Where is affiliate marketing heading?

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Established, well-regarded and 'officially' 21 this year, the affiliate channel is now an integral part of the online marketing mix.

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Established, well-regarded and 'officially' 21 this year, the affiliate channel is now an integral part of the online marketing mix. But, with recognition and stability also comes the burning question... where is it heading?

In this whitepaper we consider how the affiliate channel has evolved into what it is today and the factors that have shaped this, while also taking a look at what a best-in-class affiliate programme will look like in 2017 and beyond.

Introduction

Established, well-regarded and ‘officially’ 21 this year, the affiliate channel is now an integral part of the online marketing mix. But with recognition and stability also comes the burning question… where is it heading?

Once a USP, is the CPA model stifling the channel’s ability to attract new, content focused publishers?

Data, multi-device journeys and influence payments are driving the conversation, but these concepts are clashing with issues like squeezed margins, a pressure to drive new customers, perennial discounting and a blurring of channel boundaries.

On the cusp of its most radical change in the last decade, what does the future hold for affiliate marketing?

In this white paper we consider how the affiliate channel has evolved into what it is today and the factors that have shaped this, while also taking a look at what a
best-in-class affiliate programme will look like in 2017 and beyond.

Where only paying for sales was our USP, is it now our downfall?

The affiliate channel has always been seen as cost effective, standing out from other digital channels due to the very premise of the payment model, advertisers only paying for sales.
As online marketing has matured, has the age old affiliate model become outdated as a result? It is the only online marketing discipline where only conversion is typically rewarded. Consider a display campaign where only clicks or impressions that convert are paid for. Or running a paid search campaign and only paying Google for the clicks that resulted in a transaction. Both of these situations are unthinkable, yet that is how the affiliate channel has always been seen and a result do we ignore the wider value it drives beyond the conversion?

As the value of the channel increased year on year, it was inevitable it would come under increasing scrutiny. While once advertisers were only interested in sales volume, recent years have seen a greater emphasis placed on value – and rightly so.

But amidst all this, there are increasing financial pressures placed upon the channel. Given the payment mechanic is both obvious and eminently controllable, advertisers have typically seen the industry as an easy target for reducing costs and as a result we have seen a number of practices come into place that would not be allowed across other channels.

Whether this is reducing commission rates across the board, overzealous deduplication policies, no commission for existing customers or failing to have adequate mobile (and subsequently cross device) tracking in place, payment erosion has been allowed to go largely unchallenged. While affiliate networks are often opposed to this behaviour, rarely is it challenged enough to enforce change.

Additionally, affiliate networks have experienced increased pressure; the double hit of a reduction in earnings coupled with an expectation to deliver higher levels of service than ever before. Something needs to give before there is a ‘race to the bottom’ and it is no longer possible to provide the levels of account management and strategic guidance that advertisers demand. Without reflection and action the channel is at risk of cannibalising itself.

While only paying for sales was a fundamental part of selling in affiliate programmes, now that it is a fully established channel, it’s time for established working practices and concepts to be challenged to allow affiliate marketing to continue its tradition of re-invention. For the model to survive it is imperative that it becomes more flexible.