One of the defining characteristics of the affiliate marketing channel is its reliance on inter-personal, and inter-business, relationships. In contrast to other performance marketing channels such as paid search and paid social, there is no realistic way to launch and scale a program overnight.
While other performance marketing channels may allow you to settle on a targeted Cost Per Thousand Impressions (CPM) or Cost Per Action (CPA) and spend until you run out of budget, recruiting an individual partner or network into your program requires outreach, commission negotiation, creative alignment, educational lift and more.
In short, there is no “plug-and-play” model that works across brands and verticals in this space. You must build a custom program on the backs of unique relationships in order to truly unlock the potential of the affiliate channel. This relationship dynamic between partners and promoting brands has both advantages and disadvantages, which we will explore further here.
Con: Longer Ramp Up Period
There’s no way around it, the affiliate marketing channel is going to take longer to ramp up to maturity than other performance marketing verticals. When building the foundation for – and eventually scaling – a brand’s affiliate program, the account team will likely spend countless hours researching and performing outreach. This involves emailing hundreds, if not thousands, of different partners every single week.
Some partners may be amicable and click through to the partner platform, sign up on the programs page, and begin promoting offers all on their own. This, however, is rare. Typically, each affiliate partner will have questions around brand guidelines, commission rates, click-through windows, and any other guardrails the affiliate team has established in their program. The recruitment team will then spend time either replying to requests, or even getting on calls, to get said partners up to speed.
While there are certainly tactics that can expedite this process – FAQS to anticipate questions, onboarding guides that are sent to partners with recruitment outreach, etc. – there will always be a benefit to personal and direct communication. This process takes time, resulting in ramp-up periods that can last six, twelve, or even eighteen months.
If you are considering adding or scaling your affiliate program in the near future, it is important to take this ramp up period into consideration. Aligning timelines and expectations with your affiliate team is supremely important. Rushing growth may lead to over-indexing low-funnel partners such as coupon and loyalty sites that may juice top-line program revenue at far lower incrementality, which will only serve to cause issues down the road.
Pro: CPA Rate Reliability
While it may be a large lift to get partners into the program, once an affiliate is established and promoting a brand, it is far less likely to see massive fluxes in the commission rate any partner is going to demand, and thus your program costs and margins will be far more reliable.
For paid channels such as Google and Facebook, the advent of technological changes such as iOS 14 can have massive impacts on marketing efforts. Due to changes in Apple's Privacy Policy, the ability to track users dropped nearly 50%. This in turn caused CPMs on paid channels to skyrocket, and entire marketing departments were forced to re-evaluate their spend. Other performance channels' spend allocation is often over-indexed on a small handful of partners (Facebook, Google, Instagram, etc.). When one of these giants – or, in the case of iOS 14, all of these giants – raise their rates, there is nearly nothing a marketing team can do to combat inflated CPMs.
For an affiliate partner to demand a higher commission rate, they would need to reach out to the management team and present a business case for why they deserve a higher CPA. This would then likely lead to conference calls in which a partner's case is presented and a new contract is potentially negotiated. In order for there to be a meaningful change to the overall program costs, this process would need to happen on a mass-scale across thousands of partners, which is simply not realistic. Excluding supremely unique situations, brands will remain in control of their CPA rates.
This rate reliability also ties back into why a slow ramp up timeline is necessary. Ensuring that your program has the proper framework to align commission rates with overall program strategy will save countless hours and headaches in the long-term. The same relationship factors that make the channel rates inelastic to drastic increases also mean that optimization efforts will take time and individual conversations with partners. If early recruitment efforts are methodical and in-line with long-term thinking, countless hours of future resourcing can be saved.
Con: Requires Consistent Communication
As with any relationship, communication is key. In order to maximize the effectiveness of your affiliate program, staying in constant contact with your partners is necessary. This, however, requires resourcing that other channels simply don’t demand. Aligning partners with overall marketing efforts, changes in creatives, new product offerings, and more requires a recurring newsletter at minimum, if not far more personal partner-by-partner outreach.
Another key addition to the communication load in the affiliate space is the need for partner activation. Recruiting a partner to click through a link to your partner platform and sign up is not enough. In a perfect world, every single partner would be driving traffic and conversions on a monthly, if not daily, basis. The reality of this channel, however, is that partners often go dormant for any number of reasons. Getting in communication with dormant partners to identify their pain points and re-activating them is just as important as recruiting them in the first place.
Think about these efforts like you would nurturing a plant. It’s not enough to sow the seeds, or even see the first sprout. It may be annoying to fill up your watering can, walk around your house, and water every plant once a week. Without that commitment, however, your flora – and your affiliate program – will slowly wither over time.
Finally, communication with partners is potentially the most effective way to identify inefficiencies with your promotional approach. While partner platform reporting may give you a high-level overview of which partners are driving conversions, they scarcely illustrate why. Talking with partners may illuminate which copy, creatives, and promos resonate with their audience and which don’t. This in turn will open up opportunities to not only help the partner you are talking to, but share effective strategies and guidelines across the program, increasing overall program performance.
Pro: Tangible, Incremental Optimization is Possible
With other paid channels, there is a direct correlation between the amount you are willing to spend and the amount of return you see. If your paid search team is spending $100k a quarter in 2022, but decreases that amount to $75k a quarter in 2023, they will see 25% less traffic and conversion than they did in 2022.
With affiliates, that is not always the case. Due to the channel being relationship driven, there are conversations that can be had with partners, and tactics that can be implemented, that can strategically alter commissions over time to decrease costs without losing proportional conversions. This is where an agency's experience and strategic aptitude comes into play. The optimization efforts that work with one coupon site may not work with another, let alone with a longtail content partner. Knowing which levers to pull with which partners comes down entirely to data analysis and intimate knowledge of your partner.
These types of initiatives are only possible due to the relationship that a brand, and their affiliate team, have established with a partner. It may not be immediately inherent why establishing a close, working relationship with any individual partner is important when your program has thousands. In fact, it may at times feel like a blatant waste of time to answer every question they have regarding the pixel width of specific creatives. Six months from now, however, when said partner has discovered a way to tap into your core demographic in a way that enables them to drive hundreds of thousands of conversions a year, budget restraints may require reducing commission costs across the program. Establishing a relationship with this partner early on will allow for an open-flow of communication and negotiation, which in turn may allow for commission adjustments that saves your brand thousands.
The Final Take: Is Affiliate Worth It?
The pros and cons of relationship-based marketing go hand-in-hand. It is undoubtable that an affiliate program takes far more time to mature, and that the resourcing lift that goes into communicating with thousands of individual partners is far higher than plugging into other performance channels. By that same token, however, affiliates have proven time and time again to be far more resilient than other channels, and the relationships formed with promoting partners allows for customization and optimization opportunities that are often nonexistent elsewhere.
What it really comes down to, at the end of the day, is a brands willingness to commit to resourcing the channel. Identifying opportunities, performing outreach to prior connections, establishing new relationships, and then leveraging all the above takes experience and time. If done correctly, however, scaling the affiliate channel can be a lucrative, resilient opportunity to diversify your overall performance marketing efforts.
Thanks to Anna and Faique for reviewing this article.
