Myth-busting the affiliate marketing channel

Why is the affiliate channel still chronically undervalued, despite it's £13:1 ROI? Here, David Lloyd (chief customer officer at Awin) tackles misunderstandings surrounding affiliate head on, uncovering the true potential of this performance marketing channel.

Advertising is an act of myth-making. As marketers, we work hard to construct stories about brands that resonate with our consumers and capture their imagination.

But myths have a damaging effect when they lead to misunderstanding. I’ve worked across numerous marketing disciplines in my career, and I’ve seen first-hand how misunderstanding has disproportionately hindered the affiliate channel.

And at the same time, I’ve seen affiliate marketing have a hugely positive impact on businesses of all sizes, from micro SMEs to the largest brands in the world. According to Forrester research commissioned by Awin, three-quarters of senior marketers plan to increase their spend in affiliate this year as a result.

This is an industry practically as old as the internet itself; brands have used affiliates to promote their products and services online for more than two decades. And it’s been a hugely effective source of advertising. Despite this, the channel languishes behind others in terms of perception, understanding and often share of wallet. In part, that’s because of a series of myths that surround it.

So, what are these myths? I’ll tackle these head on with the help of some of the affiliate-savvy brand, agency and publisher attendees at our recent ThinkTank conference in London.

“Affiliate marketing isn’t effective compared to Big Tech”

Forrester research conducted earlier this year assessed affiliate effectiveness and found it had a 92% rating among senior marketers. Unsurprising, given the £13:1 ROI Awin’s own customers see on average.

Yet, the channel is still chronically undervalued when it comes to budget allocation. Just 7% rank affiliate as a top budget priority. We still see Big Tech dominating digital ad spend; around two-thirds goes to Google, Meta and Amazon. But with diminishing returns and business costs spiralling, the affiliate space can offer more reliable gains.

“Running an affiliate program is too complicated”

Let’s get clear on the component parts of an affiliate program, because they’re simple.

Brand X works with an affiliate partner (also known as a ‘publisher’) to reach new customers, then rewards that publisher when they drive a sale (or other desired outcome).

“We’ve heard people say there are just too many brands, too many publishers and too many platforms,” said Nicola Bufton, head of sales & marketing at the agency Syyco. “The fact there are so many partners working in so many diverse ways really leads to a lot of innovation and creativity.”

And for those trickier, more time-consuming elements of running a program? That’s where tech partners can lend a hand. They offer cutting-edge ecommerce solutions that can easily be deployed by brands and retailers to improve the customer experience on their own site, without the need for complex, protracted integrations. As Adrian Vella, cofounder of Tyviso shared, “It couldn’t be easier. You can activate our technology in minutes via Awin. This should be mainstream knowledge.”

“It’s a slightly dodgy, opaque channel”

“It’s not,” says Lookfantastic's Harry Avent. “It’s changed a lot, and it’s definitely something that should be part of any marketing team’s plan moving forward.”

Affiliate’s reputation is arguably still dogged by a bygone era where a lack of scrutiny and formal regulation meant the inevitable use of black hat tactics by a minority of unscrupulous partners.

But over the past decade in particular the industry has professionalized to an enormous extent with many affiliate businesses now as big, and sometimes bigger, than the advertisers they promote.

“It’s an unfashionable ad channel”

Nick Rouquette, director of partnerships at SaleCycle calls out the perception of affiliate as being decidedly unfashionable compared to other channels. “It’s been around for many years; it's generating value for advertisers and it’s not going to go anywhere.”

This is a channel that has adapted and evolved to the changing trends of digital marketing for such a long time. Take influencer marketing as an example. A growing number of brands are realizing that influencer marketing can be effectively run via their affiliate programs, bringing a welcome new layer of performance to their partnerships with individual influencers.

“It’s just a last-click solution”

Affiliate programs can be run to support every part of the customer lifecycle, from pre purchase, through to post purchase. Influencers are a well-established partner in the pre-purchase phase, for instance. At Awin they generated more than £350m in sales revenue for brands last year alone.

Then at post-purchase there’s brand partnerships; where one advertiser promotes another post-checkout. This initiative adds significant value to the advertiser, while supporting the consumer. More than £20m in additional revenue was generated via this activity on Awin in 2023.

Assuming that its value can only be found in motivating that last click misunderstands what affiliate is at its core; a channel that champions innovation and connection.

Ron Schlentrich from the commerce advertising platform, shopping24 commerce network, spoke to the perception of affiliate as being a purely performance-based, data-dominated channel. True enough; like any good marketing channel today, data is a vital component. But as he goes onto explain, “I think it’s actually much more about forging genuine connections.”

Connections between advertisers, publishers and most important of all, consumers. The beauty of the model is the value exchange at its heart. Unlike most other forms of advertising which 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 all stages of the customer life cycle, it helps you along your way to discovering and buying the products you want.

Consider a travel comparison site that provides you with the best advice on your next holiday destination. Or a cookery vlogger you love to follow who recommends a certain frying pan or kitchen knife you end up using every day. Affiliate connects these useful sources of information with the most relevant brands and retailers so that you have the help and expert guidance you need to find the things you want.

With an abundance of different partners to choose from covering a wide range of touchpoints and marketing values, whatever your goal, there’s an affiliate for it.

What marketing problem are you trying to solve? We’d like to hear about it. Let us know.