Why Affiliates and Influencers Are Critical to Business Growth
For the past 20 years, we’ve witnessed a remarkable reshaping of the forces that drive business growth. As traditional sales and marketing lost their potency, the resulting shift in how people chose to discover and purchase products and services gave rise to an extremely powerful channel for business growth: partnerships.
As Forrester analyst Jay McBain put it, partnerships drive enterprise growth by “paving the last mile to the customer through partners and alliances.” These alliances include publishers, influencers, and businesses of all types and leverage the trust, expertise, and authority they’ve established with their audiences or customers to refer business elsewhere. Those partners in turn receive payments and incentives. Most important, customers get some sort of value, be it a bargain, a solution to a problem, a new favorite product, or a better product experience.
The partnership opportunities for brands are huge—high-maturity programs can contribute 28% of a brand’s overall revenue and fuel 2x faster growth. Take meal delivery service Purple Carrot, for example. Facing diminishing returns from its existing marketing channels and high customer acquisition costs, they decided to recruit top-of-funnel partners like bloggers and top-tier mass media affiliates to introduce new audiences to Purple Carrot. The result was a 68% QoQ increase in orders and a 30% increase in ROAS.
With modern consumers trusting traditional advertising methods less and less—combined with consistent cost increases across other digital channels—it is more important than ever for businesses to leverage new, more trustworthy, and cost-effective channels. So if you have yet to invest in your partnership channel this year, now is the time to shift your thinking, and here’s how.
1. Embrace Affiliate Marketing as a Performance Driver
With channel spend expected to reach $8.2B in 2022, the affiliate model is well established, and these partnerships can help just about any kind of business gain traction with new audiences. The key to choosing a potential affiliate partner is not just vertical alignment. It’s also looking at where in the customer journey the affiliate engages with consumers. For example, a review site could raise awareness at the beginning of the consumer journey, while a loyalty publisher may help close a sale at the end of it.
Brands with more mature partnerships are embracing the ability to use affiliate marketing to drive performance. Expanding beyond just coupon and loyalty, they include content partners that educate consumers through blogs, product guides, and mobile app integrations. Take finserv for example. When a trusted site that focuses on savings and credit card recommendations ranks a particular card offer as among the very best, that advocacy is incredibly valuable. At the very least, it goes much further than the brand running a paid media campaign where it calls its own card among the best.
2. Increase Influencer Effectiveness through Authenticity
Dwarfing the affiliate marketing ecosystem (although there’s a lot of overlap), influencer marketing spend is expected to reach $15B by 2022. The size of this industry is hardly surprising, given that 60% of consumers consult blogs, vlogs, or social media posts before considering a product purchase and that influencers can generate 11 times the ROI of traditional advertising.
The influencer partnership space has exploded lately, and the most impressive influencer relationships driving ROI often come from those that are more focused, collaborative, and maintain a high degree of authenticity. Eyes are increasingly on nano-influencers and micro-influencers. Micro (<10k followers) is a sweet spot for many brands, because these influencers yield more than 3X the engagement of their celebrity counterparts. Nano influencers (>10k followers) frequently promote brands they love without compensation for product endorsements, and they may be tomorrow’s big thing. These influencers can be incredibly effective in shaping the consumer journey by introducing new brands and products and then credibly advocating for them (as long as the brand or product they are advocating is close enough to their category expertise).
As with affiliate marketing, influencer programs must have a way to pay for value throughout the customer journey. By segmenting its existing and new influencer partners to recognize and optimize each group’s unique contributions to its goals, apparel company Ivory Ella saw its total partnership revenue rise by 11% and achieved 19X ROAS on its influencer partner program. Attribution is vital, and it’s not complex.
3. Adopt A Critical Third Partnership: B2B
There’s a third partnership type that deserves the attention and recognition of its affiliate and influencer counterparts, and that’s B2B partnerships — more specifically, the tech integrations that are created as a result of these brand-to-brand partnerships.
Let’s look at Canva, which recently reached a $40 billion valuation, and Hubspot. As part of Hubspot’s software offering, marketers have the ability to build landing pages and emails quickly and easily. But that offering became infinitely more useful when Canva and Hubspot partnered together and built out an integration where Hubspot users can now pull Canva’s templates into their landing pages and emails (and other assets) to create advanced designs right within their Hubspot account. This kind of strategic business-to-business partnership is a win-win for all, but it’s critical that the businesses create a mutually beneficial structure for the partnership, one that’s authentic and adds value for their customers.
Whether a compelling influencer, an authoritative rewards publisher, a team of major publishing editors, an innovative brand-to-brand collaboration, or some unprecedented configuration, today’s partnerships are more creative, diverse, and credible than ever before. But the necessity of trust in any partnership equation cannot be overstated. When built on a foundation of consumer trust, the partnership economy is a winning solution for all.
David A. Yovanno is the CEO of impact.com.