Mediation is guest Mediated today by James Atherton, affiliate planner at Vizeum.
Since the credit crunch first reared its ugly head, tongues have been wagging around the affiliate world, with one main concern spilling out of people's minds; was the looming cloud of a recession gilded by the sweetest of silver linings?
With every penny ever more precious, with every cent being counted, would the greater focus by merchants on return from marketing spend see an industry seeing significant year on year growth make the shift to a dominant mainstream channel? Or would overall reduced marketing spend mean affiliates would suffer along with press, radio and TV?
For a while it seemed that affiliates were at least safe, and were at best coasting to a better, and richer, future. As one might expect, merchants were increasingly enticed by the idea of a channel that only pays out on a tangible return. However, overall reduced marketing spend has seen a more significant shift as merchants have shifted focus on other media to CPA and ROI targeted campaigns. Aggregators, PPC and traditional display-based advertising are delivering on CPA and ROI based models that have begun to return lower CPAs than affiliates and higher ROI.
There’s a simple lesson to be learnt from this; it is no longer enough to simply drive sales. Whilst this represents a sea change in thinking for many, for affiliates to capitalise on the current economic condition it is imperative that two things are addressed, and soon:
- Quality of traffic
- Costing Models
Without a significant increase in the quality of traffic, or the way that traffic is handled, the opportunity that is available to affiliates, that sweet silver lining, is likely to evaporate. By changing the overall perspective of a volume driving channel to one that is linked to profitability, ultimately doors will be opened rather than shut.
This is not to say that fundamental upheaval is necessary. However, publishers need to accept that positioning and potential will need to be increasingly tied to the needs of the merchant rather than CPAs and EPCs as merchants become more educated.
A simple example of this would be loyalty sites, a group that have seen huge successes in recent times, but who have also left a bad taste in merchants' mouths that have been burnt one too many times. Simply by developing offerings that tie into the LTV of a customer – for example an insurance bounty that only pays out on renewal of a policy – they can create a harmonious model that would make significant steps toward realising the huge potential growth for affiliates that is currently available.
The affiliate channel currently sees itself at a fork in the road; partially through its own impressive and intrinsic growth, but also through unforeseen global economic changes. By acting quickly and sagely, it can make the move from being a specialist part of the marketing mix to something that consistently sits at the heart of all merchants’ overall media strategies.