Why is the affiliate channel so chronically undervalued, despite an ROI of £13:1? Here, David Lloyd, Chief Customer Officer at Awin, tackles the myths surrounding affiliates head-on and reveals the true potential of this performance marketing channel.
Advertising is myth-making. As marketers, we work hard to construct stories about our brands that resonate with consumers and capture their imaginations.
But when misunderstood, myths can have a detrimental effect. I’ve worked in many different areas of marketing throughout my career and have seen misconceptions become a disproportionate obstacle to the affiliate channel.
At the same time, I've seen affiliate marketing have an enormous, positive impact on businesses of all sizes, from small businesses to the largest brands in the world: According to a Forrester study commissioned by Awin, three-quarters of senior marketers plan to increase their affiliate spending this year as a result.
It's an industry as old as the internet itself. Brands have been using affiliate marketing to promote their products and services online for over 20 years, and it's been an extremely effective advertising source. Despite this, the channel has lagged behind other channels in terms of awareness, understanding, and often wallet share. Part of the reason for this is a series of myths that surround it.
So what are these myths? We tackle them head on with the help of affiliate-savvy brands, agencies, and publishers who attended our recent ThinkTank conference in London.
“Affiliate marketing is not as effective as big tech”
A Forrester study carried out earlier this year assessed affiliate effectiveness and found it to have a 92% rating among senior marketers – no surprise when you consider the average ROI Awin customers get is £13:1.
Yet when it comes to budget allocation, the channel remains chronically undervalued, with only 7% citing affiliate as their top budget priority. Digital ad spending is still dominated by big tech companies, with roughly two-thirds going to Google, Meta and Amazon. But with revenues declining and costs of doing business soaring, the affiliate sector could offer more solid returns.
“Running an affiliate program is too complicated”
The components of an affiliate program are simple, so let’s be clear.
Brand X works with affiliate partners (also known as “publishers”) to reach new customers and compensates the publisher when they drive a sale (or other desired outcome).
“We've heard people say there are too many brands, too many publishers, too many platforms,” says Nicola Bufton, head of sales and marketing at ad agency Syyco. “The fact that so many partners are working together in so many different ways leads to a lot of innovation and creativity.”
For the more complex and time-consuming elements of running a program, a technology partner can help. They provide cutting-edge e-commerce solutions that brands and retailers can easily deploy to improve the customer experience on their sites, without the need for complex and time-consuming integrations. “It couldn't be easier,” says Adrian Vella, co-founder of Tyviso. “You can enable our technology via Awin in minutes. It should become common knowledge.”
“It's a bit of a dodgy, opaque channel.”
“Not really,” says Harry Avent of Lookfantastic. “Things have changed dramatically, and it should definitely be part of the plan for any marketing team going forward.”
It can be said that affiliates' reputation is still affected by a bygone era, when the lack of oversight and formal regulation meant that a few unscrupulous partners were forced to use black hat tactics.
However, especially over the past decade, the industry has professionalised significantly, with many affiliate businesses now as large or larger than the advertisers they promote.
“It's an outdated advertising channel.”
Nick Roquette, director of partnerships at SaleCycle, points out the perception that affiliates are decidedly outdated compared to other channels: “Affiliates have been around for a long time, they create value for advertisers, and they're not going away anytime soon.”
It's a channel that has adapted and evolved over the years with changing digital marketing trends. Take influencer marketing, for example. More and more brands are realizing that influencer marketing can be effectively executed through affiliate programs, bringing a new layer of performance to partnerships with individual influencers.
“It's just a last-click solution.”
Affiliate programs can be implemented to support any part of the customer lifecycle, from pre-purchase to post-purchase. For example, influencers are solid partners in the pre-purchase stage, with Awin generating over £350 million in sales revenue for brands last year alone.
And then there's post-purchase, brand partnerships, where one advertiser promotes another after checkout. This initiative creates huge value for advertisers while supporting consumers. In 2023, more than £20 million in additional revenue was generated through this activity at Awin.
To assume that the only value of affiliates is in driving the last click is to misunderstand what affiliate marketing is all about: a channel that drives innovation and connection.
Ron Schlendrich of commerce advertising platform Shopping24 Commerce Network spoke about the perception that affiliate is purely a performance-based, data-centric channel. Sure, like any good marketing channel today, data is a key component. But, he goes on to explain, “I actually think it's much more about building authentic connections.”
Connecting with advertisers, publishers, and most importantly, consumers. The beauty of this model is the value exchange at its core. Unlike most other forms of advertising (TV and podcast ads, banner ads, pre-roll and mid-roll video ads, etc.) that tend to interrupt the experience, affiliates tend to be integrated into the experience. At every stage of the customer lifecycle, affiliates help them on their journey to discovering and purchasing the product they want.
Think of a travel comparison site that gives you the best advice on where to go on your next holiday. Or maybe your favourite food blogger that you follow recommends the frying pans and knives you end up using every day. Affiliates connect these helpful sources with the most relevant brands and retailers, giving you the support and expert guidance you need to find what you want.
With a wide range of partners to choose from, covering a wide range of touchpoints and marketing value, whatever your goals are, there's an affiliate to fit them.
What marketing problem are you trying to solve? We'd love to hear from you!
