Why is affiliate marketing still undervalued despite its 13:1 ROI? Here, David Lloyd (Chief Client Officer at Awin) tackles the misconceptions surrounding affiliate marketing and reveals the true potential of this performance marketing channel.
Advertising is an act of myth-making. As marketers, we work hard to build brand stories that resonate with our consumers and capture their imagination.
But myths have a detrimental effect when they lead to misunderstandings. I have worked in many marketing disciplines over the course of my career and have seen first-hand how misunderstandings have disproportionately hampered the affiliate channel.
At the same time, I’ve seen affiliate marketing have a hugely positive impact on businesses of all sizes, from micro-SMBs to the world’s largest brands. According to a Forrester study commissioned by Awin, three-quarters of senior marketers plan to increase their affiliate spend this year.
It’s an industry that’s almost as old as the internet itself: brands have been using affiliates to promote their products and services online for over two decades. And it’s a hugely effective source of advertising. Despite this, the channel lags behind others in terms of perception, understanding, and often wallet share. This is partly due to a series of myths surrounding it.
So what are these myths? I’m going to tackle them head on with the help of some of the expert affiliate attendees from brands, agencies and publishers at our recent ThinkTank conference in London.
“Affiliate Marketing Is Not Effective Compared to Big Tech”
A study by Forrester earlier this year assessed affiliate effectiveness and found that it scored 92% among senior marketers. This is not surprising, given the 13:1 ROI that Awin clients see on average.
Yet the affiliate sector remains largely undervalued in terms of budget allocation. Only 7% of respondents ranked affiliate as a top budget priority. Big tech companies still dominate digital ad spend, with about two-thirds going to Google, Meta, and Amazon. But with yields declining and business costs rising, the affiliate space may offer more reliable earnings.
“Managing an affiliate program is too complicated”
Let’s start by clarifying the components of an affiliate program, because they are simple.
Brand X works with an affiliate partner (also called a “publisher”) to reach new customers, then rewards that publisher when they generate a sale (or other desired outcome).
“We heard there were too many brands, too many publishers and too many platforms,” said Nicola Bufton, head of sales and marketing at agency Syyco. “The fact that there are so many partners working in such diverse ways really drives a lot of innovation and creativity.”
And what about the more complex and time-consuming aspects of managing a program? That’s where technology partners can help. They offer cutting-edge e-commerce solutions that can be easily deployed by brands and retailers to enhance the customer experience on their own site, without the need for complex and lengthy integrations. As Adrian Vella, co-founder of Tyviso, said, “It couldn’t be simpler. You can activate our technology in minutes through Awin. It should be common knowledge.”
“It’s a somewhat dubious and opaque channel”
“That’s not the case,” says Lookfantastic’s Harry Avent. “That’s changed a lot and it’s definitely something that should be part of any marketing team’s plan going forward.”
Affiliates’ reputation is arguably still tainted by a bygone era where lack of oversight and formal regulation meant the inevitable use of black hat tactics by a minority of unscrupulous partners.
But over the last decade in particular, the industry has professionalized to a huge extent, with many affiliate businesses now as big, and sometimes bigger, than the advertisers they promote.
“It’s an old-fashioned advertising channel”
Nick Rouquette, director of partnerships at SaleCycle, believes that affiliate marketing is seen as being distinctly outdated compared to other channels. “It’s been around for many years, it’s generating value for advertisers and it’s not going away anytime soon.”
It’s a channel that has adapted and evolved with the changing trends in digital marketing for so long. Take influencer marketing, for example. A growing number of brands are realizing that influencer marketing can be managed effectively through their affiliate programs, bringing a welcome new level of performance to their partnerships with individual influencers.
“It’s just a last resort solution”
Affiliate programs can be set up to support every stage of the customer lifecycle, from pre-purchase to post-purchase. Influencers, for example, are well-established partners in the pre-purchase phase. At Awin, they generated over £350 million in revenue for brands last year alone.
Then, after purchase, there are brand partnerships, where one advertiser promotes another after checkout. This initiative adds significant value to the advertiser, while supporting the consumer. Over £20m of additional revenue was generated through this activity on Awin in 2023.
To assume that its value lies only in the motivation for the last click is to misunderstand what affiliation is at its core: a channel that champions innovation and connection.
Ron Schlentrich of commerce advertising platform Shopping24 Commerce Network spoke about the perception of affiliate marketing as a purely performance-based, data-driven channel. That’s true; like any good marketing channel today, data is a critical component. But as he explains further, “I think it’s really more about building authentic connections.”
The connections between advertisers, publishers, and most importantly, consumers. The beauty of the model is the value exchange at its core. Unlike most other forms of advertising that tend to interrupt your experience (think TV or podcast ads, banner ads, pre- and mid-roll video ads, etc.), affiliate tends to be integrated into your experience. At every stage of the customer lifecycle, it helps you discover and purchase the products you want.
Think of a travel comparison site that gives you the best advice on your next vacation destination. Or a food vlogger you love following who recommends a frying pan or kitchen knife that you end up using every day. Affiliate connects these helpful sources of information with the most relevant brands and retailers so you have the help and expert advice you need to find what you want.
With a multitude of different partners to choose from, covering a wide range of marketing touchpoints and values, whatever your goal, there is an affiliate for it.
What marketing problem are you trying to solve? We’d love to hear more. Let us know.
