Last month the AP team traveled to Seattle for the annual Shop.org Summit, where we had great conversations with marketers from all across the country. Over and over again we heard how e-commerce sites are tired of trying to game the system.
There’s been a major sea change in digital marketing over the last few years. As the industry matures, digital channels are no longer seen as separate silos. They’re being integrated into overall strategy with a renewed focus on brand integrity.
The days of looking for short-term digital gains are over. The most innovative e-commerce sites are now focused on building long-term programs that add real value.
The New Generation of Affiliate Marketing
Nowhere is this more clear than in affiliate marketing, where industry leaders are busy upgrading their programs to the new ‘Gen 2’ of affiliate marketing.
Robert Glazer, AP’s founder and managing director, hosted a roundtable at Shop.org on how to transition to a next-generation affiliate program. Companies large and small attended to find out how to get the most out of their affiliate programs.
The problem for merchants is that many affiliate programs appear to be sources of easy revenue when in fact they are major cost centers full of fraud and off-brand promotion. Affiliate programs can deliver incremental and performance-based revenue, but only if merchants upgrade their inefficient Gen 1 programs to Gen 2 programs that emphasize high-quality partners and multi-channel attribution.
Here are six major areas where Gen 2 programs separate themselves from the first generation.
1. Program Management
Gen 1 programs tend to be managed by whoever is available in-house, generally an employee with limited experience who is stretched between several channels. Or, management is turned over to the affiliate network, which potentially constitutes a serious conflict of interest.
Gen 2 programs, on the other hand, are overseen by experienced in-house managers or specialized third party firms that partner with the in-house team.
2. Success Metrics
In Gen 1, success is judged by the number of affiliates in the program and the overall revenue brought in by the program, regardless of whether it’s actually adding value.
Success in Gen 2 is measured by new customer acquisition and incremental revenue. The program is looked at under a multi-channel attribution model to make sure it’s adding value.
Gen 1 programs place the greatest value on affiliates that generate the highest volume of referrals. The affiliate immediately before the point of sale always receives the commission, regardless of whether they did the work of bringing a new customer to the site.
Gen 2 programs compensate affiliates based on who they are, the type of promotion they do, brand relevance, and the value they bring, not simply their volume.
4. Affiliate Make-Up
Over 80 percent of affiliates in a Gen 1 program are loyalty/toolbar sites or low-value coupon sites, many of which use deceptive tactics.
Gen 2 programs strive for the top twenty affiliates to comprise less than 50 percent of the program. They focus on building relationships with high-quality content partners such as blogs.
5. Use of Networks
Gen 1 programs tend to use multiple, competing large affiliate networks, mistakenly thinking more networks will bring greater reach.
Gen 2 programs tend to operate on fewer networks, eschewing the bigger-is-better philosophy of Gen 1. They also work with SaaS platforms and other technology partners to craft custom solutions.
Gen 1 programs have little to no transparency when it comes to affiliate activity, even lacking a referring URL that shows where affiliate traffic originates.
Referring URL data is imperative for Gen 2 programs and is demanded for all clicks and sales.
Bob Glazer and Daniel Marques, director of channel marketing at adidas, worked with the companies that attended the roundtable on how they could upgrade their individual programs. If you’d like to revamp your program with an emphasis on quality, get in touch with us and find out how we can help.
SEO That Doesn’t Play Games
It’s not just in affiliate marketing that businesses are looking to change their way of doing things. Many sites were hit by Google’s Panda 4.0 update earlier this year and for those that hadn’t already upgraded their SEO tactics it was a rough year.
Almost everyone we spoke with at Shop.org has disregarded the short-term tactics that were meant to manipulate Google’s algorithm and little more. As Google becomes more sophisticated, these tactics no longer pay off. The focus now is on crafting a long-term strategy that appeals to real life users as much as search engines.
AP has been working with our clients to integrate SEO into a more comprehensive strategy. That’s why we created SEOUX™, a seamless integration of SEO and user experience. It’s search engine optimization for a new generation, privileging the experience of the user and brand integrity above all else, with a focus on driving conversions, not just visits.
The big trend here is that digital marketing channels are coming out of their silos. They’re being integrated into larger marketing strategies. To learn how your site can make the best use of digital channels to grow your business, contact us.
Photo via Bryan Wright on Flickr.