Affiliate networks practically grew up with the internet. As the latter became more popular across college campuses, in homes, and at places of business in the mid-1990s, so, too, did the pre-partnership era of affiliate networks and their revenue-generating ways. Today, affiliates continue to be a mainstay in marketing practices. But now a third channel — the partnership channel — exists, and affiliates are simply one example within a much wider range of partnership options.
Impact Cofounder and Vice President of Strategic Initiatives Todd Crawford recently joined JEB founder and Profitable Performance Marketing podcast host Jamie Birch to talk about his long history in the affiliate industry. Todd was the first employee at Commission Junction, now CJ Affiliates and has particular insights into the affiliate world. In this podcast, Todd talks about how he and a few entrepreneurs began paving the way for a more diverse and complex partnership path that has levelled-up and future-proofed the growth strategies that put people first.
When pixels and cookies no longer work
As Google moves to limit and eliminate third-party cookies, and Apple continues to make technical revisions to block third-party cookie behaviors, marketers are scrambling to solve the problem of how to track their product’s and brand’s performance. Over three decades ago, some industry leaders — like Impact’s own Todd Crawford — were already arguing that pixel tracking had severe limitations and that better times might be on the horizon. Businesses across the world have realized the solution is to work more broadly and more personally. These qualities are the reason why partnerships are on the rise.
Affiliates may have been the starting point for partnering online, but they are simply one partner type in the partnership universe, which can include influencers, software integrations, mobile apps, and B2B agreements. Many businesses today are expanding their partner efforts to include these other types of partners, and to shift toward a more nurtured community based on trust and relying less on the tainted network that thrives on clicks.
No more getting lost in a sea of affiliates
One of the key topics Jamie and Todd cover is the answer to a burning question in the affiliate world: “Why not another affiliate network?” Their discussion led to a multi-layered answer, with top elements of it including:
- The vast sea of players populating an affiliate network greatly raises the chances for drowning. Partners get lost and fall off.
- Tracking doesn’t always deliver accurate reflections on performance.
- Businesses can lose money and opportunities when the network takes its cut. It can work, but typically for only a top few. For everyone else, the obstacles are many and difficult to control.
Establishing a diverse partnership channel and integrating an automation SaaS platform, however, can open windows that might have previously been closed, or even nonexistent. Brands of all sizes and expertise can build a partnership channel, structure it in any way they conceive, and create a unique model that works for them. Forget out-of-the-box relationship networks. Partnerships are the new paradigm.
To learn more about how partnerships grew from affiliate networks, listen to The Profitable Performance Marketing podcast episode, read the transcript below, or contact a growth technologist at grow@impact.com.
Podcast transcript:
Jamie Birch:
They said it wouldn’t last, and they said that you can’t drive profitable and incremental revenue through the affiliate channel. But here we are 20 years later and the affiliate channel is alive and kicking and generating profitable revenue for thousands of retailers across the globe. Hi, I am Jamie Birch, host of the Profitable Performance Marketing podcast, where we talk to some of the industry’s best and brightest about their careers, about leadership, and about how to drive profitable revenue through the affiliate channel.
Today we have industry legend, industry vet, the first employee at Commission Junction (CJ) way back in 1998, Todd Crawford. Todd and I have known each other for a really long time. Welcome to the Profitable Performance Marketing podcast. How are you?
Todd Crawford:
Happy New Year, Jamie. Thanks for having me. I’m doing well.
Jamie:
The first introduction I had to you was way back in the ABW days. I was managing Coldwater Creek on the LinkShare network. I’d been in the industry for like a year, and on the forum, I think, the real introduction was you and Steve Messer talking about pixel versus batch tracking. There’s a very long thread of the two of you going back and forth. Do you remember what I’m talking about?
Todd:
Yeah, it was kind of like a playground fight and all the kids came out to watch. We were in these [online] forums. We could see how many people were in a section. So the whole back and forth was happening in one section. You could see the number and I think it was pretty high. Steve mentioned it, but I used to get under his skin pretty good.
Jamie:
I remember being one of those school boys watching the fight and going, Oh, snap, he said that! But you’ve been in the industry for a really long time. How did you find affiliate marketing?
Todd:
Well, my dad and uncle, in Minneapolis, they helped companies raise their initial capital through angel investors. They had a network of angel investors. A guy named Lex Sisney, who ended up being the first CEO and one of the founders of CJ, went to them with an idea for some procurement company. And my uncle was like, I don’t really think that’s something that I want to raise money for, that doesn’t really do it for me. He said, I’m really interested in a transactional business, and I’ll know it when I see it, or something like that. And so they ended up hiring Lex to help them with a company they were running, and while he was doing that, he kind of ran across affiliate marketing.
This is [19]97, ‘98, and he was having drinks with my uncle after work. He said, You know, this affiliate marketing, this is how it works. It’s kind of flawed, and I think this is how it should work. My uncle said, That’s a business I can get behind, if you want to create a business. That was kind of the birth of Commission Junction. I got introduced to Lex and we just started talking and hit it off. And I guess the rest is history.
Jamie:
Wow. I had no idea that was the connection. Now, prior to the affiliate world, what were you involved in?
Todd:
Nothing really. My experience on the internet was, you know, late nineties I was going to college. So basically I had some email and kind of surfed the internet, played video games and things like that. But when I got introduced to Lex, I was very interested in the internet, and I thought, You know, it has a lot of promise and I certainly want to find a way to get in. I said to him, Look, if you think my dad and uncle are good at raising money, selling investment ideas, I grew up listening to them do that.
I said, Let’s make this work, and he said, Okay, let’s do it. That’s how we got started in Minneapolis. That was in the middle of ‘98. We launched, I think the end of November, maybe December we launched, and we had a couple of companies go live right away, and then by July 1st of ‘99, we relocated to Santa Barbara because we found someone to build the technology, who ended up being Per Pettersen and a team he had there. He became our CTO. It was kind of like we were growing the company in two offices and thought, before we get too big, let’s move everybody to one place, and Santa Barbara is way nicer than Minneapolis.
Jamie:
I agree. I’ve been to both and it’s much warmer in Santa Barbara. So then you were at CJ in sales and strategic initiatives. Tell me about your kind of career path to where you are now.
Todd:
Well, you know, we started CJ, built it up, we kept getting courted by ValueClick and eventually after a number of roundabouts, we ended up selling to them. Then, you know, we were made part of a bigger company and things kind of changed. After a year and a half or so, maybe two, I said, Oh, I’ve had enough. You know, it’s just not the same. So I resigned.
Then Digital River saw that and they said, Hey, we want to fly out and talk to you. And they said, We’ll make you an offer and you can help us build out our affiliate network for our commerce platform. Back then, Digital River was the biggest software download company and e-commerce platform.
They powered Symantec and all these companies made it very easy for them to have a website that can download software and get customer support and things like that. So I helped build out their one network, direct affiliate platform. A lot of people that were involved in CJ, because we all lived in Santa Barbara, kept in touch and we talked about some ideas we had about taking affiliate networks to the next level. The thing was, nothing was changing with the affiliate networks. When I was at CJ, one of the biggest frustrations we used to get from customers, all types of customers, agencies, advertisers, and publishers, was feature requests, changes in technology, and the added capabilities that just never got built, never could get prioritized against other things.
It was very frustrating. So we talked about getting the band back together again. It was myself, Lisa Riolo, Wade Crang, Per Pettersen, who was one of the founders and CTOs at CJ, and one of his partners, Roger Kjensrud. January of 2008, we got in a room with whiteboards floor to ceiling on three walls, and everybody started white boarding out all their ideas.
And I say this every time, because it really struck me, Per kind of looked at all of us — and I just remember uncapping the dry erase marker — and going, So we’re all in agreement, we’re not building another affiliate network. And so that’s kind of the start. That’s when we started putting out all of our ideas and things that we thought we would take to the next level and change the industry.
Jamie:
Why so specific on not another affiliate network?
Well, Per is an entrepreneur, and I definitely am in that same vein. If you take those personality tests and things, we usually fall into the same type. If you go into an industry that already exists and you say, we’re just gonna do what they’re doing, you’re not really an entrepreneurial opportunist. What you’re doing is you’re just elbowing your way up to the table and fighting for your slice of the pie, right? That other people are already getting. So you have to push market share away, and there’s not a lot to differentiate yourself. It’s not fun. You’re not changing anything. You’re not moving the industry forward. And I would just go back to when we started CJ, it was really rewarding because the industry was nascent.
So you were shaping it, you were creating what the industry became. And, CJ, what its innovation was, really was catering to the publisher side, as opposed to the advertiser side, which at that time it was LinkShare and Be Free in the late nineties that were kind of the big players. And they were just selling to advertisers and affiliates wer just the pawns in the scheme. And we really thought, Well, if we can make it easier for affiliates to make money through aggregated reporting and aggregated payment, which now, it seems normal, but it didn’t exist [at the time]. And that was one of the big changes that made it really easy to be an affiliate, because you could earn $10 from 10 programs and get a hundred dollar check. Whereas if they were running on the legacy players and you didn’t meet the minimum for each program, you didn’t get paid and you had to run different reports, and it was just a mess.
So when we went to start Impact, we really wanted to shift how people look at the industry, and that was kind of around two things. One was the pricing model. We felt like the pricing model was wrong. It was overpriced and the industry had matured and you can’t really demand 30% of spend, or even today 25% or 20%, for most brands, is not something they would consider. So we felt like it was overpriced, and there was a chance to innovate on the pricing side in licensing software, as opposed to taking a commission of a commission, or a percent of sale. And then the other side was the technology, being a tech company and really just delivering all the technology that everyone had been asking for with all the capabilities.
A lot of those capabilities worked against the network, like being able to blacklist a coupon. If you did that, then the network doesn’t track as many sales and if they get a commission, it would cut into their revenue. So they were always reluctant to make some of these changes. And we felt like, Well, for licensing our software, they have the brands decide and the agencies decide how they’re going to use it and who they want to partner with. If they want to fire a partner or lower the commission, or raise a commission or blacklist coupons, that’s up to them.
And we really wanted to focus on data. We felt like data was pretty thin on the affiliate side. At CJ, if you wanted anything complex, as a client, you had to have a data analyst go behind the curtain and bring it out. You didn’t have that self-serve. We really wanted those two primary things. And then when I talk about tech, there’s also the concept of separating technology from service. With the networks, that was bundled, or you got tech and service. You could use an agency, but for the most part, before Impact, very few agencies had really large customers. Most of the largest deals, largest affiliate programs were managed by the networks because it was just an easy solution, and they purported to be the best at doing it because they were using their own technology.
Again, going back to this kind of entrepreneurial thing, if you want to make a change, you need to change. Everybody needs to benefit from the change, not just the company, right? So you need to make it better for agencies, better for advertisers, better for partners, better for the third-party tech company. Our vision was, Let’s grow everyone’s business and that’ll grow ours. So that was kind of our thought process when creating Impact.
Jamie:
How’d the rest of that meeting go after uncorking the marker?
Todd:
We put down a lot of ideas of things that we thought, and then you have to bucket those, right? Like all these ideas go into this bucket and that bucket, product tracking, who we think our clients are going to be. Initially, actually, we were going for offline, so we built a lot of TV and radio and print tracking capabilities because, back then, most advertising was still offline. And so we felt like if we could make it easy to track that and enable partners to get paid for doing that. So we went to a lot of the places where those companies went, you know, the infomercial crowd, and tried to work with them, but they’re really slow moving, and they outsource almost everything.
So there was nobody really conducting the orchestra. There was an agency, a fulfillment company, a customer service company, a web hosting company. It was very fragmented. They looked like a brand on the outside, but they’re not. It was not really getting traction. So then we went back to our roots and said, Let’s really focus on the affiliate side of this because and maybe we can get traction quicker.
And, again, do a lot of the stuff that I was talking about, the innovation changes, and maybe mingle in some of that offline with the online.
Jamie:
Now you said that with Impact, you guys wanted to expand the industry or reach beyond affiliate. You talked a little bit about the print stuff, and coming back to that, How do you see the ecosystem that Impact serves? How was that bigger than affiliates? What other areas are involved in that?
Todd:
Well, to me, it’s finally the most exciting thing about affiliate marketing, is partnerships, which is the big umbrella, that affiliate is a piece of. So, if you’re an affiliate marketer, it’s great because there’s so many existing affiliate businesses out there that know what they’re doing. And if you’re a new brand, or you’re a brand and you don’t have an affiliate program, you can gain traction fairly quickly. There’s a lot of low hanging fruit, plug and play relationships, not a lot of work to get those partnerships up and going, because everybody knows what they’re getting into.
When you start to go beyond companies that their primary or sole revenue stream is being an affiliate, and you want to form partnerships, it’s not as easy, right? Like if you and I did not know about affiliate marketing and you were a brand and I was a brand, and we wanted to create some kind of synergistic partnership that benefited our shared consumer, it can get very complicated. It can be a lot of paper going back and forth around contracts between our lawyers. How are we going to track this? What are we trying to do? And so, as we evolved our technology and our clients, we started seeing them forging these types of partnerships outside of what people would consider traditional affiliates. And that to me is what’s most exciting because these kinds of partnerships don’t feel like advertising, right? And there’s more value around the consumer experience that makes these types of partnerships very valuable to the brands. And we’ve got a lot of examples.
I think one that is the easiest for most people to understand is, if you use Spotify or most any streaming service, you’re checking out songs, but you’re also checking out bands. And when you check out a band — not this last year but soon — you’ll see their tours, you’ll see, Hey, they’re playing. You can see within the Spotify app where they’re on, if they’re on tour, and you can get notifications. You can actually see the tour dates in the cities and you can click on them and it’ll open up Ticketmaster and you can buy a ticket. So it’s a very convenient, very integrated partnership that seems normal to a Spotify subscriber. Like it would be weird if I couldn’t see, first that they wouldn’t put, at least, the tour dates in there, because I would want to know. And two, they wouldn’t make those something that I can take action on and be able to go to the concert.
So it doesn’t seem like advertising. I would say it really isn’t advertising. It’s more of an added service to your Spotify per convenience feature, right? This is how the consumer sees it. But it’s very valuable to both Spotify, or any streaming service that participates with Ticketmaster, and Ticketmaster, because, you know, they always talk about how millennials don’t like advertising — they’re the highest user of ad blockers. And partnerships are a way to engage with people where it doesn’t feel like advertising. That’s one of the things I think is the most exciting, and I’m seeing more and more brands, we are seeing more companies look for that and want to do that.
Jamie:
The big push the last couple of years in the affiliate community has been influencers and let’s move away from coupon sites and get these influencers. What you’re kind of talking about is something much different and maybe a little harder to get the handles on because it can be different in any brand’s circumstances, it would be a Spotify Ticketmaster integration. Do you see that partner marketing is where the industry is going? Is that the next big growth area?
Todd:
I look at it this way. Like I said, the affiliate model works great. It’s plug and play. There’s a known universe of affiliates. There’s always up and comers. There’s definitely the long tail and paying them. Now you can mix influencers to a certain degree in there. But if I go to work with a leading affiliate company as an advertiser, there’s a lot of competition, right? I’m not going to be the only advertiser or the only advertiser in my category, right? So there’s a lot of competition for their traffic and the real estate that they can provide. When you go into the Spotify app and you want to buy tickets, there’s no competition. That’s one partnership, and it’s unique, and it’s very valuable. So that’s one thing I see as a benefit to partnerships, that you’re not going to probably ever get through what we call affiliate because for an affiliate business to work, they need to provide some service to the end user that aggregates lots of access to lots of advertisers.
They just can’t do it for one or two, where partnerships can be more strategic. They’re also under the radar, meaning my competitor doesn’t know I have this partnership. They can’t see it. It’s not an affiliate in the network that they can go look up and call. When you think of businesses trying to grow . . . most businesses have sales, they have marketing, and when you go out and do sales, most people think, Oh, I need software to manage my sales team. You kind, I should probably use Salesforce because everybody else uses it. It’s proven it works. There’s an industry leader. And when you go to marketing, those companies are going to use something like HubSpot or Marketo, right? It’s a proven technology that allows companies to scale and get the data. They need to run their marketing teams.
With partnerships, outside of an affiliate network, that doesn’t exist. And so we see Impact as being that provider of partnerships and giving this company now a third channel. And I see affiliate as part of that, I see influencers as part of that, and I think there’s some blurring there, right? Marketing still sees affiliate as marketing and influencers can fall under PR, they can fall under marketing, they can fall under its own little place. Even influencers, there’s really two types, there’s one to get paid for producing content, which is more paid per post, and there are ones that are willing to work on more of a pay for performance or hybrid. Those are the smaller ones or the midsize ones, and then maybe as they become bigger, they switch to paid per posts.
To me, like I said, it’s the most exciting thing happening in our industry right now because it creates something unique. I’m not saying this to bash affiliate, but it’s not unique anymore. It’s matured. It exists. People understand it, people know it. I can remember somebody launching, in the U.S., a new brand, and they’re like, Who are the affiliates I should be working with? That’s not a question anybody asks anymore, right? Depending on your business model, that’s a known group of affiliates that are going to be your top partners.
Jamie:
Tell me, in the past to get a partnership like Ticketmaster and Spotify, and like you said, the path to get there was convoluted, bureaucratic. How does Impact remove the friction, make that a viable option? And this third channel, How do they equip an advertiser to do that?
Todd:
It is a white labeled platform, meaning, if I’m a brand, Tod Tech, and I want to work with Janey, I can give you a link and you can sign up and you can log in from my website. And all you see is the Impact UI, but it’s, it’s branded Todd, and you’re not offered hundreds of other advertisers, which would be confusing because your business model isn’t affiliate marketing. You don’t need to access an affiliate network. That would make it more difficult to be my partner, because the UI is built for people who know what they’re doing. And so you need a simpler, cleaner kind of UI, which is, you know how to get links, how to run reports, and how to get paid.
That’s what the whole partnership is. We have a contracting tool that helps brands create very complex, to very simple contracts. What activities have to happen and can be tracked and reported? What would you pay or even not pay them? We track a lot of partnerships where there’s no payment made, the benefit is to the consumer, and that benefits the partner and the advertiser, without having to pay that.
So there’s those kinds of tools, and then for some integrations, like a Spotify integration, it’s more technical. It’s not as simple. It’s not a website, it’s an app. And there’s a feed from Ticketmaster of every concert going on out to a certain time horizon. So that needs to be ingested and trackable. That’s the other thing, not every partnership is the same, even for one brand, much less two identical brands. They’ll have different partnerships, so you need that flexibility in the technology through APIs and other types of integrations where you can get everything, help them make it work. Like, they want to do the partnership, now Impact, please help us make it a reality, so it’s simple for both of us.
Jamie:
I’ve always believed that affiliate marketing was a way to compensate for an outcome that you’re looking for, and it shouldn’t be limited to those known publishers. If someone has an audience, they benefit from my message and my product, and the person who has the audience, will benefit from sharing that, then let’s find a way to work together.
We’ve done offline, online things . . . While I was at Coldwater Creek, and even now, to equip large, disparate groups that weren’t online, to earn commissions by promoting our company’s products. We worked with medical school fraternities when I ran some medical book and supply programs so that they could go out, and none of it happened online, but it was still trackable. So it sounds like you guys can work with a bunch of those things and have really unique ways to power those, that they can be tracked, they can be optimized, and that they can happen.
Todd:
Yeah. And when it comes to partnerships, sometimes the affiliate team isn’t even doing those partnerships and sometimes they are, it really depends on the mindset of the company, and who’s driving this concept of partnerships for the advertiser or the brand. It’s got to take sea level funding, green-lighting. Like, Okay, we get affiliate, that’s great, we get influencers, that’s great. These kind of partnerships, when you talk to the C-suite, their whole job is to grow the company’s revenues, right? They’re not sitting around having three martini lunches, they’re looking to grow revenue, so how can we grow revenue? Well, you’re doing marketing. What are you going to do, double your marketing? No, you can’t, it’s finite, there’s only so much spend in inventory for your return on ad spend targets.
Sales, whatever your sales strategy is, if you’re selling consumer electronics, you’ve got, companies like Best Buy that you sell through or Target or Walmart. You can’t really double the revenues coming through those channels very easily once you get them established. So, Hey, there’s a new thing we want to talk to you about called partnerships. And this is what a bunch of company’s partnerships look like. Suddenly, they sit up in their chairs and they’re like, partnerships, we should be doing partnerships. Yes. This is something else to do. And so know if you are in the C-suite and you’re thinking, How do I grow my company’s revenue? I mean, you can keep doing what you’re doing and that’s fine, and a lot of companies have so much growth opportunity, but you don’t want to step over a hundred dollar bill to go after a 20 or fifty dollars, righ? You want to get both.
It typically doesn’t happen as organically in the affiliate team as I would like, because they’ve already got a job and they’re busy. So to say, We’re just going to increase our workload or take this initiative on our own — some companies do, and maybe it’s unique to their partnership strategy or their affiliate strategy — but in general, most people are already doing affiliate, and that’s already a lot of work. So how do we start doing partnerships? In the end, they get more resources or another team that works alongside them because they’re using the same technology.
Jamie:
How are the CMOs responding to this? Once they have the technology, what is making them successful? Are they owning it at a C-level perspective? Or are they hiring teams to push the partnerships? Are they working with an outside vendor?
Todd:
Well, just backing up for a second. You know, when I used to explain affiliate marketing in the late nineties to executives, C-level, VPs, I could literally explain it three times. You’re not paying for the impression. You’re not paying for the click. You’re only paying when you get a sale, and you can just give them a percent five, 10%, whatever the margins work out for your business. And so you assume a lot more risk, and they would literally go, I don’t get what you’re saying. I don’t get it. And I have to explain it sometimes two or three times, and then the light bulb. They would go, I can’t believe I didn’t think of that.
Back then, there wasn’t a lot of education, but today, people get it. And I think when you talk to people today about partnerships, and they’re just leaning in, they’re, Oh, this makes sense. How do we do it? What do we need to do? And you have to explain to them, Look, your affiliate team doesn’t organically start doing this. You guys need to say, What do partnerships mean to our company? What would they look like? Where are they, how many are there? What is this partnership strategy going to look like? And how can we even get proof of concept? Maybe, [we get] a dozen partnerships going, we can then say, Based on those partnerships, this makes sense to fully fund, and it can get funded under a CMO. We envisioned a chief partnership officer, long-term, or it could be an expanded role of a CMO. It could also report under a COO or a president or even a CEO, I’ve seen it. It depends on the size of the company, the structure, things like that.
Jamie:
Interesting. What’s going on right now? [There’s been] a large shift to online, [because of] COVID impacting our economy and consumer behavior, Do you see that driving this partnership even more? Becoming more important right now and in the future?
Todd:
I’m not sure that COVID has accelerated or changed anybody’s opinion that they need to start doing this when they weren’t gonna. I think once somebody’s smart and accountable, here’s what partnerships mean and how they work and how they could be run. And you have a turnkey software that can enable the contracts, the tracking, the reporting and the payments, the integrations, it’s like, Why aren’t we doing this? We should be doing this. Some of them are already customers, so you get up to that level and they’re like, Yeah, we need to be doing this. We talked to a lot of large brands.
We’re very lucky to be working with almost all of the Fortune 100 companies in the U.S. — we’re a global company, we have amazing brands all over the world — but once you have that conversation, it’s them figuring out, How do we fund this? How do we get this rolling without disrupting anything we’re already doing? And that’s probably the hardest hurdle because it’s . . . I always say, [imagine] I invite you over for dinner, I’m sitting on my front porch, and I have a freshly planted field in front of it that you walk by. You come up. I go, Hey, Jamie! Glad you’re here for dinner. And you go, What’s the plan for this field? I go, I just got them planting corn, and you go, Great, are we having corn for dinner? No, not yet. It’s got a little more work to be done here.
There is an upfront investment with probably no return initially. So how do you fund that as a company? That’s a C-level solve that they need to do. I think some companies have very smart affiliate marketers, and they do it organically and get it going. Others, they bootstrap their affiliate teams, and they’re underfunded already, so they’re not really capable, they don’t have that free time or that luxury. Every company is different, their mentality, their culture, the executive team’s approach to things.
But I haven’t had a conversation or anybody else in our company around this, where they go, Ah, we’re not interested in that. It’s their job to be interested in it, and then they’ve got to figure out how to make it work.
Jamie:
Have you faced any sort of pushback from the affiliate community trying to get this partnership model installed in an advertiser? Any pushback from the affiliates of, This isn’t what affiliate is. We don’t do that.
Todd:
I think affiliate networks have been pushing back on our vision. And when we talk at conferences, they say, Oh, we’re doing that, too. Or, that’s just affiliate marketing still. And I think it’s not. I think partnerships is the bigger picture affiliate, influencers, brand to brand, technology integration — those are the partnership types, and some are more mature than others. We have customers who use our software and have virtually no affiliate running through it, they’re doing only partnerships or almost exclusively partnerships that are unique to them with companies that their business model is not affiliate marketing. They’re not making money as an affiliate. They have a proven business model.
There’s a lot of companies growing their business [like that]. They’re not working in traditional affiliates, because it doesn’t work for them. They’re not a retailer, they don’t do coupons. It’s just not their business model. What does work for them are partnerships. It’s rare to see two companies following the same partnership strategy.
At this point, because it’s still nascent, I mean, partnerships have always existed, it’s not like this is a new thing, but being able to automate them, create efficiency and scale, is something a little bit newer.
Jamie:
Yeah, definitely. So, if I’m an advertiser and I want to commit to partnerships as a third channel, what are some of the common mistakes that I should avoid?
Todd:
You want to have a solution in place, and I hope you’re using Impact for that, but you don’t need it if you’re going to do one or two partnerships. You could get by with something like just your analytics, but you need something to scale. And that’s the biggest struggle some companies have is just figuring out, who could our partners be and how do we go about identifying those partners and knocking on the door and getting a foot in there and having a conversation with the right people. Now that’s a different DNA than what you see in a typical affiliate team.
The affiliate team is more of a nurture. They’re growing these partnerships they already have, or they may not be their partner now, but when they call them up, they’re like, Oh, you’re a brand we would want to work with. So then you’re just kind of managing a relationship and all the different promotional opportunities and promotional calendars and things like that. Whereas going out and kind of cold calling into businesses and finding the right person to have a biz dev conversation and partnership conversation, that’s a hunter, and a lot of affiliate teams don’t have that type of person at the level that you need.
We, as a software company, to sell our software, we have people that that’s what their job is, is to get in the door. We identify a database of all the companies that should be licensing our software. We have to figure out who the right person is to listen to us and get them to listen, to take a meeting. So it’s a different DNA, and I think that’s a shift that some companies don’t, you know, if you’re a retailer, you don’t think that way, you know what I mean? You’re whole thing is the customer.
Jamie:
And you probably don’t have much of a sales organization in there. You have your salesforce on the floor, if you’re a brick and mortar retailer, but you may not have a sales team. I keep thinking I was going to ask you earlier, the partnership’s role sounds a lot like business development. One of my first jobs, I worked for a precursor to Google docs and Gmail, and we had a team that was just out there trying to find companies to partner with, and we offered these services through Costco and that wasn’t an affiliate deal. I was running the affiliate program, but that was a biz dev deal. That seemed much more of a, like you said, a hunter, more like sniping it instead of farming, and more on the sales side. So I think it’d be difficult for a retailer that really doesn’t have a sales team doesn’t do B2B, and have that business development for them to grasp this. And that’s probably a mistake they would make is treating it as a nurture type of campaign.
Todd:
Yep. I can tell you of all the teams I’ve worked with that have probably been that way from day one, is the team at Fanatics.
They’ve had to do this because they wanted to work with newspapers and anything that talked about teams or sports, whether it was message boards or, there’s lots of places that sports is happening that’s not affiliate and not coupons and not cash back and not product recommendations. You’ve got people that are fanatics about sports, and where they’re congregating and talking about sports, [Fanatics] wants those sites or those companies to be their partners. And so they’ve always had that approach, which always excited me about what they do, because they’re creating value for those partners. They’re giving them a revenue opportunity where before it probably was a cost to them to even do this, they’ve made nominal money or none. And now there’s a revenue opportunity, and it benefits the sports fanatics that are in there talking, easy access to supporting the message boards or whatever the thing is that they’re engaging in. That’s the kind of stuff that I think is interesting.
Retailers probably struggle the most with this because affiliate was so easy, because in essence, low hanging fruit exists and partnerships don’t, and how do we approach this?
I’m not saying partnerships are perfect for every company. They may not be today, just because of the cost and time, resources maybe, to find and get those partnerships and what they could bring to the table. But as more and more companies do partnerships similar to affiliate marketing, it becomes a much bigger, easier to do thing.
Back in the nineties, affiliate marketing wasn’t super easy and it certainly wasn’t super valuable to the brand. It wasn’t like, Oh my God, this is our second biggest or our biggest channel or most cost-effective channel. Nobody was saying that, the appeal was very small. As it matured and affiliates became companies themselves, it became very meaningful. That’s where we’re kind of on this partnership curve and the companies that get it right sooner benefit more from it long-term. But I think everybody’s going to benefit over the long-term.
Jamie:
This really is a long-term play because you’re going to test different kinds of partnerships. You’re going to find some that they just simply don’t work and others wildly successful and others in between. So for an advertiser looking into this, this should really be a long-term play. Right?
Todd:
Yes, and the other thing you have to realize is that sometimes when you approach a partnership and you test, it was the wrong test, and then you say it didn’t work and you move on from that partnership, you still miss the opportunity. So it takes kind of some smart cookies to go, Wait a minute. And really how a partnership works is you’re talking about your business and your relationship with customers and I’m telling you what works and what excites our customers and our value proposition and what we can do for customers. And you’re telling me what you do with your customers. And through that conversation is where the discovery happens. In simple ones, Hey, you know, you sell a product and service that we don’t and our customers need that or want that.
We have a meat company, they sell different meats direct to consumers, and there’s a food basket company, and they basically created prepared meals, but they don’t sell the protein. I mean, it doesn’t take long to figure out, if you’re buying prepared food, here’s our preferred protein provider and maybe a coupon for a new customer for your first purchase or whatever. Likewise, if you’re buying our meat and you were into prepared food services delivered to your house, here’s one of our partners, right? That’s simple and it’s really a cross promotion that makes a lot of sense. Just getting that right . . . How do we communicate that? Is it in the checkout process? Is it in our email? Is it everywhere? How do we do it?
Jamie:
There’s a real interesting affiliate back in the day, I don’t know if this will jog your memory, I think it was called Madison’s Bag, and they contracted to provide the bags that you get your clothes in from the dry cleaner. Madison was the brand ambassador for the brand, I guess, the face of the brand, and she would curate these deals. What they’re trying to do is, and we did that with Coldwater Creek and it was successful, you know, the people who tend to pick up dry cleaning, at least at that time, was the woman of the house. And she got a lot of those offers in there. And so it was a really neat merge identifying, here’s this audience that we can reach now, how do we reach those?
Beyond that, we used to do stuff and we still do really simple brand to brand partnerships . . . You bought this product, you get the confirmation page and here’s something that we selected based on what you purchased that you may find valuable as well. But I can see with what you guys offer, including, other customers who bought this also bought this from us, but also customers who bought this may find this from our partner, and using that on both brands to generate revenue and a new customer acquisition.
Todd:
Yeah. Customers are busy, and if you can tell me, Hey, you’re buying prepared meals from us, and we have selected this company as our preferred partner for proteins, and here’s the information about them . . . They’ve been in business so many years, this is the type of meat they get, they’re very selective and ethical, and here’s an offer to get you a discount on your purchase. You’re giving the customer, telling them something they didn’t know and educating them.
Jamie:
It’s a value.
Todd:
Yeah. And you probably need it. We don’t sell the protein, you need the protein.
The best thing about this pandemic is that so many online businesses, the adoption of their products and services has accelerated in two ways. One, a broader audience is using them, and in general, people are more habituated to using them where before it was maybe more casual, like food delivery. Like most people are, Oh, I just don’t feel like cooking, and I don’t want to go pick up, and okay, I’ll use Postmates or Uber eats, or whatever the product is to get my food delivered. Now. It’s like, you’re hand is on that app, and it’s not even a conscious decision anymore. So more people started using them where I think businesses like that, and a lot of the online streaming, they’ve got so much more adoption that would have taken them five years, they got it in five months, all of these companies. So that’s good for the online because their businesses expanded. And I think even once we come out of the pandemic that habituation, that comfort . . . I wasn’t used to buying prepared food or protein online. I went to the grocery store, and now I don’t have time for that. I don’t want to do that. I don’t have to.
Jamie:
I dunno how many conversations my wife and I have had about how do we get out of making dinner every night or to a conversation of, Oh God, what do we make for dinner?
Todd:
Send your kids to cooking school.
Jamie:
That’s a great idea. I’m going to write that down. Actually, both our kids cook a lot. My oldest, who, today’s his actual last day at JEB, he’s moving on to another career, he was a chef. So we do have a lot of that in the house, but back to the affiliate stuff. I got two questions. So one thing you and I talked about was the need for automation, how important that is in partnerships, in affiliate marketing and what, how Impact powers that. Can you tell a little bit about that?
Todd:
Yeah. And again, a lot of automation is unique to partnerships. Some have certain needs, whether it’s a post back or an API call, but as a partnerships manager, managing affiliates and partners and influencers, I want to spend the least amount of time in the UI doing things. I want the software to notify me and do things for me. I want it to work for me, not be my job.
We are always looking at, where can you create efficiency? If you can spend less time in the software, then you have more time for nurturing and developing and recruiting partnerships. That’s where the money is. It’s not logging in and clicking around. So being able to build custom reports, get them by API or delivered by email, or even just have them saved, so when you log in, you’re getting the exact data you need to look at for whatever task you’re doing. On the contracting, we have well over a hundred, I think it’s one hundred-thirty, different things that we capture that you can create rules on, whether a commission should be created or paid or what it should pay. The flexibility, you literally can create rules. If this happened and this happens, then there’s a commission, or if this or that happens, there’s a commission. Or if this and this happened, it moves to a different state. It can be more ands and more ors. So the ability to give you an infinitely configurable contracting tool is what gets you outside of affiliate marketing, because most affiliate networks are designed for creating contracts for affiliates.
So, to narrow the use case for the partnership, two partnerships could have completely different contracts, compensation, et cetera. Our contracts are direct with the brand. So if you and I are doing a deal together, we’re contracting together. Impact is just a supportive tool. Like if I’m using Salesforce and I sell you, Salesforce isn’t involved in the contract, they’re not in the contract. Even though I might be using all their tools to build contracts, send contracts, get contracts signed, they’re just the tool. An affiliate network is the contracting entity, they’re in the mix. And that, to me, seems weird, because they’re a media company. It’s really what they are. I look at them as an agency that owns their own technology.
And they’re basically taking your budget and managing partnerships. Granted eight other agencies can use their software and do that, but that’s really what they are. Our vision was to create the platform and then let the advertisers say, I need an agency to support my team or to be my team and manage this channel, and when I go out and do partnerships, I need to contract with them directly. I don’t need a middleman in there. I don’t want them to have a say, who I can partner with or how I construct that partnership, or if I want to change their compensation, I don’t want them being concerned about that because it’s their money, too. They’re getting a piece of it. So, if you cut the commission in half for whatever reason, because that’s just the value that the partnership dictates, a network can say, Wait, what’s going on? Why is that happening? You know, it’s like, I’m running my business, right?
Jamie:
Definitely. I think you and I’ve talked about how that concept of a network really being an agency with a software can create a conflict of interest. And I think that’s the best sort of explanation of that, and also how you guys are different and the difference between Impact and the other networks.
I have a bunch of questions I didn’t get to ask, but we’re right at time, I got one more for you, and then we can, I will let you go and get on with the start of your year. You’ve literally been in the industry since the beginning, first employee at CJ, now co-founder at Impact. With all that hindsight, what are you preparing for? Or what should advertisers prepare for this year? What should they be doing?
Todd:
Well, again, I think one is making sure your tracking is as good as it can be. Changes to operating systems on mobile devices and browsers on PCs are going to impact how tracking works or doesn’t work. There are solutions out there that don’t need cookies to track that are just as good or better. I guess we’re going full circle back to my conversation with Messer. Pixels and cookies are not the best way to track anymore. Also, because mobile and desktop is such a fluid thing now, 10 years ago, even, but for sure, 20 years ago, 23 years ago, when I got started, most houses had the computer station. To go online you had to go over there, get online.
Today, almost everybody in the house has three ways to be online. They have a laptop, they have a phone, and they have a tablet. Or they have a Xbox or a TV, the internet of things. People are very comfortable looking at something on their phone and going, Oh my God, yeah. And then opening their laptop, searching and buying. Well, you’ve got to be able to connect those dots. You’ve also gotta be able to track links that work just as well on a mobile device tracking app to app as you do the traditional way we’re used to seeing it, web to web on a PC. So affiliates want one link that does both. They don’t want to have to get a different link for mobile and a different link for desktop.
So talk to your vendor, your network, whatever, do a tracking gut check, health check. Is my tracking future proof? What do I need to do to make sure my tracking is going to be as reliable as possible? That’s probably something I think everybody needs to double-check. And a lot of people just assume tracking is tracking and it’s working. I don’t know, I’m not technical. I’m a marketing guy. So that’s a big check.
Looking at how can I broaden performance or partnerships or relationships outside of what I have today, whatever that is, what does it take? How can I just go up to my CEO or my leadership and say, I’ve been hearing a lot of talk about partnerships and I wish our company would just talk about it? We don’t have to do anything about it, but shouldn’t we just talk about it? It’s something to consider. Let’s get educated on it.
That’s always the beginning of anything, right? Think back when paid search started, it was all affiliates doing paid search, no advertiser was running their own paid search campaign, or very few, and they didn’t know what they were doing and they were doing it with spreadsheets. There were no paid search agencies, no paid search tools. And eventually the affiliates were so good at it, the companies had internal conversations, like, Should we be doing this and owning this channel? It seems like a big revenue driver, traffic driver. And I think it’s the same with partnerships. It doesn’t hurt to have the conversation and explore it and see, Does this fit in where we are as a company? Is this something we should do in 2021? Is it something we should think about in 2021 and maybe do in 2022? I don’t know. It’s certainly a conversation worth having. It’s just getting the right people to say, Yeah, let’s have that conversation, because not everybody knows they should be having that conversation.
Jamie:
Yeah, definitely. You mentioned paid search and managing with spreadsheets. That’s how I bought my first brand new car, was consulting, doing paid search with huge spreadsheets, back in the day.
Todd, that was outstanding. Thank you for that last tidbit and bringing something to our audience that we haven’t heard yet, and this importance of partnerships. I really appreciate your time today and our friendship, over now 20 years, and learning from you along the way. And definitely being a bystander in some of those conversations from way back when.
If someone wants to follow you, and you produce a lot of content for Impact as well, What’s the best way for them to follow, to interact?
Todd:
Our LinkedIns are probably the best place, that’s where I put a lot of our more partnership and business content. I’m just forward slash Todd Crawford on LinkedIn. We have the impact brand on there as well. They produce a lot of content there. Our blog is a super powerful resource, not only just stuff that we’re producing, a lot of stats on COVID, a lot of stats on Cyber Week and things like that, but also a lot of good case studies and other information. So if you go to a part of our site, we produce a ton of content, so definitely some great stuff in there.
Jamie:
Awesome. Well, I will share those, LinkedIn and link as well to the impact blog in our show notes for our listeners, and Todd, thank you so much. Always enjoy every conversation we have, especially this one.
Todd:
Thanks for, including me, Jamie.
