What Every CMO Should Know About Affiliate Marketing
By Peter Klein | SVP, Media Services
Editor’s note: The following post was originally published in MediaPost.
Long considered the ugly stepchild of digital marketing, affiliate marketing has grown to become one of the leading drivers of brands’ online marketing success. It accounts for more than $21 billion in online advertising revenues in 2011, according to the IAB.
For CMOs seeking ways to guarantee ROI without sacrificing brand affinity or customer value, affiliate marketing is a channel worth considering. It helps them achieve their ROI goals by utilizing publishers to conduct their marketing efforts via multiple media channels on a pay-for-performance basis.
Affiliate marketing’s success for brands is realized when three key parties — advertisers, publishers and affiliate networks — all work toward the same goal: acquiring customers.
The advertiser is the product or service; the publisher, commonly referred to as an “affiliate,” is paid for marketing the products or services. In between the two is the affiliate network, which acts as the media planner, tracking system, creative assistant, compliance monitor, optimization engine and bank. In this structure, the advertiser pays only on performance and does not risk any media spend.
The affiliate marketing channel, therefore, helps generate significant value for CMOs since scale is unlimited. Paying for performance is a strong benefit, but there are several others to consider:
- Small investment. A minor investment of around $10,000 is all that is needed to start a successful affiliate marketing campaign.
- Cross-channel reach. Affiliate networks specialize in different kinds of marketing, such as email, display, search, social and mobile. It’s important to test two to three of these channels simultaneously when beginning an affiliate marketing campaign.
- Speed to market and results.It takes as little as one day after launching an affiliate marketing campaign to see results. Since affiliates are paid only on performance, all marketing efforts are ROI-focused and come with detailed analytics for each channel.
Success for any CMO using affiliate marketing boils down to a five-step process:
Step 1: Define the goal. The desired outcome should either be a lead or a sale, which narrows the field of available and effective affiliate networks.
Step 2: Choose the network. Conduct due diligence before engaging an affiliate network by comparing areas such as tenure, financials, staffing, media channel, vertical expertise, technology and services.
Step 3: Plan the media mix. Share budget, KPIs, demo and geo-location information with the affiliate network so it can provide a comprehensive online media plan for the campaign with equal transparency.
Step 4: Monitor the campaign(s). Once launched, ensure the budget is being spent accordingly, brand guidelines are adhered to and performance is tracked against plan.
Step 5: Optimize. ROI goals are achieved by optimizing each campaign source ROI by paying more for profitable sources to scale volume or paying less and/or cutting off unprofitable sources.
Testing a small affiliate marketing budget for immediate and measurable results, and on an affiliate’s own marketing spend, will make CMOs more efficient and accountable marketers. None of this is possible in traditional marketing campaigns.
The benefits of affiliate marketing are more thoroughly explained in a new MediaWhiz insight paper, “The CMO’s Guide to Affiliate Marketing.” Download it here.
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