This article was originally published on MarTech Advisor.
Shopify recently began working with BuzzFeed to increase visibility of its merchants, marking BuzzFeed’s biggest step into affiliate marketing to date.
The structure is simple, BuzzFeed will include links back to Shopify in some of its articles and receive a commission on any sales conversions made from those links. Unsurprisingly, BuzzFeed is getting a massive cut – 10 to 25 percent per sale.
Affiliate marketing has become a major staple for most online media companies. Last year, The New York Times purchased The Wirecutter for $30 million, hoping to benefit from the site’s niche audience and affiliate revenue.
Jessica Spira, head of revenue at The Wirecutter, said this about the future of media and affiliate marketing, “Performance marketing has been the main source of Wirecutter revenue since its launch in 2011. We’ve translated reader intent into high conversion rates by creating context around the purchase decision and including calls to action at the point of purchase consideration. This intersection of content and commerce works well in performance marketing by allowing advertisers to partner with us in a cost effective and efficient way.”
Deals like these indicate a shift away from cost-per-thousand-impressions-based models toward a performance-based structure, where advertisers pay for results rather than impressions. Publishers like BuzzFeed and merchants like Shopify are embracing affiliate marketing thanks to the mutual benefits of a performance partnership model.
The Rise of Affiliate Marketing
Banner ads died more than a decade ago . Cost per click rose, then programmatic brought back the banners. Affiliate marketing is the next step in this evolution. Even with programmatic marketing, most people ignore unsolicited page ads. Publishers now have the personalized data and niche audiences necessary to provide valuable marketing services to merchandisers. The advertisement is almost native, leading to more clicks and more conversions.
Today, two groups make up the bulk of affiliate deals. Publishers offer performance-based compensation models for online ads, as their banners no longer generate revenue . Thought leaders and companies, meanwhile, offer more valuable content to audiences in the hope that it will lead to sales.
Together, these two groups can accomplish more than either one could alone. A publication with a strong following and the authority to recommend a good product can charge a higher rate to merchandisers, who are happy to pay for directly converted leads.
The Evolution of Affiliate Marketing
As affiliate marketing continues to establish itself as the most cost-effective marketing tool for both advertisers and publishers, the way companies use it will evolve.
Both advertisers and publishers can initiate partnerships. A publisher might have an upcoming listicle about the best coolers, for example, and then reach out to affiliates to see which companies will pay higher rates to have their coolers featured. They would then connect to the retailer’s affiliate network or direct program, set up an account, and receive a monthly check for the commissions.
The stronger the affiliate performs, the more the merchant sells. Performance marketing turns the game of faking impressions into an exchange of real value , meaning advertisers no longer must defend their invoices.
As affiliate marketing continues to become more common, publishers will seek new ways to demonstrate the value of placement on their sites.
Benefits and Challenges of Affiliate Marketing
Merchants and advertisers benefit from connecting with an affiliate program, tracking results, and having payments handled automatically after a certain period.
Media companies, magazines, and content sites are increasingly interested in affiliate marketing and are sliding into it, but their challenge lies in not knowing who to talk to about it.
They need to work with someone who represents publishers, like Button or BrandCycle. Then, consider where they have expertise and look at search data to see which areas don’t see many hits. If there’s demand for certain content, they can develop it and rank for it.
The performance model ensures that when everyone’s doing well, everyone’s enjoying the profits, and vice versa. Retailers have a commerce budget-not a brand budget-and they’re looking for clicks and sales, not impressions. Adopting a performance-based model ensures a fair rate and better results.