What is Performance Marketing and How Do I Leverage It For My Business?
If you’re thinking about a partner or affiliate program for your business there is a lot to know.
Performance Marketing is an inclusive term that refers to online marketing programs in which “advertisers” (retailers, merchants or service providers) pay “publishers” (marketing partners or affiliates) when a specific action is completed; such as a sale conversion, lead or click.
Once the conversion action is defined, the advertiser must then perform a technical integration with a third-party service provider that tracks attribution and credits the appropriate source with a commission or flat fee.
This effectively pushes the cost of marketing to post-conversion, and when executed correctly, makes Performance Marketing one of the most cost-effective channels for both new and established advertisers alike.
In the online marketing space, these programs have been traditionally called “affiliate programs”. However, they are now commonly referred to as “partner programs” for several reasons, including advancements that now attribute offline referrals to online actions. This brings many more partnership types under the umbrella.
If you’re thinking about a partner or affiliate program for your business there is a lot to know. Below are five key takeaways for starting down the right path.
Define your conversion metric. Do you sell products with an ecommerce store? Offer professional services? What kind of business you have will determine what action to track. For example, if you’re a retailer selling camping gear, you will most likely want to track the sale action as the conversion metric. If you’re a real estate agent, you could instead track a lead action from a website form submission.
Have the correct expectations. Building a partner or affiliate program on a performance basis is a process, and it takes time. This channel is relationship heavy and requires dedicated and experienced management working day-to-day to onboard, optimize, and retain key partnerships. There is no magic switch to flip on. Be prepared to measure the impact and effectiveness of a program over years, not months.
Know your publisher partnership types. If you’re selling products, it’s important to understand consumer shopping dynamics when configuring a partner marketing campaign. Customer loyalty is the objective, but price drives conversion online. There are dozens of publisher partnership categories, including “coupon” and “loyalty”. Those two publisher categories can drive huge volume, but they generally come in late during the checkout funnel and may not be providing the incremental value of say a blogger or content publisher. This is especially the case if your store does not discount.
Do not auto-approve publishers or allow a program to run on auto-pilot. If the resources aren’t available to proactively manage your partner or affiliate program, best to not launch one. There will be an investment in money and time to get going, so it will defeat the purpose to go through a set-up and launch process that ends up being a stagnant campaign. In addition to constant outreach and onboarding, program managers should be working on a 1:1 partner strategy, updating offers/campaigns, communicating program-wide, etc.
It’s also important to note that programs running on auto-pilot and set to auto-approve publishers may be vulnerable to rogue activity that could undermine objectives and even damage a brand. Don’t rely on the third-party tracking providers to police the activity of all their publishers. Bottom line: be engaged with your program.
Offer incentives for key partners and/or prospects. Publisher relationships can be fluid, and sometimes hard to establish and maintain. They are under no contractual obligation to test out a partnership with you, or to continue to send you traffic. If they do come on board and see a conversion rate that is unfavorable, they will move on.
Stand out from your competitors and consider paying a higher baseline commission or initiating a key partnership with a sponsored post. This will yield a strong ROI with select partners and/or prospects. Sponsoring a post for say $500 to kick off a valuable partnership is a small price to pay for months or years of consistent new customer referrals.
Nothing to sugar coat here. Setting up and launching an affiliate or partner program can be intimidating, and there are many moving parts to consider. Know the fundamental technology and components, and be sure to understand what types of partnerships to embrace for your business. Most importantly, be engaged on a day-to-day basis with the program and your key partners.
ThoughtLab can help! Reach out if you would like assistance with setting-up, or the long-term management of your affiliate or partner program.