Lee Brignell-Cash, Co-Founder and COO at FusePump examines how technology innovation can make marketing products online easier and more profitable for merchants and affiliates.
Affiliate marketing is seeing increasing levels of competition, investment and technology evolution. As the channel grows and diversifies, merchants and affiliates marketing products online are seeking the most efficient ways to drive traffic, conversion rates and profitability.
The affiliate, or performance marketing channel, has undergone immense change since its inception in the mid-1990s. It has branched into new areas including comparison and group buying sites as well as making footsteps into social media and mobile. It has become more professional with affiliate networks and super affiliates investing in technology platforms and it has diversified with the emergence of micro affiliates catering for the longer tail specialised search terms of the web.
This proliferation of streams within the affiliate channel makes it much harder for merchants to work successfully across them all, which is why development of rich product level data feeds and innovative tools for their creation, distribution and management are so important. High-quality data feeds allow merchants to create a single platform of distribution under which brand consistency and product visibility is maximised, while affiliates can more easily tailor rich product information (i.e. promotional text) into higher-converting consumer-facing content.
Consumer engagement drives channel diversity
The internet has been the catalyst for dramatic change in consumer shopping habits. The latest figures from the IMRG Capgemini e-Retail Sales Index revealed shoppers in the UK spent a total of £5.2 billion online in April 2010, which is 19% more than in April 2009 and equivalent to £84 per person. This growth is impressive in contrast to a recent report by the Ernst & Young ITEM Club, which predicts the high-street will remain stagnant for the next decade. The market watcher sees consumer spending growing by just 0.6% this year and 1.3% in 2012, before rising to 2.2% in 2013.
For marketers, it is the change in the way consumers are searching for and engaging with brands and products online that is driving diversity throughout the affiliate channel – the birth of group buying and comparison shopping engines being two examples of this change.
The fact that the internet has become a primary research tool for many was confirmed in a 2010 survey of UK consumers by Econsultancy, which found that 34% had recently made a purchase (either online or offline) that required research, with 61% using search engines, 47% using information websites and 45% using online retail websites such as Amazon. The survey also confirmed that consumers were increasingly engaging with vouchers and discount offers, with 60% using these to make a purchase online.
These findings point to a longer-term shift towards online discounting, meaning marketers will need to ensure their products appear on sites that offer discounts and value for money.
Recommendation sites are also important for merchants, with a recent survey by Havas Media Social and Lightspeed Research finding that 53% of consumers were more likely to look up a brand if a friend had recommended it.
The boom in user-generated content and the power of recommendations has led to the emergence of micro-affiliates. This term describes the sites that form the web’s ‘long-tail’ of niche search product categories. Historically, the micro-affiliate stream was perceived as uneconomical in terms of the administrative burden in managing a huge number of tiny commissions. The tide is turning though as merchants begin to appreciate their ‘collective’ influence in driving click-through activity.
Indeed, merchants now recognise long-tail search terms as a huge opportunity to drive traffic back to their sites, generate buzz and spread messages virally. For example, an affiliate focused on long-tail search terms – e.g. ‘digital camera’ + ‘brand’ + ‘colour’ + ‘key features’ – will most likely see lower traffic volumes but a higher rate of conversion, whereas those bidding on generic search terms – e.g. ‘digital cameras’ – will drive higher traffic volumes but have a lower rate of conversion.
Affiliate opportunities
For affiliates, the change in consumers’ online behaviour means they have more ways in which to drive and monetise traffic. Organic or ‘natural search’ traffic via SEO remains one of their preferred methods, while Pay per click (PPC) is also popular.
Other widely-adopted models include loyalty and reward schemes, email marketing (affiliates that build their own data lists to target a merchant’s potential customers with newsletters or dedicated email campaigns), co-registration, voucher-code and group-buying affiliates. Notable examples include Nectar (loyalty and reward schemes), Groupon, Livingsocial and Dealster.
Each affiliate stream results in a different quality and quantity of leads, which impacts on the incoming revenue they can generate.
What remains constant however is the affiliate’s aim to drive performance by bringing merchants closer to their visitors, and ensure the incremental revenue generated as a result is greater than the amount invested initially to build and promote the site. Based on this premise, selecting the merchant to partner with becomes a question of scale, efficiency and lowest cost for the affiliate.
The product feed challenge
With more e-commerce sites out there than ever before, it is vital a product can be found easily and that the affiliate is able to give the consumer the information they want in one simple, clean hit. To achieve this, a merchant can build a product data feed for a specific affiliate marketing application, comprising product information such as the promotional text, pricing and availability. Applying this product feed across multiple channels and potentially hundreds of affiliates increases complexity by an order of magnitude.
In the past, merchants have struggled to ensure pricing and availability information included within the feed accurately reflects their inventory on a daily basis. The data feed also becomes unwieldy if it includes too many combinations of different products. At the same time, affiliates need product level information supplied and structured in different ways. All too often, it is left to the affiliate to extract product information in the format they need to convert it into consumer-facing content.
Inaccurate product information results in a poor consumer experience and damage to the merchant’s brand. It can also have legal implications if the consumer’s complaint is brought to the attention of a trade or regulatory body. Moreover, affiliates don’t want to have to wade through huge volumes of product information. This is especially true for those specialising in the long tail, where many sites are managed on a part-time basis.
Data feed technology has therefore evolved, with advanced data extraction and feed creation tools being developed to enable merchants and affiliates to use product level data across a wide range of applications, drive conversion rates and revenue.
Getting tooled up – the power of the data feed
By harvesting (among many other elements) pricing, availability and product attributes directly from the merchant’s website, it is possible to ensure that the extracted data feed is accurate and includes comprehensive product data. This enables a merchant to deliver to its affiliates all the elements their online audience may, in turn, be engaged with. Also, because there is no requirement for technical resource from the merchant, feeds can be generated and deployed quickly and at low cost extracting the ‘front end’ product related HTML code from the website, with no requirement for any ‘back end’ data.
At the same time, affiliates need feed creation and management tools to quickly and accurately convert information carried within a merchant’s product feed into consumer-facing content. They also require controls for ensuring consistency in ad/brand messaging, as well as filtering out and presenting special offers or engaging content relevant to their target audience.
Creating interactive and engaging advertising content is just as critical in the conversion of the online consumer. Ad and widget creation tools, for example, can allow affiliates to create dynamic advertising solutions that go beyond the simple ‘banner advertising’ concept and enable consumers to engage and select products within the banner. Facebook Commerce (f-commerce) and social media widgets allow the merchant to soften their brand message and engage customers with interesting, fun and potentially viral media.
Clear and open channels of communication are just as important in building the relationship between the merchant and the affiliate. Many affiliates feel they have limited or zero means of direct communication with their merchant partners. The provision of an interactive portal (an ‘affiliate hub’) by the merchant not only provides easy access to the types of affiliate tools discussed but improves communication and knowledge. This makes it much easier and more attractive for the affiliate to work with the merchant, eliminating the time it takes to wade through product information, minimising the risk of inaccuracies and increasing conversion rates by making consumer-facing content easier to distribute.
Delivering mutual benefit
Affiliate marketing has been described as a microcosm of the entire digital marketing mix. The complex nature of online channel marketing can certainly bamboozle all but the most tech-savvy. There needs to be investment of time and resource within the channel to make it work over the long term from both merchants and affiliates.
Product data feeds that are accurate, well structured and rich in information simplify the affiliate proposition by making the distribution of the feed much easier. When feeds are combined with ‘easy to use’ deployment tools that enable the customisation of feeds and the production of dynamic advertising units, they provide a platform for powering the best online product marketing performance.
Once an affiliate starts to generate revenue from the merchant, they can invest further in the functionality of their site – thus delivering mutual benefit. By making content more engaging and by deep-linking searches to the exact product pages, high-quality data feeds ensure that consumers are able to find what they are searching for and convert better too. Interactive, dynamic advertising content that uses product feeds, adds further functionality that enables selected goods to be placed directly into online shopping baskets. After all, a wasted click is wasted potential revenue for both the affiliate and the merchant!
By Lee Brignell-Cash
Co-Founder and COO
FusePump
www.fusepump.com