Michael Nutley
Michael Nutley 8 December 2023

Brands and Agencies Need to Work Together to Capitalize on the Reinvention of Affiliate Marketing

Affiliate marketing used to be seen as the poor relation of digital marketing. Not any more. But even as the channel grows in scope and popularity, it’s still not fully accepted as part of the omnichannel mix. And that’s creating opportunities for marketers and agencies alike.

A recent report – High Performance and High Demand; The reinvigorated, full-funnel potential of affiliate marketing – compiled by London Research and published by specialist affiliate marketing agency Gen3, shows nearly two-thirds of US marketers (62%) plan to increase their spend in the affiliate channel over the next 12 months.

Only 7% plan to reduce it. But two-thirds (67%) still say affiliate is separate from the rest of their marketing activities.

Meanwhile, affiliate sites are no longer just a feature of the lower funnel. Customers are increasingly using them at the top too, in the inspiration phase. This is a dramatic contrast to even a few years ago, when all the discussion was centered around whether Google or Amazon would become the dominant starting point for consumers’ paths to purchase.

Now pole position has been taken by social media and influencers, which are forms of affiliate marketing.
So, brands that do start to include affiliate marketing will give themselves a competitive edge over those that continue to treat it as a tactical afterthought.

“As the website and publisher opportunities for consumer touchpoints expand and evolve, we’re seeing a change in how consumers shop online,” explained Kerry Curran, Chief Growth Officer at Gen3 Marketing. “They are engaging with more types of content to narrow down their choices before they go and complete the purchase through a retailer. This reiterates the importance of brand presence early and consistently throughout the early shopping phases.”

An opportunity for agencies

Agencies too stand to gain from this changing attitude to affiliate marketing. The research shows that half of large companies (those with revenues of more than $100m) see it’s very important to have an affiliate agency to create strategy.

On top of that, 46% of large companies say having an agency that offers affiliate integrated with all their other media, marketing and advertising is very important. A similar percentage of small agencies agree. But only a third of smaller companies think it’s very important to have an agency to create strategy.

However, marketers who responded to the survey were split on the issue of cost. Half said the cost benefit of running their affiliate marketing purely in-house as ‘very important’, while the other half said the same about the cost benefit of using an agency. To capitalize on the opportunity to provide strategic advice, affiliate agencies also need to win the argument on value for money.

“A lot of in-house programs are truly world-class. But, on average, our agency-managed clients are growing as much as 50% faster year-over-year and are working with 40% more partners, which is part of the reason why we love working with agencies,” David A. Yovanno, CEO at partner management software specialist, said when interviewed for the report. “One of the interesting things in the partnerships channel compared to others is that success is not only about the expertise and the attention an agency offers, it’s also about having a network of relationships with partners to tap into, and our best agencies have those relationships already in place. An agency is also going to get programs up and running much faster than a brand trying to do it on their own.”

Marketers understand, the C-suite doesn’t

The report also finds that, while most marketers have a decent grasp of the channel, there is still work to do to persuade the C-suite of its strategic importance. Almost half of respondents (46%) strongly agree they have a strong understanding of affiliate marketing, but only 39% say the same about their senior leadership.

In addition, one in five said lack of senior executive buy-in was a major barrier for them in trying to grow their use of affiliate marketing. A further two out of five said it was a minor barrier. So another crucial role for agencies will be to help marketers convince their senior management of the increasing importance of affiliate marketing as consumers and brands alike look to make their spending go further.

You can access the full report, High Performance and High Demand; The reinvigorated, full-funnel potential of affiliate marketing here. And there’s an infographic outlining the main points here.

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