What will happen to performance marketing?
Performance marketing, and more narrowly affiliate marketing, has always been a rapidly growing and evolving industry. Along with it, the larger space of digital marketing is moving at a faster pace than ever before, so it is a good time to look at future trends that might change the model.
Big Data-driven Insights
While there is still room for improvement, marketers in non-affiliate channels have come to rely on detailed reporting and meaningful insights for their channels. The affiliate channel, meanwhile, has stayed in the “dark ages” with respect to data.
Moving forward, affiliate marketers will demand the same level of insights and analytical tools as their peers. Managers will want to understand how the affiliate channel interfaces with other channels as well the overall value of affiliates in the typical consumer journey. Big Data promised to revolutionize access to data and the types of insights that marketers can learn from it – the change is underway.
Marketers know the top 20 relationships that drive 95% of their conversions. Yet, marketers who rely on affiliate networks do not manage those relationships. The inherent flaw in how networks, and even some agencies, charge for their services is that they are not necessarily driving the outcomes that brands need.
Direct relationships can offer significant cost savings that can be used to improve channel economics and drive growth. Affiliate marketing managers want to get real control of their partnerships and appropriately apply ad spend to those that provide the most value. Core business relationships in the affiliate channel should be managed directly by the brand (or its agency) on an appropriate platform where the brand owns the relationship.
No marketer is ever satisfied with the status quo. Everyone wants – needs – more growth to deliver on their evermore aggressive KPIs. Affiliate managers are on a constant search to find and test new partnerships, but they are largely at a loss as to how to find them. They need a transparent way to search for and review media partners; just as affiliates need the opportunity to review campaigns. In the not too distant future, the “black box” of networks and brokers will be replaced with an open and transparent marketplace that enables low friction deals.
Globalization drives the industry because affiliate marketing is a low cost way for brands to launch in new countries. As a result, the affiliate model has become increasingly international, and many professional affiliates are now based overseas. Innovative technology platforms are finally making it easy to test and tap into these international partnership opportunities – global affiliates can now constitute more than 50% of a brand’s business. Expect international affiliate commerce to continue to rise as disruptive technology providers accelerate the trend.
Mobile is where the customers are today and it’s a safe bet that it will remain the dominant source for affiliate traffic. Mobile is personal, engaging, and immediate — and it has opened the door for a new way of reaching and communicating with the consumer. Marketers can now connect with their customers 24 hours a day, and a strong, simple call to action can lead to a swift conversion. In fact, 84% of companies said they see an increase in new business once they have a mobile site deployed. From social media to apps, tracking, analyzing and reporting on mobile data will be essential to grow the affiliate channel in the future.
Continued strong growth
All indications suggest that affiliate marketing will maintain its rapid growth. In a world where marketers must maximize their ROAS, affiliate’s pay-for-performance model is likely to remain very popular and gain more adoption.
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