Marketing & Advertising

Is Affiliate Marketing the Next Big Thing?

Ecommerce trends, the burgeoning creator economy, and marketing tech are invigorating affiliate promotion, boosting the effectiveness of an already powerful digital marketing channel.

Affiliate marketing is not new. It has been around since the earliest days of the commercial internet, as venerable as search engine optimization, digital advertising, and email marketing.

This does not, however, mean that affiliate marketing has stayed the same. It has changed and is changing greatly.

In the United States alone, spending on affiliate marketing has grown by 10% per year for about a decade. According to Statista, affiliate marketing will reach $8.2 billion in 2022, a 20% increase from 2020.

Many factors are driving that growth.

Social Commerce

The term “social commerce” is vague in 2021.

For our purposes, social commerce is a subset of ecommerce. It involves the sharing and promotion of products on various platforms. This sharing employs text, images, and video, including live streams.

Sometimes it is communication between a business and a shopper, QVC or Amazon style. But more often, it is an influencer recommending a product in a post, a recording, or a live video.

Chinese ecommerce companies lead the world in social commerce. Integrating online sales, content, and sharing is now the norm in China. And the trend is breaking out globally.

“WeChat alone drove $250 billion in ecommerce in 2020. It is massive. And for social commerce, many people expect the market to grow at a compound annual rate of 38% for a decade…which means it’s a channel we need to embrace,” said Joris Kroese, CEO of Hatch, a provider of omnichannel commerce tools.

Social commerce often relies on influencers who are paid affiliates. Thus, as social commerce grows, so too does affiliate marketing. Conversely, ecommerce companies interested in social commerce should begin with affiliates.

Creator Economy

Affiliate marketing once had a poor reputation. More than a few affiliates simply stuffed keywords into ugly and spammy landing pages.

These pages might misrepresent a product or promote a disreputable item. Policing these affiliates was burdensome for affiliate marketing managers. For consumers, buying from them could feel like a back-alley drug deal.

Unscrupulous affiliates are similar in concept to black-hat and gray-hat search-engine-optimization practitioners who seemed to be everywhere a decade ago. I wrote several articles disparaging the SEO tactics of the time. Many sought to trick both search engines and humans.

SEO has always been important. But too many early practitioners focused on gaming Google instead of producing good content. That has changed. Now SEO benefits both the website and the searcher.

Affiliate marketing has changed, too.

Many of today’s affiliates are creators — artists, musicians, coaches, chefs, pundits. They produce original content. They build lasting relationships with an audience of fans. They promote only products they believe in it.

If a fitness coach with 50,000 subscribers says she “loves” a particular brand of vegan protein powder, you can bet she likes the product.

Her audience is too important for her to risk. She won’t promote a product she does not use. Thus, the promotion, while paid, is genuine.

The creator economy is growing quickly. Many rising creators are looking for affiliate relationships.

Don’t be surprised if affiliate marketing blasts off in the next few years,  proportional to growth in the creator economy.

Marketing Tech

Marketing software — sometimes called marketing technology or martech — is also improving affiliate marketing.

In the past, affiliate sales for ecommerce were one and done. An affiliate link led to a single purchase. But modern affiliates, especially creators, want deep relationships with fans. Martech is making this possible.

There are three parties in an affiliate transaction: the seller, the affiliate, and the buyer.

Martech tools now allow the affiliate to send post-purchase messages to the buyer via the seller. These messages can help the affiliate reengage the buyer, deepen the association between seller and affiliate, and lead to repeat sales to the buyer.

Martech tools also provide better feedback. An affiliate once knew only when a sale was made and nothing else. Now, an affiliate dashboard can show customer lifetime value, related purchases, and more. This business intelligence makes the affiliate more effective, and, therefore, generates more sales for the sellers.

Armando Roggio
Armando Roggio
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