Consumers are smarter about data protection and their privacy online, and privacy legislation restricting the passing of any personally-identifiable customer data to third parties is gaining steam. Jordan Glazier, CEO, Wildfire Systems, shares why marketers must now consider customer privacy and responsible data management as part of an overall customer experience strategy.
With the impending “death of the cookie,†merchants must find effective methods to expand and scale their marketing programs. Third-party cookies, the use of PII and “lookalike†strategies with ad networks, and social network advertising with demographic and psychographic data have traditionally been among the most effective ways that marketers leverage the power of technology to acquire new customers. But consumer privacy concerns are mounting. Legislation that restricts the use of third-party customer data continues to gain steam.Â
On top of these factors, CPCs and CPMs in social media and ad networks are risingOpens a new window (while targeting capabilities are declining.) Tinuiti, a performance marketing agency, recently reported that pricing in these channels is the highest it’s ever beenOpens a new window , even though “productivity†for advertisers is lower.
Factoring in Privacy
With all of these considerations in mind, marketers need to pivot their growth strategies and factor in privacy when planning marketing programs.Â
One strategy marketers are increasingly shifting their attention to is affiliate marketing. Affiliate programs have long been regarded as one of the most cost-effective and high-return marketing channels available to retailers. In most cases, affiliate marketing is paid on a performance basis for completed transactions (aka cost per acquisition or CPA). The CPA-based affiliate marketing structure is lower risk and more efficient as it shifts advertisers’ budgets further down the purchase funnel.Â
Rather than CPC or CPM-based advertising in which advertisers pay to get shoppers to the front door, CPA-based programs enable brands to leverage marketing budgets with more certainty and lower risk, much deeper in the conversion funnel (as they only pay for actual, completed transactions.)Â
See More: Are Data Clean Rooms the Future of CPG AdvertisingOpens a new window
Raj Nijjer, CMO at Refersion, an affiliate and influencer marketing network, reportedOpens a new window that this holiday shopping season, affiliate sales in the network increased by 39%, and that affiliate network spend typically returns $6.50 in revenue for every $1 spent, compared to paid ads which produce $2 in revenue for every $1 in ad costs.
Successful Affiliate Marketing Growth Strategies
One approach is to leverage affiliate marketing by working with offer distribution channels that already have a large audience. Specifically, this means collaborating with the networks and platforms to further amplify the company’s offerings, such as coupon and loyalty rewards programs. Affiliate networks such as Rakuten, with 150,000 worldwide affiliate publishers, and CJ.com, with over 100,000 publishers, offer tremendous opportunities for growing a program quickly with various large, relevant publishers. Partnering with these types of publishers can result in faster program scale, better conversion rates, and larger basket sizes.Â
Rewards, loyalty and coupon platforms are becoming increasingly essential in affiliate programs’ publisher mix. Because they already have huge audiences of their own, they offer tremendous potential as a one-to-many technology platform with significant reach, which helps drive incrementality for marketers.Â
With the rise in consumer popularity of cashback and rewards, growing a program’s reach and sales by incentivizing customers with rewards and discounts through these platforms is an effective strategy. Here’s why: when a potential customer activates incentives or cashback rewards at the start of a shopping journey, that activation acts as a magnet, bringing the customer through the shopping cart and ultimately to a converted sale. The psychology of “getting a bargain†comes into play in these cases.
While it may seem counterintuitive to put the marketing budget to work against customers who are already in the purchase funnel, the benefits are clear from the data, particularly when it comes to cashback, coupon and loyalty programs which are built upon the affiliate infrastructure and have a substantial positive impact on transaction conversion rates and average order value.
According to our own data, there is a clear connection between activating a cashback reward or coupon and conversion rate. As a baseline, the global average conversion rate, measured as the percentage of ecommerce website visits that result in a purchase, is anywhere from 1.7 to 2.4%Opens a new window . But when the consumer activates cashback benefits or coupons during the course of their online shopping trip, the conversion rates increase tenfold to 17.4%. Â
Cashback and coupon offerings also substantially impact average order value (AOV). Typically, AOV is $65 when consumers purchase after visiting an online retailer via social media sites such as Pinterest and Facebook. But our data shows that AOV increases to nearly $130 when customers activate cashback offerings or coupons, which are enabled via affiliate marketing platforms.
See More: The 4 Most Common Questions Advertisers Have About Affiliate MarketingOpens a new window
In addition, affiliate marketing is a privacy-friendly approach that doesn’t rely on acquiring (or selling) user data or disclosing any personally-identifying information to third parties, making these programs ideal for today’s privacy-aware consumer. Affiliate programs rely on first-party data, in which the publisher or affiliate has their own audience/users, and marketers utilize affiliate programs to access those users. Affiliate marketing simply passes anonymous transaction data such as order number and cart value for tracking and attribution.
Privacy-forward Marketing
As consumers get more savvy about how their data is used – and to keep in compliance with new privacy legislation and rules – marketers need to reconsider how they use privacy-compliant marketing methods such as affiliate marketing and cashback rewards programs. To grow smarter in today’s privacy-centric age, forward-thinking marketing managers must find suitable affiliate publishers and platforms to help them distribute their offers at scale, including reward and coupon publishers.
How are you tailoring your marketing strategies to be more privacy-centric? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window . We’d love to know!