What is performance marketing, and how does it relate to affiliate marketing? The meaning of each has become confused and the line between them blurry. Some would say that performance marketing is a rebranding of affiliate marketing. Others use the name more loosely, as a blanket term for any correlation between marketing activity and purchase behavior.
The move away from “affiliate marketing” as a name is understandable because it suffers from some historically negative connotations related to get-rich-quick schemes and shady products. Also, those in the revenue-share arena want to differentiate their services from common lead-generation tactics.
But it can be confusing when companies that offer paid search and social media describe themselves as performance marketing firms. You may not know what the firm really delivers unless you dig more deeply. Many digital marketing agencies offer SEO, paid search PPC, and paid social. They call themselves performance marketing specialists because they can measure the connection between their spending and returns, and they track the revenue generated. Yet the channels they manage don’t include cost-per-action or a cash-on-delivery element. Is that really performance marketing?
While many types of marketing allow retailers to measure spend, payment isn’t tied to return. For example, you can’t tell Facebook or Google that you’ll reward them depending on your marketing campaign’s success. And you can’t complain that performance was disappointing and ask for a refund.
This type of program isn’t a true partnership. It’s an advertising service purchased from a provider. The ability to track responses and sales is valuable, but it’s distinct from a partnership that pays publishers based on how successfully they generate sales. For purists, the ability to measure performance isn’t sufficient to constitute performance marketing.
A new framework: Performance Partnerships
Instead of continuing to debate labels, we need a new framework to describe the essence of high-quality affiliate marketing and the increased digitization of partner marketing and business development. I call it a “Performance Partnership” framework. Performance Partnerships can only exist within a CPA model because the partners win and lose together. This isn’t the case with many of the other channels labeled as performance marketing. Performance Partnerships include everything that people want in their affiliate relationships and exclude all that is undesirable.
Performance Partnerships have become the industry standard. The smartest, most forward-thinking people already operate Performance Partnerships, or are at least moving in that direction. For a relationship to be considered a Performance Partnership, it must contain the following elements:
There must be a CPA element. This means the partner brings a certain behavior to the table. And once it’s delivered and tracked, payment is made in real time. Unless brands can make a clear connection between the results they’re getting and the amount of money they’re paying, there’s no clear performance link.
Transparency is essential. The early years of affiliate marketing were plagued by a lack of transparency. Many large affiliates wouldn’t disclose their tactics, citing proprietary methods. A partnership based on transparency offers a clear understanding of what’s being done to promote and represent the brand. In a Performance Partnership, you know what your partner is doing and how they’re doing it.
There’s a real relationship. Affiliate marketing is often anonymous. You might pay for thousands of leads or sales without understanding where they came from. This isn’t the case with a Performance Partnership, which emphasizes trusting your partner through quality communication. Companies are seeing that there’s no difference between their business development partnerships and the relationships they have with affiliates. Therefore, they’re redefining these relationships by seeing affiliates as partners.
A real-time tracking and payment platform. Performance Partnerships use real-time tracking platforms to handle operating agreements, tracking, and payments. These platforms also deliver transparent, real-time reporting to both parties. For some, this may mean adopting a traditional affiliate network solution. For others, it may involve engaging a software as a service (SaaS) platform. Today, many companies keep their non-affiliate relationships separate from their affiliate programs. In the coming years, expect everything to be managed in one place.
If your relationships meet the above conditions, consider an arrangement to be a Performance Partnership. If not, you can’t be sure of what you’re getting in return.
However you define what you offer, and what you’re looking for, Performance Partnerships cover the essentials of a profitable, sustainable relationship for everyone involved. Rather than working together opaquely or against each other’s interests, the future of affiliate marketing requires a collaboration based on transparency, communication, and delivery on mutually agreed-upon performance goals.
Robert Glazer is the founder and CEO of global performance marketing agency, Acceleration Partners. He is also the co-founder and Chairman of BrandCycle. In addition to being a serial entrepreneur, Robert has a passion for helping individuals and organization build their capacity to outperform. Bob is a past recipient of the Boston Business Journal “40 under 40” award and is an advisor/board member to several high-growth companies. He also recently authored the international bestselling book, Performance Partnerships: The Checkered Past, Shifting Present, and Exciting Future of Affiliate Marketing.