After decades of classic marketing campaigns, affiliate marketing seemed like a revolutionary strategy. Why pay up front and make your firm vulnerable to risks associated with under-performing ad placements when you can select a performance-based approach? As discussed in class, the key advantage with affiliate marketing is that advertisers only pay when a sale occurs. Therefore, there is both a better safety guarantee for companies and more incentive for affiliates to push the ad. However, like any marketing strategy, it is far from perfect. Finding reliable affiliates that bring in sufficient new customers and ask for reasonable compensation can understandably be a challenge for firms, and many businesses have wasted valuable resources on affiliates that brought them a low ROI (Edelman, & Brandi, 2015).
Traditionally, an affiliate merchant is a website that aims to sell goods or services through online advertising, such as Amazon. An affiliate, logically, is the website that presents the merchant’s link to its visitors (Edelman, & Brandi, 2015). For instance, a travel site could link to an Expedia page that offers hotels in a certain area. To track the success of their various affiliates, merchants use a variety of defined metrics, such as click-through-rates and cost-per-click (both discussed in class). While this worked fairly well, marketers began to see the emergence of a new generation of affiliates: the social influencers. This group includes bloggers and YouTube, Instagram, Vine, and other social network personalities with a large following. Strangely enough, a great deal of persuasion power has slowly been transferred to them from traditional affiliates and companies have had to shift their digital marketing strategies to adapt to this change.
How did this happen? Well, simply put, bloggers were a generation of regular people that everyone could relate to. Whether you are a teenager experimenting with make up, a young mother, or a new business owner, a guru is available to help you. When companies realized how great some of the gurus’ followings were, they took it as a chance to promote their products through these new influencers. Today, we can find posts that feature one (or many) products from a brand, made by these influencers. They often offer a discount code to their fans and have a clickable link to the product. As an example, here is a YouTube video by Jim Chapman, giving his viewers Christmas gift ideas. From the title of the video, we can see that this video contains a paid-for advertisement.
Though this form of marketing can be very effective, there are a few key things to remember. Firstly, an influencer must be chosen based on how well they fit in with your marketing strategy. Their target group, other brand deals, and reputation must all be considered before you offer an affiliate opportunity to them (Cheese, Gardiner, and Stewart 2016). In terms of calculating ROI, it can be particularly difficult here, as learned in class, because we cannot directly associate sales with an influencer’s ad. By clearly defining key performance indicators and understanding what these numbers mean, we can begin to understand the impact that influencers have on our sales (Bowie, Daniele, and Mariussen, 2010).
Finally, the human factor cannot be forgotten. Gardiner, Director of Acquisition Marketing at Underthedoormat, states that looking at affiliate marketing as a branch of digital marketing is incorrect. This is because positive human relationships are what make someone put in 100% of their effort into something. Having open conversations, rather than pushing your content through a digital source, helps the influencer connect with your product and promote it more genuinely (Cheese, Gardiner, and Stewart 2016).
Now, let’s talk about a particular company that has changed how we think about affiliate marketing.
Amazon Associates, launched in 1996, is an affiliate marketing program that allows website owners to make money by including click-through links to Amazon products on their websites. The digital giant explains that, when customers click on an Amazon link and purchase a product, the website owner receives 10% in referral fees (Amazon, 2017). While this program has been around for a long time, the company has recently decided to branch off into influencer advertising, following in the footsteps of the aforementioned bloggers and vloggers.
The new Amazon Influencer Program is currently in the beta testing stage, which explains the current lack of awareness about it. Similarly to their original program, it will offer commission to influencers on products sold. However, what truly makes it unique is that it’s an invite-only strategy. To become an affiliate for the company, you can simply sign up and build ads for your website, receiving commission for click-through sales. The Influencer Program, though, requires an application to be filled out before you’re considered for the role (Perez, 2017).
As you can see above, the program calls for influencers with “large followings and a high frequency of posts with shoppable content” (Amazon, 2017). Other metrics are also considered, including fan engagement on posts and relevancy to Amazon, but the company claims that there’s no specific follower cut-off point to be included in the program. How else does this differ from regular affiliate marketing? Well, influencers are all given a unique URL on Amazon’s domain that’s easy for customers to remember (amazon.com/shop/username). One example that Perez, writer for Tech Crunch, provides is a popular Youtube Channel called “What’s Up Moms”. On their Amazon online shop, customers can browse through a selection of recommended products, in this case geared towards new moms (Perez, 2017).
The link to this online shop can be included in the down-bar of YouTube videos or in Instagram posts, to make it easy for customers to find the mentioned products online. When the link is clicked, you’re redirected to a page that shows thumbnails of the recommended products, along with their prices, Prime status, and a brief description (Gesenhues, 2017). As Liane Mullin, President and COO of WhatsUpMoms, states,
“We are really excited to be a part of this new program…As the #1 Parenting Network on YouTube, we are constantly asked by our community for product recommendations and about the products used in our videos. Now that we have our own Amazon store makes it much easier to have a curated collection all in one spot”.
While the program is currently limited to a small number of influencers, it has the potential for success. Amazon has clearly caught on to the idea that influencers have more power of consumers than regular affiliates, and ave decided to experiment with this strategy themselves. To me, this seems like the logical next step for an online giant like Amazon. By providing a convenient digital space for the products that influencers are promoting, they take away the need for customers to click through multiple links and search for items themselves. Whether consumers will actually adopt this new service is currently unclear, but it’ll be interesting to watch how Amazon continues to change the course of marketing, one innovation at a time.
Amazon. (2017). Amazon.com Associates Central – The web’s most popular and successful Affiliate Program – Get Started Tour. Affiliate-program.amazon.com. Retrieved 4 April 2017, from https://affiliate-program.amazon.com/welcome/getstarted
Edelman, B., & Brandi, W. (2015). Risk, Information, and Incentives in Online Affiliate Marketing. Journal Of Marketing Research, 52(1), 1-12. http://dx.doi.org/10.1509/jmr.13.0472
Perez, S. (2017). Amazon quietly launches its own social media influencer program into beta. TechCrunch. Retrieved 5 April 2017, from https://techcrunch.com/2017/03/31/amazon-quietly-launches-its-own-social-media-influencer-program-into-beta/
Gesenhues, A. (2017). Amazon beta testing Influencer Program aimed exclusively at social media bigwigs. Marketing Land. Retrieved 7 April 2017, from http://marketingland.com/amazon-beta-testing-influencer-program-210982
Cheese, E.,Gardiner, M., Stewart, P. (2016). Being human the secret to affiliate marketing success. Campaign, 32-33.
Bowie, D., Daniele, R., Mariussen, A. (2010). Unintended consequences in the evolution of affiliate marketing networks: a complex approach. The Service Industries Journal, 30(10), 1702-1722.