Insight/ Tools

A CMO’s Guide To Affiliate Marketing


by Peter Klein
SVP Of Media Services

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Long dismissed as a niche form of online marketing, performance marketing has become a multibillion-dollar force in the digital-media ecosystem. For CMOs, performance marketing, of which affiliate marketing comprises the largest share of revenue growth, is no longer a marketing strategy that can be ignored or delegated to junior-level marketing managers. It is now a driving force behind many brands’ online growth and customer-acquisition efforts. As such, it requires CMOs’ devout attention to properly use and scale in order to realize long-term customer-acquisition value.

The rise of affiliate marketing, and its growing influence with digital marketers, is no accident.

Affiliate marketing has existed for more than a decade. It helps advertisers achieve their ROI goals by using publishers (affiliates) to conduct their marketing efforts via multiple media channels on a pay-for-performance basis.

Affiliate marketing can be used for any vertical, brand, company, language, time frame, or demographic. Importantly, it is a useful testing ground for CMOs who desire online marketing channel options, instant gratification, speed, and a clear measurement of return on advertising spend (ROAS) or return on marketing (ROM) investment. In fact, many affiliate marketers are experts in industry metrics and traffic sources, and can help CMOs develop campaigns based on long-term brand and customer-acquisition. This is critical as the industry evolves into a larger mobile-consumer target.

But affiliate marketing’s benefits extend beyond lead generation. Affiliate marketing professionals and networks are at the forefront of innovative online marketing campaigns. The rise of social networking sites, such as Facebook, LinkedIn, and Pandora, were largely built on affiliate marketing ad spend revenues.

Every brand in the digital age needs a strong lead-generation component to its online marketing strategy. Affiliate marketing is CMOs’ answer to that need.

Benefits Of Affiliate Marketing
Affiliate marketing is one of the smartest online advertising investments that CMOs can make for their brands. Here are five reasons why that is the case:

1. Twenty-one billion reasons. Performance marketing drove $21 billion in online advertising revenues in 2011, according to the IAB. This isn’t a niche segment of the online marketing industry. Affiliate marketing is a mature and profitable industry in and of itself and one that CMOs should invest in as part of their integrated marketing campaigns.

2. Small investment leads to big results.It takes a very low investment to test into various media channels, at a recommended spend of $10,000 per three media channels.

3. Multiple channel reach. Affiliate marketing includes all types of online marketing, allowing a CMO to launch a test campaign(s) in up to three different channels, such as email, search, and social media.

4. Speed to market. Once an affiliate marketing campaign launches, it often takes as little as one to two days to fulfill the budget and measure results. This is unparalleled in any other marketing vehicle.

5. Measurable results. CMOs pay their affiliate networks only when an action occurs, be it a sale or a lead. They also receive critical analytics from users’ activities across their Web sites. There are no other channels in marketing that have such a specific and actionable ROI focus, making affiliate marketing easy to evaluate.

There are several more reasons to engage in affiliate marketing, but CMOs need to start with a basic understanding of what to look for and how to manage their affiliate marketing efforts before engaging an affiliate network.

The future of digital marketing will include a mix of performance-based lead-generation campaigns, social media engagement, search, and online advertising. Affiliate marketing is the right answer to CMOs’ evolving digital marketing and customer-acquisition challenges.

About Peter Klein

Peter Klein is senior vice president of media services at MediaWhiz, an integrated digital media agency that is part of the Hyper Marketing Inc. network. The benefits of affiliate marketing are more thoroughly explained in a new insight paper from MediaWhiz, “The CMO’s Guide to Affiliate Marketing.” It outlines critical steps CMOs should take to begin working with an affiliate; defines core terminology; and information on why it is critical for CMOs to invest some of their marketing spend in the affiliate marketing channel.