The increased use of ad-blocking software is disrupting the digital marketing industry as we know it. People have grown tired of “interruption advertising,” whereby irrelevant ads are forced upon them or they are tricked into clicking them on their small mobile screens. Successful brand marketing depends on building relationships with consumers, and as customers demand more control over the types of ads they see, affiliate marketing has proven to be an effective way to establish, strengthen, and maintain these invaluable relationships more authentically.
The affiliate marketing concept is simple: Brands hire affiliates, who may be bloggers, publishers, or other companies, to promote a product or service using their own blogs, websites, or social media channels. Affiliates are paid a share of any sales or a commission resulting from their efforts. Compensation for affiliates may also take the form of incentives, discounts, one-time offers, or giveaways.
Affiliate promotional efforts are often native, and the content they create informs consumers about the products they really want. This creates a strong relationship between affiliates and consumers and offers businesses the opportunity to build stronger brands, expand their reach, and increase incremental sales. Affiliate marketing is also a fairly cost-effective marketing channel as affiliates are paid on the basis of performance.
The disruptive force of ad blocking
More than 25 percent of internet users report that they will block ads this year, and over the next five years, ad blocking is expected to increase by 50 percent. Ad blocking in the U.S. continues to cause headaches for online advertisers and publishers, and the phenomenon is expected to grow by double digits this year and next.
In 2016, for example, the number of Americans using ad blockers increased 34.4 percent over last year.
People are embracing ad-blocking tools because they are tired of seeing irrelevant, intrusive ads. Consequently, ad-blocking tools also keep relevant ads from reaching potential customers.
This is a major drawback for the digital marketing ecosystem of publishers, marketers, agencies, merchants, and other businesses that depend on advertising revenue.
In a recent survey, 91 percent of Americans said they feel they’ve lost control over how their personal data is collected and used online. Thus, ad blocking is also seen as an effective tool to protect privacy, eliminate annoying pop-up ads, and improve online performance.
With this huge rise in ad blocking, affiliate marketing is more valuable than ever. Here are three reasons why:
1. Display banner ads are becoming less effective, especially on mobile devices.
Ad-blocking software mostly targets companies that use traditional banner ads, which are becoming less appealing to many advertisers. Industry experts predict that spending on digital display ads will decrease by more than 3 percent this year and remain flat as ad spending shifts to other channels.
Native advertisements, on the other hand, see 53 percent higher customer purchase intent, meaning they will more likely translate to a conversion than traditional display ads. This decline is accentuated by the transition to mobile, where banner ads are even less effective and often very intrusive.
Display ad networks are the most at-risk because they are likely to be blocked more often than affiliate ad placements. This presents an opportunity for brands to reach consumers more effectively through affiliates who provide informative promotional content through blog posts, reviews, videos, or podcasts.
2. Consumer tolerance is lower for disruptive, irrelevant advertising experiences
People often turn to ad blockers after a bad experience with interruptive, irrelevant online ads. But affiliates have shown that they can seamlessly integrate advertising into content that is of interest to and well-received by their audiences while still clearly identifying it as sponsored.
By delivering meaningful content that integrates with advertising, content affiliates such as bloggers can establish trust and authority with their followers by sharing their personal experiences using the brand’s product, what they like about it, and why they think it’s worthwhile to purchase.
This approach not only conveys a lot more information than a banner ad, but customers are also more receptive to it. Of those currently using ad blockers, 60 percent say they would turn them off to access quality content.
Affiliate marketing is also more conversational than traditional display advertising.
Take blogger Classy Mommy’s relationship with Build-A-Bear’s National Teddy Bear promotion.
Classy Mommy provides incentives for customers to comment on posts, share pre-written tweets that tag Classy Mommy and Build-A-Bear, and follow the blog on Instagram and YouTube to enter to win a $100 Build-A-Bear gift card. Instead of relying on banner ads, Build-A-Bear reaches potential customers in a meaningful and personal way.
In another example of effective affiliate marketing, Button recently launched app-to-app marketing technology that shows users relevant “buttons” in one app that connect them to another app.
So, if one makes a restaurant reservation on OpenTable, a button might link to Uber with the destination pre-filled. This is both relevant and a much better user experience that feels far less like advertising.
3. Focus is shifting toward performance partnerships
Companies are moving beyond standard online ad formats and placements, focusing more on developing strategic and integrated large-scale affiliate partnerships.
In fact, spend on affiliate marketing is expected to exceed $4 billion this year, and that rate of growth beats predictions for display advertising and all other online channels.
Rather than paying for clicks and impressions, what these companies want is an overarching view of their data and costs, as well as the chance to earn incremental revenue.
They are combining marketing, business development, and other partnerships that are based on cost per action and tied to their overall goals. They expect transparency, achieved through centralized reporting, automated payments, and a standard operating framework.
This type of performance-based marketing provides much more oversight than traditional advertising. Managers can enforce guidelines to ensure that promotions are ethical and that the brand is protected while still driving sales.
For example, rewardStyle has aggregated thousands of high-value fashion affiliates who feature products prominently in their content, which makes it a highly lucrative channel for fashion brands looking to drive customer acquisition.
In its first year, the company drove more than $60 million in sales by inviting fashion bloggers into its network and then fostering relationships between the bloggers and retailers. If a post led to a sale, the blogger received a share of the profits.
Affiliate marketing provides relevant and meaningful content to people, making it a much more powerful tool than traditional digital advertising, especially as more people turn to ad blocking.
Reaching people with information that they really want allows brands to foster valuable relationships with potential or current customers, and what company couldn’t use more of that kind of performance in their marketing initiatives?
Want to learn more about how and why brands are shifting more of their marketing budget to their affiliate program? Let’s chat!