Performance partnerships took some giant steps forward in 2017. Many brands stepped up their efforts in building mutually beneficial relationships based on the performance model to drive growth in all areas of their business, from marketing and sales to business development.
A Performance-Based Framework Yields Better Results
First, we saw many brands calling for a connection between the results they are getting and the amount of money they are paying.
What company wouldn’t benefit from a system that pays partners after they have delivered a desired outcome? When it comes to affiliate marketing, the benefits are exponential because it’s all about performance.
When partners are paid purely according to their ability to perform, brands benefit from increased sales, and affiliates earn commissions for driving those sales. That’s why more than 80 percent of brands are incorporating affiliates — be it in the form of bloggers, influencers, coupon sites, etc. — into their marketing strategy.
A New Focus on Transparency
Second, brands are re-examining their agency relationships to ensure full transparency and limit their exposure to display ad fraud and kickbacks that are prevalent in the industry.
According to the World Federation of Advertisers, which represents most of the largest brands in the world with a combined budget of more than $30 billion — including Emirates, Procter & Gamble, and Visa — many brands are setting up new (or rewriting existing) contracts to put more focus on transparency and brand safety. Procter & Gamble went so far as to revisit all of its agency contracts last year and cut between $100 million and $140 million from its digital ad budget in just one quarter to address ineffectual advertising and brand safety concerns.
Performance partnerships provide that missing link between results and costs. Brands not only know what their affiliate partners are doing to promote their products or services, but they can also use real-time tracking platforms to handle operating agreements, tracking, and payments to see the impact of their programs more clearly. Because affiliates only get their cut after delivering a desired outcome, both parties benefit by keeping brands in the loop.
The Evolution of Performance Partnerships
A strong affiliate program establishes mutually beneficial relationships. When Reebok partnered with Ronda Rousey, for example, it allowed her to sell merchandise on her website that was tracked via affiliate links. This type of relationship will become the norm in 2018.
Imagine a prominent travel brand looking to reach high-end customers teaming up with a credit card company to grow both of their customer bases. Many marketing leaders have realized that their affiliate programs are as important as their business development initiatives. In some cases, it makes sense to manage business development relationships via a centralized software as a service (SaaS) platform, rather than keeping nonaffiliate relationships separate from affiliate programs.
With more brands looking to new types of partnerships to create authentic and scalable relationships that have an impact on the bottom line, performance partnerships will continue to evolve.
Based on our experience, we’ll see affiliate marketing transform in three ways this year:
1. Many companies will pivot to focus on performance.
Many marketers have grown tired of display advertising, which typically requires advance payment for a specific number of impressions. This payment model, coupled with skepticism around the return on investment of these impressions, has incited many companies to turn to performance-based outcomes.
The performance-based nature of affiliate marketing means that companies pay for results, whether it’s cost per acquisition, cost per lead, or another mutually agreed-upon outcome. Brands will continue to leverage affiliate marketing for everything from customer acquisition and lead generation to managing and scaling business development partnerships and influencer relationships.
2. Brands will globalize their marketing efforts.
As brands go global, they’ll seek out partnerships to provide global service infrastructure across key markets. Brand globalization will drive demand for affiliate programs that are truly global, and they will look for partners that can combine global reach with local connections.
Agencies that provide creative ideas and strong publisher development programs — as well as management teams that monitor marketing activity and report on program performance — will be brands’ first choice. Brands will also look to networks and SaaS platforms, such as Impact Radius, AWIN, and Performance Horizon, which allow brands to globally expand without a lot of fixed costs by activating programs in one market before strategically expanding into others.
3. More brands will create marketplaces to bring buyers and sellers together.
The fastest-growing businesses are those creating marketplaces to bring buyers and sellers together. Uber, for example, isn’t in the business of owning cars; it pairs drivers with passengers.
Now, Uber is leveraging this model when it comes to marketing by partnering with affiliates and publishers to promote its online marketplaces. Affiliates are compensated for generating driver and passenger leads and new Uber users.
This “marketplaces of marketing” model allows companies to establish connections with marketers who have knowledge and expertise in social, content, coupons, incentives, etc. Rather than trying to do everything in-house, brands can now leverage an army of outside experts to promote their products and services, not to mention find audiences that would be otherwise out of reach.
When a brand establishes a performance partnership, it has the opportunity to increase sales with little to no upfront cost, which just makes good business sense — today and tomorrow.