Defining Affiliate Marketing
Affiliate marketing will become more complex as the sector grows and develops.
“I just don’t understand what affiliate marketing is!” is a complaint I still hear from people within the digital marketing industry. This is a digital craft that, it seems, you either intuitively get or will always struggle with.
The evolving landscape will not make it any easier for people to get their head around affiliate marketing, but it will make it more important for them to do so.
Some of the world’s most popular sites are affiliates or offer affiliate platforms themselves; Amazon and eBay, for example.
Affiliate marketing is essentially a “cost per success” channel in which brands share a portion of the profit of a success with a publisher or partner. For example, when an eBay affiliate creates business for eBay they are paid a commission based on the value the auction site attaches to that business.
Affiliate marketing should be an attractive proposition to brands as the underlying promise has safety baked in. If the channel doesn’t drive any value, then the brands don’t pay any money. Except, it isn’t that simple.
International Differences In Affiliate Marketing
One of the defining issues of affiliate marketing is that the world will continue to be a fragmented space. That’s different from many other digital marketing disciplines where we can see dominant players and platforms (Google, Facebook, et al.) continue to do well.
I tend to view the affiliate globe in four zones:
- United States and Canada
- United Kingdom
- Rest of World
This is a simplistic view, but effective as a starting point.
United States And Canada
The sector is still largely known as “affiliate marketing” in the U.S. and Canada. There are many different affiliate networks and most are able to reach the entire domestic audience for any national brands.
Paying fees in addition to commission to affiliates is far more common here than anywhere else in the world. Want a large affiliate to find space on their site for a mention of your brand? Don’t be surprised if the affiliate asks for a one-off cost to cover the change or rent out the space on their site in addition to the ongoing reward of a CPA deal.
The American markets aren’t the most regulated in the affiliate marketing space. This will be a discussion point.
Toolbars, parasiteware, and other problematic software can be an issue. Compared to the UK, rules around coupons are scant – it’s easy to find examples of dodgy domaining, SEO, or even PPC tactics.
The United States and Canada will both be an attractive market for affiliates and brands, as it always has been, but it isn’t a straightforward one.
The term “performance marketing” as a synonym for affiliate marketing is increasingly common in the UK. Some of the biggest technology providers and conferences have rebranded away from “affiliates” and to “performance”. This reflects the broadening jurisdiction of the channel but clashes with other equally common uses of the phrase “performance marketing”. SEO and PPC are also called performance marketing, for example.
The UK is a hugely competitive market. Networks, agencies, and even affiliates in this space offer up some of the most advanced technology and solutions in the industry.
Regulation, industry agreed best practice, and code of conducts, are tighter and more clearly defined here than in any the other four zones. We saw backlash and complaints when big players made moves that the other big players thought were too aggressive or conflicted with these industry approved guidelines. In this fiercely competitive market, with innovation front and center of many efforts, we’re likely to see similar clashes.
A trend in the UK space for will be efforts to work more effectively with the “long-tail affiliates.” These are bloggers and other small sites that may be active in affiliate marketing from time to time rather than small businesses monetizing through affiliate deals. Each “long tail” affiliate is rarely significant; will attempt to change that.
Europe isn’t one country. The landscape here is fragmented and complex; countries have different laws, agencies have different capabilities, and networks have different reach. Even within Europe there are different currencies, different taxes, varying internet use and shopping habits.
One of the few common threads in the affiliate industry across Europe is the lack transparency compared to the UK or U.S. The myriad of networks tend to do more of the heavy lifting, perhaps due to fewer able agencies, and as a result networks tend to be less willing to share data.
The further East your affiliate marketing activities reach in Europe the more like the “Wild West” it becomes. Poor quality or artificial traffic is still a problem to watch for.
Rest Of World
Affiliate marketing is a growing opportunity across the rest of the world. Affiliate networks and agencies are expanding their presence and brands are looking to grow.
The day to day management of affiliates and the importance of maintaining the relationship with key publishers is both the challenge and a big part of success in a widely international campaign.
The language challenge won’t go away. In addition to localizing offers and content, brands will face issue with overlapping languages. English, for example, is spoken as a first language across the world and as a second language in many countries. Deals shared in English are deals that the international audience could use regardless of whether that was the intent.
Changing Technology Landscape
Affiliate networks have for a long time provided bundled account management and technology (the affiliate tracking and payment solutions). That technology is beginning to detach as dedicated, often cheaper or more agile, software-as-a-service solutions grow and take market share.
At the same time some traditional affiliate networks are rebranding as “performance agencies” or performance solutions that offer more services than a historic CPA from merchant to publisher deal.
Affiliate networks, thanks in part to tags on sites, have a lot of data. Remarketing solutions are one of the new areas that affiliate technologies are expanding into.
Also of note in the technology landscape is the rise of “affiliate aggregators.” Companies like VigLink and Skimlinks provide publishers with automated solutions that automatically enroll sites into many thousands of affiliate programs at once.
These aggregrators remove the need for affiliates to work with individual networks unless those networks are offering something more than a CPA deal. We are also beginning to see some brands work directly with this sort of platform and this will be a hot topic to watch.
Native Advertising As Affiliate Marketing
There is a strong overlap between native advertising and affiliate marketing. You could argue that affiliate marketing is native advertising.
If native advertising is defined as making content that complements a reader or user experience of a site, and which earns money for the publisher due to a commercial deal, then that description certainly seems to include a large amount of possible affiliate activity.
One of the questions around native advertising is whether it can scale. Affiliate marketing, or at least revenue shares tracked back to these content projects, could certainly be the answer to that.
Tenancy deals in which affiliate publishers are paid an upfront fee by brands to secure a presence on the site are another example of the native advertising overlap. It is likely we’ll see more discussion around this.
As to the issue of defining affiliate marketing – is an tenancy banner placement or email mention, arranged through an affiliate connection, but without a CPA element still considered affiliate marketing?
The Video Boom
Affiliate marketing will include plenty of video. The sector is booming as the Internet audience demands more and more video content and as brands and publishers experiment with ways to turn that demand into money.
Video platforms like Coull provide an affiliate layer on top of commercial or public video content at zero risk to publishers. However, Coull’s moved away from the self-serve model suitable for publishers of all sizes and now only operates in the million-plus impression level. Is the cost to serve ads still too high? Providers like Kiosked still seem willing to work with publishers of all sizes but have video as only part of a wider range.
Meanwhile, Amazon’s acquisition of Twitch is interesting. Amazon is one of the biggest affiliate providers out there; using its own in-house platform, so what plans for Twitch could they have?
The Core Of Affiliate Marketing
Affiliate marketing will be more complex than as the sector continues to grow and develop.
At the core affiliate marketing is about paying a distributed group of partners based on the hard facts of performance. How we measure that performance may change and evolve but affiliate marketing will remain true to the original mission of rewarding success.