Today, I wanted to chat all about a topic that usually never gets much love in this industry, sometimes because it's perceived as scammy, or because it's not an easy channel to set up in the first place: affiliate marketing.
It's one of the hardest channels to get to a point where it's truly cruising on its own, mostly because it’s very relationship-based and requires a lot of communication to external affiliate partners. However, once it’s humming, it’s revenue you can rely on, no matter what's going on with Facebook CPMs, pixel issues, or iOS tracking issues (read: invest in getting this done right).
Affiliate marketing isn't a new concept by any means, but the internet did help to accelerate the practice. In 1989, a man named William Tobin patented (https://patents.google.com/patent/US6141666) the concept of affiliate marketing. Since then, Amazon, along with a couple of other companies, drove the innovation in affiliate to bring us here today.
For DTC brands, affiliate marketing is great for macro-ROAS balancing, in addition to driving awareness for your brand. When you spend over 50% of your AOV acquiring a single customer, the 10% of revenue affiliate charges help increase your overall ROAS and keep your CFO happy. The funny part is at year-end when the CFO asks why we can't cut all paid media and only run affiliate channels!
From a software perspective, I highly recommend getting set up with Refersion to power your affiliate marketing. One of my close friends, Raj Nijjer, has now become the CMO there and after asking him to put together an offer for my newsletter that's more cost-effective than any other platform, he came through! Click here to check out the special pricing!
There are four different buckets I like to categorize affiliates into, as they all have different ways to get compensated, and sometimes different levels of pay too.
Coupon Sites
Coupon sites are the high-volume, low-quality sites you want to make sure have their own designated code. I'm not talking about the industry tragedy, known as the Honey browser extension, but rather sites like RetailMeNot or Savings dot com. These sites sign up for your affiliate program and begin crowdsourcing coupons from users unless you give them a coupon of your own, which I highly recommend.
While these are the lowest quality sites, they do have incredible SEO and will end up taking credit for a good amount of purchases. Make sure that when you set the commission to these coupon sites, you specifically go into their profiles and keep a lower commission rate. You don't want to be paying a coupon site the same amount of traffic as a high-quality publisher who's finding the traffic for you. People usually get to coupon sites once they already know they're buying, and are about to make the purchase, which is probably because of the advertising you've done yourself.
Normal Affiliate Sites
With "normal affiliates" you can expect to receive good quality customers, traffic, and expect to pay them fairly (10-12%). These range from online marketplaces, to earned media mentions, to "offer" sections of your credit card portal.
You want to make sure you're registered with Skimlinks as a starter. They quietly live inside the CMS of many internet publishers (BuzzFeed, Refinery29, etc.). When they tag your brand, they earn a commission, which also, in turn, makes them more incentivized to write about your products. Another great one to look into is Cartera, owned by Rakuten. They power the offers you see in your customer portal as a Chase credit card customer or an American Express customer. One last one here, with Bitcoin, is Lolli. You can incentivize customers to get cashback in the form of Bitcoin. These platforms place high-quality customers with offers they find to be most interesting, based on their spending habits.
Ambassadors
These are the most fun to work with and ideally come in through your social media team/person. These are creators, influencers, bloggers, vloggers, or "influencers" who have a following interested in what they use, consume, or purchase. Having an ambassador program, living on top of the affiliate platform gives them the ability to earn money back from anything they push.
This works incredibly well for two types of products:
- High AOV products (ideally $150+ per purchase)
- High consumption products
If you want to set up a creative ambassador program, you should have an understanding with your influencers around a content cadence, bonuses, how they can earn higher tiers of commission, etc. Sometimes, depending on the following, this could mean you pay a flat fee, or keep a brand's link in their bio, like this:
Premium Affiliates
These are your high-quality affiliates. They will usually require some kind of flat fee, in addition to a commission, or they'll simply demand a higher commission structure (sometimes 25-40%, instead of 10%). You typically don't find these on marketplaces, but you can reach out directly and get deals set up.
Companies like RewardStyle have created their own ecosystems to manage the monetization of bloggers/creators with high reach. In most cases, they'll still end net-positive for brands, driving online and retail sales, but you won't squeeze in like a coupon site without paying anything. Another example of a strong affiliate placement is with a media company, The Skimm. You are usually given the ability to pay $35,000 OR 12% of revenue, whichever is greater by the end of the campaign (usually 2 weeks from the email send).
While it sounds expensive, if you have the brand awareness, demand, and AOV to support it, you could be getting a steal of a deal!
One Last Idea
One thing I'm surprised more brands don't do is generate affiliate revenue of their own. Let's say you're selling sheets at Brooklinen. Why isn't there a post-purchase email with all of Brooklinen's favorite: mattress, standing desk, lamp, sleep aids, etc.?
It does two very simple things: creates fun content for someone who's just shown intention to better a part of their sleep, and it makes money!
