Asia Pacific has been slower to adopt affiliate marketing than the United States and Europe, but the region is gradually catching up as many brands and partners opt for a pay-on-performance approach, writes Stuart McLennan, senior vice-president for APAC at Rakuten Advertising.
Affiliate marketing has a reputation problem. If you think affiliate marketing is focused on discounts or less-premium brands, you are not alone. But the adoption and scale of the channel globally highlight the flaws in this way of thinking. Take Japan as an example; its sub-affiliate networks are well-established, with a projected value of affiliate marketing of $5bn by 2023.
China – a nation with the most internet users in the world – has an over 40% share of the global affiliate marketing industry. And Australia is now a hot bed for publisher innovation to rival that seen in the UK and the US.
So, where does this gap in understanding lie and how can we close it? Earlier this year, we hosted the first meetings of the Rakuten Advertising International Collective (RAIC), made up of leading advertisers and publishers from around the globe. These meetings allowed us to collaboratively discuss and reflect on the channel and to gather the insights and examples that formed the basis for our recently-published 5-Stage Blueprint for High-Performance Affiliate Marketing.
The strategic brain power, experience and innovation that RAIC members showcased in our meetings underscored that affiliate marketing is still inhabited by a worryingly outdated perception.
A key misperception: affiliate marketing is a tactic for conversion
There are two misperceptions there: that affiliate is a tactic and that it’s only about conversion. Conversion is undoubtedly one of the most important goals of affiliate marketing. The ability of affiliates to generate sales and revenue is foundational and it’s often the place where many advertisers start. Unfortunately, it’s also one where many of them remain. That misses a huge opportunity.
Accepting that affiliate marketing has transformed from a tactic to a strategy is fundamental in appreciating the value it can bring to your business. A strategy defines the overall approach to how you’re going to achieve your goals; tactics are the discrete things that you do to execute this strategy.
Take traditional advertising. While a tactic might be to create and run a print advertisement, the strategy will define how the different advertising channels combine to influence the audience.
Affiliate marketing is the same. A high-performance affiliate marketing strategy will combine multiple affiliate publisher models – from content to comparison to cashback to coupons and more – to support commercial goals throughout the funnel. Attracting and acquiring new customers from previously untapped demographics or regions, introducing and promoting new products, positioning brands appropriately can all be supported through the modern affiliates.
Taking the full-funnel view
Consider the elements of typical customer journeys. A broad online search leads to content and reviews and then maybe onto price comparison. An influencer post that sparks specific product interest, before a search for a coupon or voucher. A post on Pinterest might lead to the advertiser’s mobile e-commerce site before the customer selects the payment method offering the most advantageous benefits.
Modern affiliate marketing can play a role in every one of the steps in the customer journey, yet too many still see it as a method of converting a customer at the point of purchase.
Effective attribution has played a role, of course. Affiliate marketing aligned to last-click conversion makes attribution and commission payments simple. But much of the increasing sophistication of affiliate marketing – and the investments made by publishers in broadening their offerings – has been based on the ability to apply attribution and multi-touch commissioning further up the sales funnel, along with effective in-app tracking.
Multi-touch attribution enables brands to recognize and credit publishers for their contributions across the consumer journey. Publishers have been more eager and able to spend and develop as a result of this recognition – and the money it generates – bringing more value to advertisers. It is a self-fulfilling prophecy.
Using data to define, justify, convince and grow
APAC has a plethora of options for companies wanting to develop their affiliate program. The region offers appealing and diversified potential for advertisers due to the recent increase in online shopping and an audience of more than half of the world’s internet users. With numerous languages and 48 nations in this diverse region, it is critical to devote time to thoroughly knowing the region’s complexities and possibilities before tailoring affiliate marketing tactics with all the data provided.
In defining any marketing strategy, the use of data is paramount. One of the striking aspects of the discussions in our RAIC meetings – and which is one aspect highlighted in our blueprint for high-performance affiliate marketing – is how much data is used in modern affiliate programs.
Data comes from both the advertisers and publishers – after all, finding the sweet spot between an advertiser’s target customers and a publisher’s audience is central to success. In forward-thinking engagements, both parties see the benefit in transparently sharing this data to better inform program development.
And while data is essential in planning, it’s also critical in measuring performance and this, in turn, helps support the argument to make affiliate marketing a central part of an advertiser’s marketing strategy.
A universal perspective among participation in our RAIC meetings was that aligning the affiliate marketing strategy and KPIs to the overall business objectives, and regularly communicating its progress and success, is the route to further internal commitment. In turn, this changes the internal perception about the value of affiliate marketing.
Being the champions of affiliate
For those of us who are close to affiliate marketing, who have seen its transformation as a strategic marketing activity, there’s a vested interest in helping educate our broader marketing stakeholders, and to bring the perceptions of affiliate right up to date.
Although the APAC market has been slower to adopt the affiliate marketing model as we know it in the United States and Europe, the region is gradually catching up, with many brands and partners adopting the pay-on-performance approach.
Few marketing approaches can measurably move a consumer from being an unknown individual to a loyal customer, but this is the strength of affiliate marketing. A broader understanding of this will not only expand the use of affiliates within organizations, but will also support the career aspirations of affiliate marketers themselves.
Stuart McLennan is the senior vice-president for Rakuten Advertising at Asia Pacific