of how this looks for a wider cross channel piece. Again, case studies have pointed to the fact that publishers are effective at driving sales where they were the only touchpoint in the customer journey. This highlights the incrementality of the channel - had it not been for that particular publisher, it is unlikely the consumer would have purchased.

Typically being a conversion channel due to the last click payment model, the role the channel plays earlier in the customer journey often goes unnoticed. There is a lot of evidence to suggest that publishers are able to provide value in the research phase of the journey. We have recently launched an 'influence' report to identify those publishers that are driving a significant volume of assists without necessarily converting the sale. This data is extremely valuable in presenting to advertisers the value publishers offer higher up the purchasing funnel. 

While customer journey data focuses on pre-sale elements and the touchpoints a customer has engaged with up to the point of making the purchase, post-sale data can also highlight the value of the channel.

While many advertisers focus on the customer journey, few take into account the post-sale metrics that demonstrate value. This can look at how often customers referred by each publisher are returning and how much they are spending over their lifetime to add another dimension of value to each publisher. The more value demonstrated, the more likely the industry is to move up the value chain.

C-Level Engagement

As an industry, it is important to gain more C-level engagement. Case studies and findings backed up with data can help C-level management sit up and take notice of the power of the channel. 

Networks, agencies, OPMs and publishers all have access to significant volumes of data and it is important for us to share our success stories. Case studies demonstrating the value of the channel can help drive the industry forward and showcase how performance marketing is an extremely important element of the online marketing mix. With advertisers increasingly willing to spend more online, affiliate marketing needs to be in a position to push for greater spend in the channel.

With a paid on performance model comprising of a number of promotional methods (including other online disciplines such as PPC and display publishers), advertisers would be foolish not to invest further in the channel.