WITH A LITTLE HELP FROM MY FRIENDS: AN INTRODUCTION TO AFFILIATE MARKETING

You’ve cracked pay per click and you’re making good headway with organic search engine optimisation, so where do you go next? How do you grow your audience further while ensuring a good return on investment?

An affiliate marketing programme may be the answer.

What is affiliate marketing?

Put simply, affiliate marketing is when publishers (also known as affiliates) connect with brands to promote their products and services in exchange for commission.

The global industry is estimated to be worth about $13bn annually and 4/5 Brits use affiliate websites. The scale of the opportunity can’t be overlooked so it’s understandable why brands such as Argos and Tesco have embraced the channel.

How do I get started with affiliate marketing?

Whether you’re planning to manage your affiliate programme yourself, or hire an agency to do the work for you, one of the first things you need to consider is which network you’ll use.

A network provides the interface for connecting publishers and brands, and ensures everything is tracked and reported on accurately and transparently.

There are several different networks to choose from, all with their own advantages and disadvantages, but at The Ticket Factory we use Awin. There are 13,000 other advertisers on the Awin platform, but more importantly for us, there are over 100,000 active publishers offering a healthy mix of blogs, technology services and cashback sites.

Despite the size of the network, we work with fewer than 100 affiliates who focus on sending us high quality, relevant traffic. Each time one of these website visitors makes a purchase, we pay a small fee back to the affiliate who referred them. In an industry where margins are very tight, this gives us the peace of mind that the entire programme is self-funding.

What are the other benefits of affiliate marketing?

The bread and butter of our affiliate programme is voucher code, loyalty and cashback sites. Visitors to these sites are aware that they receive a discount or reward when they make a purchase so there is a very high conversion rate. However, affiliates can also help solve other challenges.

Technology partners can be recruited on a CPA basis and we’re currently working with VE Interactive who provide us with basket abandonment software.

Basket abandonment is a conversion rate optimisation technique for re-engaging visitors who have added products to their shopping cart but haven’t completed their purchase. If the customer has got as far as supplying their email address, the software will detect this and send an automated email encouraging them to return to the site. The results speak for themselves – for every £1 we spend with VE Interactive, The Ticket Factory generates £70 in revenue and approximately £7 in profit.

The default attribution model for affiliate marketing, as with most other digital marketing activity, is last click. Unfortunately, this doesn’t always tell the full story. We live in an age where customers are spoilt for choice and brands must fight for every penny, so there’s usually multiple touchpoints in the journey to conversion. And there’s no touchpoint more powerful than influencer marketing.

Imagine you want to sell your house and you’re after the services of an estate agent, what is the first thing you do? You probably ask your friends, family and colleagues if they have any recommendations. One might even point you in the right direction with a glowing review. But this is only the start of the journey. The estate agent will still give you their sales pitch, and you’ll need to get your property valued and agree how much you’ll pay them.

Six months later when the sale finally goes through, the estate agent will get paid the commission, but there’s no denying the importance of that original recommendation.

It works exactly the same in the digital space and Awin allows The Ticket Factory to easily connect with bloggers and other influences who are willing to promote our events to their engaged audiences.

Unfortunately, just like in our estate agent analogy, the blogger probably won’t convert the customer but they still have an important role to play so it’s worth considering top-up payments to key influencers.

What does the future hold for affiliate marketing?

Trying to predict trends and future developments in the digital industry is a difficult task, but there’s a couple of topics which are certain to affect the affiliate channel in 2018.

• This article wouldn’t be complete without a nod to GDPR, but it will have a profound impact on the entire industry when it comes in to force on 25 May 2018. However, while many people are apprehensive about the changes that GDPR will bring, the affiliate channel may potentially benefit from the new regulations.

Channels that are heavily reliant on third party data or behavioural targeting will inevitably suffer in the new environment, but affiliate marketing - with it’s simple tracking mechanisms - is arguably less at risk which could see brands adjusting their marketing spend accordingly.

There’s also a clear value-exchange in affiliate marketing which could help further differentiate the channel from the crowd in a post-GDPR world.

• Facebook has had a tough start to the year and their response may have consequences for the affiliate channel. The social network has recently announced that it will be changing its ranking mechanism to prioritise personal interactions over those with businesses or celebrities.

The ramifications for businesses that have invested heavily in growing their Facebook following could be huge. This is of particular cause for concern for the affiliate industry where there are a number of publishers for whom Facebook is their largest traffic and revenue driver.

Conclusion

Affiliate marketing is a fairly simple concept, but one which can reap huge rewards for advertisers and publishers alike. In the space of two years The Ticket Factory’s affiliate programme has doubled in size and now accounts for 6% of our revenue, which is an impressive achievement considering the low risk nature of the channel.

It has also allowed us to add new strings to our bow by making it easy to partner with technology services and industry influencers who help deliver additional revenue in the long run.