Introduction

This is Driving the Next Wave of Growth in Affiliate Marketing: Today’s affiliate industry is increasing, but it’s not simply from the overall increase in consumers shifting their buying habits to e-commerce.

Here affiliate marketing has long been a staple in most online retailers’ marketing mix, and it’s estimated that affiliate marketing currently accounts for 16% of all online purchases in the U.S. and Canada. Each year, it grows about another 10%, according to Statista, and is expected to reach $8.2 billion in 2022.

Now, devotion and cashback rewards programs built upon the existing “infrastructure” of the affiliate industry are spurring new growth in the affiliate channel.

How does affiliate marketing lay the basis for cashback and loyalty rewards?

Popular the affiliate-marketing advertising model, online retailers pay fees in the form of commissions, most often as a fraction of sales, for referrals from “publisher” websites. It is also commonly known as revenue sharing or “rev share.”

  • Producers come in many shapes and sizes, including content sites on a specific topic, deal-finder sites, blogs in niche verticals, social-media influencers and more.
  • These producers promote links to retailer sites in their content in the hopes of driving their audience to those retailers and earning sales commissions from the traffic they drive.
  • Affiliate-marketing networks such as CJ, Influence, ShareASale, and others provide retailers with technology platforms that track publishers’ referrals to attribute the purchases that result from those referrals to the appropriate publisher and convey rev-share payments from merchants to publishers.
  • As a result, affiliate networks serve as marketplaces connecting publishers with online retailers, enabling them to create marketing relationships with each other.
  • Publishers join the network to access online retailers willing to pay them for sales driven by their audience. Online retailers join the web to acquire customers and drive incremental sales cost-effectively.

How do cashback and loyalty plans run on affiliate networks?

How do cashback and loyalty plans run on affiliate networks_

  • The current affiliate-network tracking platforms provide incredibly efficient infrastructure to power rewards and loyalty programs.
  • Rewards platform and solutions providers now participate in affiliate programs with rev-share commissions paid on sales by online retailers.
  • This is Driving the Next Wave of Growth in Affiliate Marketing, Nonetheless, unlike traditional affiliate publishers that keep the commissions.
  • Rewards and loyalty programs offer part or all of the commissions earned back to consumers (e.g. their audience) in the form of shopping rewards, such as cashback.
  • These kinds of cashback rewards programs, powered by the existing affiliate infrastructure, have exploded in popularity in the last few years.
  • These plans include PayPal’s Honey, Capital One Shopping, Microsoft Rewards, and Acorns Earn, among others.

Why must brands consider adding cashback and rewards programs to their affiliate-marketing channel?

The affiliate-powered coupon and rewards programs benefit rewards providers and consumers in two ways:

  • The rewards program providers see stronger brand loyalty, better customer retention, lower user acquisition cost and increased revenue.
  • Online retailers also profit directly in several ways.
  • Cumulative conversion rate and reducing shopping cart desertion:

The activating cashback loots during an online purchase increases the likelihood of the customer completing that purchase. Once a shopper activates a cashback incentive at the start of a shopping journey, it acts as a magnet, drawing the customer from the first click to a converted sale.

Internationally, the average e-commerce conversion rate is 3.29% (the per cent of e-commerce website visitors that complete a purchase). Conversely, according to data from Wildfire Systems, when consumers activate cashback rewards during their online shopping trip, over 15% of them complete the transaction that’s a 6-10 times increase.

Boosting average order value:

The characteristic order value for retailers in the Wildfire merchant network was historically in the $60 to $70 range when consumers purchased after visiting the retailers’ site via social media platforms such as Pinterest and Facebook.

  • But, in Wildfire’s experience, the average order value climbs to $130 when customers activate cashback during an online shopping experience. So, again, the psychology of “getting a bargain” is at play here.
  • Given data from CJ, a leading affiliate network, publishers in the loyalty and rewards vertical drive substantially larger transaction size.
  • With a 25% higher average order value than other publishers in the CJ network based upon the past two years of data.

Improving return on ad devote (ROAS) by shifting budgets:

Here the price of cost-per-click (CPC) and cost-per-1000-impressions (CPM) advertising continues to rise.

  • As a result, valuing in these channels is at an all-time high, according to Tinuiti, a performance marketing agency.
  • In addition, it is becoming increasingly hard to target social. And digital advertising given the evolving legislation relating to privacy and third-party cookies.
  • Also, advertisers’ trust in CPC advertising continues to erode due to the prevalence of click fraud and bots.
  • However, the cybersecurity firm CHEQ estimates that bots. And fake users now make up a whopping 40% of all online traffic. Directly detrimental to ROAS for CPC- and CPM-based advertising.
  • This combination of factors pushes online retailers to shift budget towards. The affiliate channel due to its performance-based model of paying publishers. A percentage of the actual eCommerce sale generated.
  • As a result, affiliate marketing presents one of advertisers’ marketing mix’s highest ROAS. And lowest risk components by turning to spend further into the purchase funnel.
  • Here CJ also noted that in 2021. Loyalty and rewards affiliate publishers in its network earned a 34% higher ROAS than other publishers.
  • Prizes programs have entered the mainstream, and consumers are not just growing accustomed to these benefits.

They’re increasingly expecting them. It is a win-win-win for everyone in the ecosystem:

  • Consumers benefit from rewards and discounts. Retailers benefit from higher sales conversion and lower ROAS.
  • And the services that offer rewards programs benefit from retention, user acquisition and new revenue streams.
  • However, as a result. You can expect to see a proliferation of rewards and loyalty programs in the form of online-shopping companions.
  • As these programs graduate from being differentiators to becoming table stakes.

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