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M&M’s Blog goes behind the headlines to offer a running commentary on the business dynamics within the international media and marketing industry. The M&M editorial team joins forces with industry experts and local market heroes to balance a bird’s eye view of global trends with the importance of local insight.

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Affiliate marketing, it’s time to learn the facts

Hands up if you really understand how affiliate marketing works. Now keep your hands up if you understand whether or not it’s right for your business. My guess is that there aren’t too many hands left up at this point.

As far as affiliate marketing is concerned there is still a fundamental lack of understanding among brands in the UK. Of course it’s a problem but, when you think about it, it’s not really surprising.

Affiliate marketing is still a relatively new kid on the block and, unlike other online marketing channels, it doesn’t have a direct offline parallel. If we look at other online disciplines it’s easy to see how they slotted into the mix and why it doesn’t take long for brands to understand the benefits. They see, for example, how paid/display advertising is taking over from print advertising and how SEO spend compares to ‘shop front’ real estate.  In contrast, other than ‘refer a friend’ type schemes, affiliate marketing has no real direct offline comparison.

Then there’s the availability of education or training in this discipline. Or, to be more specific, the lack of it.  As far as I’m aware, affiliate marketing is not taught in corporate classrooms or as part of any marketing course. If we consider who is is selling affiliate marketing services, the majority of companies are networks. They’re not really experts in performing affiliate marketing themselves. Look at the UK’s largest network (Affiliate Window) for example. They have a fantastic software platform with great infrastructure and processors. Yet they require media agencies and the brands themselves to attract affiliates and proactively market their campaigns.

This all leads to confusion from brands about whether affiliate marketing is right for them and who they need to work with to get the best results. Brands often pass the decision to their existing marketing agencies who look after other channels like PPC, SEO and social. More often than not, they don’t fully understand how to get the most from affiliate marketing despite being handed the responsibility.

The situation is very similar in the health and beauty sector, an industry we’ve specialised in since 2008. Large brands like Boots, Superdrug and Holland and Barrett see very little return from affiliate marketing despite being placed with large networks. Now, it can be argued that voucher sites are partly to blame, taking away rather than adding value to their online mix.  However, the simple fact is that these brands would be better off choosing a network that can add value through content affiliates, paid advertisers and remarketing channels. Smaller, less established  brands struggle to understand why they should give away 30-50% of their revenue to affiliates as they haven’t seen the value this marketing channel can bring.

The majority of our clients achieve 70-80% of their sales through our content affiliates and are happy to pay them on average 32% commission. They are effectively employing a sales force of thousands who only get paid on results.

With ROI at the top of every brand’s agenda, affiliate marketing will continue to gain traction. It’s now time for this discipline to gain more exposure by improving education through university marketing classes and penetrating the corporate agenda.

Large networks like Affiliate Window, Commission Junction and Webgains need to consider how they can add more value to their clients and not forcethem to search for answers elsewhere. After all, it should be the networks who are the experts and not the clients themselves.

Until this happens, brands need to fully understand this channel before getting involved. They should decide on their objectives and consider how different networks can achieve their goals. If they are looking to extend their market exposure, then large networks like Affiliate Window will do the job just fine. However,  if they want to maintain price points and focus on quality not quantity, a niche network would offer a much better ROI on any spend.

The plain fact is that affiliate marketing is not right for every brand. So, until we have a robust and sufficient education process I would encourage brands to speak to people who have been in the industry for a while. Understand the pros and cons and consider what they are looking to gain from affiliate marketing to ensure it’s the right channel for them. That way, for the time being anyway, we should see a much bigger show of hands.

By Andrew Slack, managing director and founder, MoreNiche


Tags: Affiliate Marketing


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