Affiliate marketing is a child of the technology age, and it is growing up. As technology advances, three trends are driving the maturation of the business: globalization, the expanded use of mobile phones and the increasing sophistication of the attribution models that determine who gets credit for driving customer behavior.
Today, global reach is a necessity for most affiliate marketers because e-commerce is breaking down borders. Different networks, platforms, and agencies have strengths in different markets, however, so this shift represents both a huge opportunity and a huge challenge.
Some companies have tried hiring several agencies and networks to run suites of global programs, but this strategy can create confusion. One alternative, successfully implemented by Adidas, is to develop a single global strategy adapted to multiple local contexts. Affiliate specialist Jelle Oskam describes the brand’s approach this way: “As a global team, we can also look at all of the data on all markets and compare it very easily. We have weekly or monthly calls and discuss our results to see where we can improve. We are also thinking about our ideas in the context of global solutions.”
Another good strategy is to use SaaS platforms to expand gradually in alliance with direct partners. This makes expansion more affordable. Either way, combining global reach with local connections will become essential as networks and platforms become more global.
The Mobile Revolution
Mobile phones are another disruptive force in affiliate marketing, which was born back when most users used one computer for everything. Now, people switch seamlessly from smartphone to laptop to desktop to tablet and back again many times each day. This change poses a major challenge: How can sales credit be fairly attributed when the customers are taking increasingly complex paths from lead to purchase?
Tracking sales acquired via smartphones also poses a technical challenge. On the web, tracking simply involves dropping a pixel onto the relevant site or checkout page. Since mobile apps have no cookies, however, it’s necessary to integrate something called a software development kit (SDK) into the app itself. Multiple SDKs can slow apps down, so developers are understandably reluctant to include them.
Resolving these hurdles has the potential to transform the affiliate industry radically, with the mobile share of the market rising above 50 percent—but we’re not quite there yet. Still, some emerging technologies promise to bridge the gap between ambition and execution.
One company gaining considerable traction is Button, which creates a technology path between heavily used apps. Imagine being on Foursquare, for example, and looking up a restaurant. A button in Foursquare invites you to check out available times via Open Table or to go to Uber to investigate the wait time of cars. One click can take you directly to the relevant app, where all your information is prepopulated, ready for your decision.
Clearly there is huge potential for crossovers between affiliate marketing and business development, but challenges remain. Attempting to determine the value of affiliate marketing in today’s complex technology environment, for example, has engendered a shift to multitouch attribution, which parcels out credit among the many channels involved in sales—seriously eroding payouts.
Evaluating attribution this way can be helpful, however, since brands can gain an understanding of which types of behavior from the same affiliates are more valuable. The problem is that companies that strive to fully align their internal attribution models with partners run the risk of creating excessively complex commission models. This can sow confusion and distrust.
What’s really needed is the ability to distinguish causation from correlation. Marketers, not data analysts, need to use attribution to engage with publishers and work together to produce the behaviors they desire.
The Solution: Marketing Professionals
All these challenges underscore the need for high-quality affiliate managers. Running an affiliate program requires a cross-section of skills, including recruitment, fraud management, event representation, daily program operation and campaign development. Affiliate managers need to understand a range of technologies and platforms, possess good data analysis skills and be competent and seasoned marketers.
It’s almost impossible for a single person to cover all these bases. That’s why the industry is shifting toward dedicated teams of affiliate marketing professionals. Consider that John Toskey, who heads the eBay Partner Network, manages a global team with 40 or 50 members. Ten years ago, that level of effort would have been nearly unimaginable.
Ultimately, generating real revenue requires real work from people with solid marketing and business development backgrounds. Going forward, companies will need to direct more resources to these programs and employ more experienced marketers to get results.
Robert Glazer is the founder and CEO of Acceleration Partners, the leading independent global affiliate marketing agency. He is also the author of the best-selling book, “Performance Partnerships: The Checkered Past, Shifting Present, and Exciting Future of Affiliate Marketing” and a sought-after keynote speaker. Book Robert to speak at your next event here.
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