With concerns over fraud, viewability, and misaligned incentives in programmatic advertising reaching a fever pitch, publishers are increasingly looking outside traditional revenue generation models. That shift in approach has led a growing number of media companies to embrace affiliate, or performance-based, marketing.
According to eMarketer, affiliate marketing spend will hit $6.8 billion by 2020, as major publishers like Business Insider, Forbes, and Conde Nast shift their approach in order to appeal to advertisers who are demanding more transparency and value.
No longer simply an afterthought in a larger marketing strategy, savvy publishers are bringing affiliate marketing into the forefront and finding a virtually endless stream of opportunities to monetize their content, according to Robert Glazer, founder and CEO of Acceleration Partners, an affiliate marketing agency that’s driven more than $1.5 billion in revenue for brands like Adidas, Uber, Target, Apple, and eBay.
Within ecommerce specifically, affiliate marketing is now responsible for 16% of sales, making it more important than social commerce and display advertising for brands in that sector.
“Our data shows our retail clients have doubled their partnerships—up 105% since early 2017—with mass media publishers, and they’re seeing an average year over year increase in revenue of 454% from this group,” says Glazer.
The explosion of performance marketing within the retail sector is partially the result of retailers being under intense pressure to compete with Amazon. It’s also occurring because performance marketing provides brands with a more nuanced understanding of the customer journey.
Glazer is currently seeing more publishers offering brands native experiences, combined with personalized data and niche audiences, which is leading to more clicks and conversions. He sees the shift away from CPM-based buys happening at the same time brands are taking more direct control of their programs and are turning to licensed technology.
The recent bump in affiliate marketing is also thanks to a rebranding that’s taking place within the industry, as affiliate programs are renamed “partner programs.” The new term brings brands more into alignment and is more representative of a new group of partners, explains Glazer.
“Brands find these mutually beneficial partnerships easier to scale and an effective way to increase return on ad spend by reducing risk and aligning incentives,” Glazer says. “A publisher with a strong following and authority to recommend a product can charge a premium to brands, who are happy to pay for converted sales or leads. Affiliate marketing ensures that both brands and publishers are performing and enjoying the profits.”
In particular, Glazer says he’s been impressed with Business Insiders’ Insider Picks column, which has published hundreds of guides to share the top products in particular niches, like mattresses and computers. Wirecutter, which is now owned by The New York Times, also combines content and commerce in a way that translates reader intent into high conversion rates.
In order for the model to continue growing at its current pace, publishers and brands will need to stay in alignment in their shared goals. Glazer envisions brands waiting until after they’ve established successful creative and promotional strategies before recruiting relevant publishing partners with which to make deals. But he says these partnerships will have to be based on agreed outcomes and rules of engagement in order to work in the long term.
“The advantage of having an affiliate program is that it’s entirely based on performance. The brand sets the price and parameters, and partners are only paid once a specific action has taken place. This allows brands to make a clear connection between results and spend,” Glazer says. “[I predict] we’ll continue to see more ‘in-house’ affiliate programs, which are global in nature, and we will see an increased focus on mobile publishers.”
Stephanie Miles is a senior editor at Street Fight.