In its most basic form, affiliate marketing is a performance-based marketing channel whereby brands partner with publishers and pay them an agreed commission rate based on actual performance. The cost-per-action (CPA) model is low-risk and low-cost as brands pay when the cash register rings. It is for this reason that affiliate is one of the longest-standing digital marketing channels, though for a long time it has sat outside the traditional marketing mix.
Thanks to advancements in automation, technology and innovative publisher models, attitudes towards affiliate marketing are shifting. Marketers realise the power of the channel and the role it plays in the broader marketing mix.
Luxury handbag and accessories brand Meli Melo is an example of one retailer that has aligned its affiliate channel with other digital activity to create a successful integrated marketing campaign.
Meli Melo wanted to be smarter with its marketing budget and looked to Rakuten Advertising to develop an integrated and agile marketing strategy across affiliate, display and search. Their aim was to maximise digital investment and drive incremental revenue. In doing so, Meli Melo was able to align all its performance marketing channels towards the same goal and budget. The brand was also able to use the affiliate channel to support and amplify search and display campaigns. As a result, conversion rates increased, and top-line revenue grew by 34% YoY.
In the current climate of both consumers and brands facing economic challenges, the affiliate channel has further solidified its position as marketers look to tighten the purse strings and drive real results. Marketers are increasingly turning to performance marketing channels as they look to achieve larger business goals such as new customer acquisition through their marketing efforts. A task which affiliate marketing is primed for.
In fact, there is no other marketing channel that allows brands to adjust their advertising spend based on real results that directly tie to real business objectives. New affiliate commissioning technologies now give advertisers the ability to pay publishers based on their business objectives, whether that be promoting a high-margin product or reaching new customers.
Providing brands with options and variables within their commissioning strategies gives them more choice and increased control over potential outcomes and results. 80% of marketers using Rakuten Advertising’s advanced commissioning technology have stated that the Dynamic Commissioning feature makes it easier for their brand to accomplish goals.
By empowering brands with more choice, Rakuten Advertising sees Dynamic Commissioning drive more effective and efficient campaign results, with revenue outpacing merchant costs by 38%.
Marketers are beginning to recognise this. According to eMarketer, UK brands allocate 6% of their total marketing budget to the affiliate channel. To compare, brands are also allocating 6% of their budgets to event marketing, and 7% to both TV advertising and paid search.
While marketers are beginning to invest in affiliate in the same way they invest in more traditional channels, they are also scrutinising every advertising dollar for performance and ROI. This is where the value of the affiliate channel really shines. By its very nature, affiliate is geared towards optimising performance and is typically one of the best channels for driving ROI as brands pay a commission on the net value of validated sales.
Cotton On, an Australian multichannel retailer, had not previously invested in affiliate marketing prior to engaging Rakuten Advertising. The low-risk of the CPA model attracted them to the channel where they leveraged Rakuten’s global network and watched sales grow 260% over the first six months of launching. During this time, affiliate drove approximately 10% of all online sales, and the company has gone on to utilise the channel to help facilitate international expansion.
At a time when every marketing dollar is being reviewed, there is no denying that the affiliate marketing channel is one of the most effective marketing channels that brands can use. The success of the channel is now being truly recognised as one of the strongest drivers of performance, in large thanks to the tools and automation that allow brands to align and optimise spend towards real business objectives.
To find out how Rakuten Advertising can help your business leverage the power of affiliate marketing, visit rakutenadvertising.com today.