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Questions and Answers on Programmatic Performance Marketing (aka Affiliate Marketing)

In some marketing circles, the term "performance marketing" is equated with affiliate marketing and therefore associated with a lot of unnecessary baggage (most of the time unjustified). However, when it is considered a layer of digital marketing, the term "programmatic performance" becomes more useful and informative to describe where it fits into the ecosystem of performance marketing as well as in the global marketing ecosystem.

It takes ingenious MCOs and experienced marketers, comfortable with mathematics (a field often under-valued by universities to train marketers) to move the most painful budgets, short and in the long run. ]

In addition to considerations related to the purchase of media, CMOs must ensure that messaging and positioning are in harmony with their target audience (s) . So, it's not just the media plan and the media marketing plan that influence success (or failure), but also positioning and creative messaging.

Since digital marketing silos (customer side, advertising platform and external side) are not going away anytime soon, affiliate marketing has been extremely resilient – even though the affiliate publisher sometimes gets a credit that he does not deserve.

I recently had a conversation with a veteran digital marketer (and a friend) about the future prospects of affiliate marketing platforms and publishers. Here is a summary of a recent conversation with him. Although I know that it is the opposite of the way most questions and answers are organized, I am the one who responds.

1. Is affiliate marketing really incremental to traditional marketing or is it cannibalistic?

From my experience, the answer is "marginally incremental," when measured in the online ecosystem (affiliates, of course, do not have credit for offline conversions and mobile conversions can also be difficult). Typically, affiliate platforms are measured in their own silos, so that with the help of an example cookie, the display, search and the # Affiliation often all the credit of conversion.

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Although everyone may have been very or somewhat influential, attribution is difficult and often poorly executed. Ugly attribution models are generally not predictive of optimal budget changes in an auction media market where media price-volume ratios are very different (for example, research is inelastic, display it more).

The trick is to understand the added value that affiliate marketing adds at the chain level and the publisher (in the case of large publishers). This sometimes requires completely closing affiliate channels to properly test the marginal value because – in addition to the value captured by click and conversion – affiliate impressions also provide value, and these are rarely taken into account in the attribution models.

Sometimes when a merchant changes affiliate network, he uses this break to do a test.

2. Have you found that customers acquired through affiliate programs are of quality for life (LTV)?

In general, I find that they have a lower LTV, because if a marketer or agency controls media buying (SEM, Social, Display, etc.), one has the opportunity to hone. its messaging to target its highest LTV audiences. In this situation, you can use all the targeting variables available to you, including geography, work days, operating system, and demographics or behavioral data that you can use, while you do not want to use them. do not have this control with the affiliates.

3. Do your customers really consider affiliate as a growing category?

Performance marketing is a growing category if one takes into account marketers' desire for greater responsibility in all media and marketing expenses. And because affiliate marketing is certainly a flavor of performance marketing, the answer is clearly "yes".

4. Would you invest your money in the affiliate class if you were an investor?

The Holy Grail of Marketing Performance – and perhaps that of marketing as a whole – is a central dashboard that does the following:

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  • Merges non-PII data with transactional data on each paid contact point.
  • Covers offline media and acquired media.
  • Used to create A / B or fractional factorial experimental designs.

The opportunity is to help marketers to ensure that they allocate all budgets to maximize sales (and profits) in the short and long term. long-term. The required mathematics strongly favors business marketing. So, from the point of view of a third party, there is an opportunity there, but it is very difficult to get all the data in one place (even with APIs).

In addition, there are some headwinds to what would normally be classified as affiliate marketing, including:

  1. Mobile sales are not as easy to follow as desktop sales but they improve with apps that combine location with retail purchases .
  2. Offline tracking missing yet. It seems to me that the players most likely to break through the payment verification of a sale are the online holding companies because their mobile applications are experiencing the activity of coupled payment card and l & # 39; Where you were for each charge (even if you paid without the phone application).
  3. Once you are able to determine the incremental value, the affiliate commissions will probably have to be adjusted down or the terms put in place allowing the deletion of the affiliated tracking pixel if the site de commerce detects a click of paid proximal media. For example, if a click arrives with a search UTM, the affiliate tracker is disabled.
  4. Unfortunately, if you set stricter conditions and / or if you lose commission and not your competition, there is a risk of leakage from the publisher / affiliate to the competition.

Regarding the growth of the "performance cake," the "native" embedded affiliate links used by product-centric publishers generate additional revenue, so the market is definitely growing.

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How does the above relate to programmatic display based on performance? For the most part, it is important to understand that you are missing a lot more data than you actually have.

Impressions in enclosed gardens (Google and Facebook), impressions within affiliated networks, and impressions in performance-based ad networks (Criteo) are usually not included in your programmatic reports. will be a major company. So, in the meantime, use A / B testing and experiments to understand what works in programmatic and other channels.

The opinions expressed in this article are those of the guest author and not necessarily Marketing Land. The authors of the staff are listed here.

About the author

Kevin Lee is co-founder and executive chairman of Didit, a leading digital marketing and technology company founded in 1996. Didit completed 11 acquisitions to become a one-stop, full-service marketing company in a SEM / SEO boutique. Kevin continues to invent new technology platforms for Didit and his clients. Kevin also co-founded generating more than $ 8 million for non-profit organizations through cause marketing. As a true pioneer in digital marketing, Kevin is giving back to the industry via 4 books, lectures and more than 780 published columns. Kevin holds an MBA from Yale University and lives in Scarsdale with his wife, Dr. Allison Kahner, and two children.