Sarah Gilbertson
Sarah Gilbertson 4 April 2019

Watch and learn - how the Asian ecommerce market is shaping affiliate marketing globally

The rapid increase in consumer spending in Asia signals a ripe opportunity to explore affiliate marketing strategies, which can account for anywhere between 5% to 30% of a brand’s online revenue. As Asia speeds ahead, the rest of the world should watch and learn.

The Asian ecommerce market is growing steadily, hitting US $1 trillion in 2016 compared with Europe’s $530 in the same year. Based on our experience from our offices in  Singapore and China, along with conversations with global brands, it’s become clear that marketers within the region are aware of the vast potential and are eager to explore affiliate marketing strategies. In the west, successful companies like Amazon receive 650 million visitors a month through its performance-based partner channel. There is clearly an open door for Asian brands to achieve similar results and everyone wants a piece of the pie.

On the surface, this is a smart way to tap into sales and steadily grow revenue. But upon closer inspection, affiliate marketing -- at least in its historic western model -- will not allow marketers to achieve their KPIs in the Asian market. For brands to succeed with similar strategies, they need to put a uniquely Asian spin on their efforts, leveraging the unique aspects of the Asian market to their advantage. This is something that all markets globally should be looking to do.

To understand why, let’s quickly summarize the western affiliate model: In its earliest iteration, affiliate marketing was a volume game focused on finding as many publishers as possible to promote products and services, regardless of quality or brand fit. The next phase focused on identifying the high-performing affiliates responsible for the majority of a program’s revenue. And while the western model continues to evolve, it doesn’t translate to Asia, for a number of reasons.

To begin with, consumer behavior is different in Asia than it is in the western world, and it continues changing at high speed. Consumers primarily go online via a mobile device, with desktop pushed to the margins. In Q1 2018, mobile accounted for nearly 75% of online transactions in the wider APAC region, with in-app purchases accounting for nearly two-thirds of those purchases. However, in Europe, 55% of online transactions were through mobile with one quarter of those being in-app purchases, according to Criteo. A traditional browser-based tracking model simply won’t work in a mobile dominant market as it does in Europe.

As global brands push into the market and competition grows, waste and inefficiency are more noticeable and less acceptable than they are in western affiliate marketing. As a result, marketers need to focus more on customer experience and invest in local branding, rather than focusing on revenue. At Affiliate Summit APAC, Joel Leong, the co-founder of Shopback, said that the company has found tremendous success through its mobile app by focusing on functionality that customers find useful, even if that functionality wasn’t monetized. This is helping Shopback grow like crazy against steep loyalty model competition that had more resources and history in the space. Marketers, particularly in Asia, should ask themselves more frequently, "What type of user experience do I want?" as opposed to "how am I going to get more traffic?". The same can be applied in global markets. Shopback's success comes from deploying cool features like price comparison, the average arrival time for food delivery, and cash back on phone bill reloading. In the UK, many retailers and business such as Carphone Warehouse are partnering with global affiliate networks; and by building new clients and working with existing publishers, a significant year on year growth was generated. The affiliate programme achieved successful growth over 12 months through improved payment speeds and increased the payment validation rate by 5% across the group, this then built on and improved relationships with key publishers.

When recruiting partners, many marketers either screen everyone (causing huge manual overhead) or forego doing so (introducing significant risk for fraud). With  US $18 billion expected to be lost to mobile ad fraud this year, and $56 billion by 2022 in the APAC region, the concerns are much greater in Asia than in the European market. Because recruitment must still cast a wide net, the best strategy is closer to an “ask first, screen later” approach. It takes only seconds to approach potential partners, and it’s far more efficient to screen the smaller pool that has responded “yes,” than it is to screen every possible partner before recruitment.

The types of partners matter, too. Within the Asian market, social, search and ecommerce blend together more than they do elsewhere. Many Asian countries frequently rank among the highest in average number of daily hours spent using social media, creating an environment where influencers carry more weight in partner-marketing strategies. Countries in Europe are seen to be further behind in terms of hours spent using social media. Alibaba’s marketing arm, Alimama, has found great success using a key opinion leader (KOL) model. 

Finally, there is the fact that the western model is not well understood by marketing departments, executives, and even by the potential affiliates themselves. Part of this comes down to terminology -- “affiliate” strategies aren’t as widely known as “partnerships,” or other forms of collaborative marketing. This makes it difficult for marketing teams to secure the necessary budget to start and maintain sustainable affiliate programs.

These factors create a situation where marketers need to develop a uniquely Asian riff on the affiliate channel, one that intersects with existing partnership efforts and focuses on customer value. In effect, Asia focus on a system that is based more on the expectations of Asian consumers and partners.

Affiliate marketing is far from the first business model to receive a uniquely Asian spin. WeChat’s dominance in China proves that even a global powerhouse like Facebook may not have the same appeal as it does in the western world. And there are already admirable programs running within Asia and globally. Shopback is growing massively in Singapore, winning business while raising more than $40 million. Other Asian brands, like Agoda, Zalora, Lazada and Taobao, are also using the affiliate channel to grow their businesses. In the UK luxury brands such as Liberty London and NET+A+PORTER are also following this trend as well as comparison sites and

Asian marketers have the advantage of defining their own model, based on their business practices and consumer behaviors, however this is something that can influence other markets. The key thing to remember is that the affiliate marketing channel (which is actually many channels) is built on innovation, so marketers should be willing to explore new opportunities and types of partnerships to get ahead. The real movers in the next era will be the ones who don’t bind themselves to the traditional model, but are willing to open their minds to new ideas from flourishing markets.

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