How affiliate marketing can weather the digital advertising storm

How affiliate marketing can weather the digital advertising storm

These are troubling times for digital marketers. Recently labelled ‘dysfunctional and opaque’ by a group of UK politicians, with a ‘corrosive’ effect on the trust that advertising has traditionally been predicated on, brands are left struggling to understand the value they derive from digital marketing.

There seems little doubt that 2018 will be defined as the year digital’s woes went mainstream with a combination of factors conspiring to deliver the perfect storm. From the implementation of GDPR to the fallout of the Cambridge Analytica scandal to wider data privacy concerns following numerous data breaches, a litany of damaging stories has left the industry reeling.

With Apple’ s 2018 revision of its Intelligent Tracking Prevention taking a much stricter approach to cookie handling, the terrain isn’t going to get any easier to navigate. At the heart of this issue however is more than just the need to regain trust from brands and consumers. Vendors offering online services need to fundamentally reassess whether the way they both capture and repurpose data is done in a considerate and proportional way. The uncomfortable truth is that some of them may conclude they don’t, and will be left to ponder whether they have a place in the new digital world order.

Setting a gold standard

A common conclusion in the wake of GDPR was that those businesses who can establish a trusted and reciprocal relationship with consumers will be those who stand to gain the most. But that doesn't sit comfortably with some long established digital practices. It also flies in the face of some business models that are built around micro-targeting and personalisation, with scant attention paid to whether consumers gave their consent to be marketed to.

However, some businesses will be able to build on long-established, reliable partnerships and as lower quality ad formats and murky third-party relationships fade away, they will have the opportunity to further establish a gold standard. It is no coincidence the affiliate industry represents a number of these businesses.

Under the bonnet of most of these companies is a ‘data-light’ model with the information tracked predominantly functional in nature. The personal information stored is also primarily used for fraud detection and apportionment of sales.

Relationships are also easy to understand, eschewing the complexity and opacity of the programmatic adtech system.

Value exchange of the affiliate model

Additionally, affiliate marketing is still primarily predicated on a last-click wins basis and while this has been increasingly challenged over the years it has bred retail brands that consumers love. As knowledge about how people are tracked online increases, so we will start to hear more about the value exchange these affiliates offer with consumers empowered to trade their data for a tangible benefit.

This is a concept already built into many affiliate businesses. Probably the clearest manifestation of this is in loyalty, reward and cashback offerings. Sites such as Quidco and TopCashback have established memberships in the millions of high-quality, engaged consumers who can be marketed to with new products, deals and offers. The reward for consumers is simple, cash, paid directly into a bank account or exchanged for vouchers.

Looking to the future

This could be a blueprint that shows how consumers’ data may be packaged and valued in the future. With cashback rates available for each sector and product, it’s easy to deduce what a brand is willing to pay for your custom at a very basic level, be it £100 for an insurance product or 15% of your hotel booking.

Other disciplines that fall within the affiliate bucket include niche blogger and hobbyist sites, with basic and unobtrusive monetisation of their reviews and recommendations, voucher codes with their compelling conversion mechanisms and the new breed of influencers with their authentic voices.

In 2018, we’re facing a digital dichotomy that as technology becomes ever more sophisticated, so brands may look for transparent, easy to understand partnerships that can deliver a measurable return on the investment while ensuring controls are in place over where and how they’re promoted.

Consumers meanwhile will demand a respectful approach to their privacy. But to access the free services and information they’ve enjoyed for years so all parties will need to walk a fine line.

Affiliate marketing can provide those solutions, striking the right balance between advertisers, publishers and users, and enabling the internet to continue to function in the best possible fashion.

Finally, affiliates can be at the centre of an increasingly urgent conversation about the future direction of digital marketing.

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