Article

Sean Hargrave
Sean Hargrave 22 January 2024

New Research: Is Legacy Technology Holding Back Affiliate Marketing Growth?

A new report shows marketers trust partnership and affiliate marketing to drive business growth, yet feel constrained by legacy network technology. Meanwhile, companies are continuing to commit the lion’s share of their marketing budgets to search and display advertising, despite increasing costs and ever-decreasing value from these channels.

Affiliate and partnership marketing represent something of a conundrum. Those who run programmes reveal they are very happy with the results throughout the entire customer journey, from awareness and consideration through to conversions.

And yet, despite excellent ROI from the channel, the money invested in affiliate partnerships continues to be dwarfed by the budgets set aside for tech giants such as Google and Meta.

A new survey-based report from Digital Doughnut sister company London Research, in association with partnership marketing platform Partnerize, has shone a light on the disconnect between where marketers feel they get the best value, and where they prioritise budgets.

The survey of 200 companies across Europe finds four in five marketers realise they are too reliant on PPC, digital display and paid social, with the same proportion saying that Amazon, Meta and Google receive the vast majority of their marketing budget.

Over-Reliance on Tech Giants

Those actually involved in partnership and affiliate marketing devote, on average, 22% of marketing budget into the channel, and would ideally like to increase this investment. However, over reliance on the established tech giants is holding them back, even though four in five marketers reveal it is getting increasingly difficult to drive value from search and display advertising. 

It is crystal clear that there is a disconnect between marketers’ positive experiences of partnership marketing and their overall strategy, particularly when it comes to budgeting and channel choice. 

Some fear that putting more money into affiliates might be a risk because they are not sure they can scale up successful campaigns. This mostly comes from a suspicion they may not be able to find enough quality publishing partners via their chosen tech platform. 

Better Tech Holds the Key

It would be easy to attribute the under investment in affiliate marketing compared to other channels as an on-going image problem for the channel. This was perhaps a valid concern in the past, but more than nine in 10 affiliate-using brands reveal the channel has a better reputation than a decade ago.

Almost nine in 10 marketers (88%) now agree the channel is driving profitable growth.

So, the disconnect would appear to be down to a fear that a partnership marketing platform cannot open up enough additional quality publishers to scale activity. This applies to both campaign performance as well as overall brand safety. There are also concerns that technology is not intuitive to use and reporting can be limited.

This underlines how, ultimately, marketers can sometimes feel constrained by their affiliate network provider. They trust partnership marketing to deliver results throughout the funnel, but they fear they may not be able to unlock a wider network of partners and that additional investment will be hard to track because reporting tools are limited, and systems are not intuitive to use.

The research finds that only around a third of brands rate their affiliate and partnership marketing software stack highly. 

This provides an important reminder to those involved in partnership marketing, or considering starting out, that they should research and invest in a best-in-class platform. Legacy network systems can hold back affiliate programmes because they inhibit scaling, rarely generate real-time reports, and are difficult to integrate with other tools.

Marketers are advised to ditch these legacy systems and invest in intuitive solutions which can scale campaigns, report in real time, and be easily integrated with other channels. 

Channel Benefits 

It is also important to note that affiliate marketing is not just about driving incremental sales, though this is obviously fundamental. It does improve conversions at the sharp end of the customer funnel, but the number one benefit identified is actually at the top of the funnel. 

Nearly one in two marketers call out ‘raising awareness of their brand among new audiences’ as the biggest benefit they get from the channel, rating this just slightly higher than incremental sales. 

The Fixing the Affiliate Disconnect report from Partnerize, in partnership with London Research, can be accessed here.

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