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Home Podcast Episode Five: What CMOs Get Wrong about Affiliate Marketing By Gen3 Marketing Posted on Sep 6, 2023

Actionable Insights – September 6, 2023

Episode Five: What CMOs Get Wrong about Affiliate Marketing

Overview

In the latest instalment of the Gen3 Actionable Insights podcast series, Paul Tibbett, president of CJ discusses various aspects of affiliate marketing and what CMOs might misunderstand about it.

Paul touches on topics such as the evolution of affiliate marketing, the importance of data, and how affiliate marketing can be integrated into a broader omnichannel strategy. Paul also highlights the need for CMOs to ask questions, get educated about affiliate marketing, and explore its potential for driving better outcomes and ROI.

Additionally, he mentions the upcoming CJU event in Santa Barbara, which is a valuable opportunity for networking and learning in the affiliate marketing industry.

Episode Resources

Transcript

Kerry Curran:

Hello and welcome to our latest episode of Gen 3’s podcast, Actionable Insights, where we share education and learnings to improve your affiliate and performance marketing programs. Today we have Paul Tibbitt from CJ Affiliate, and we are going to talk about what CMOs get wrong about affiliate marketing.

Kerry Curran:

Hi, Paul, so welcome.

Paul Tibbitt:

Thank you, thanks for having me.

Kerry Curran:

Yeah, we’re excited to have you. So, would you please introduce yourself and like why should anyone listen to you? Can you tell us?

Paul Tibbitt:

So, it’s a great question. So, I’m Paul Tibbitt, I’m president of CJ. And I think my three sons would tell you there’s no reason to listen to me. But I guess if I had to give a reason to this audience, it would be, you’re not really so much listening to me as the 800 CJ-ers and our 3000 advertisers and tens of thousands of publishers that we represent. All the data that I get to see of being in my shoes and talking and meeting and collaborating with all those people. So, you’re really listening to them, thankfully for you.

Kerry Curran:

And definitely a wealth of expertise coming from CJ. And yeah, as my kids would say, like, you don’t know, mom. I’m like, mm, I’ve actually been around a little bit longer.

So hopefully. So then how do you explain to your sons or other people outside of the industry what you do?

Paul Tibbitt:

I jump into examples. I don’t even try with the technical explanation. It’s just, it doesn’t work anymore. I start with digital advertising. I think that’s a broad enough definition that people can kind of grab onto something there that they can relate to, but then I go right into examples. I’m like, with my sons, they’ll be like, okay, so if you’re on a website and you’re reading something and then there’s a link that takes you to buy a pair of sneakers and then… right? And then you ask mom for her credit card and all that.

We’re the technology that enables all that to happen. And they’re kind of like, oh, wow. And then they ask more of them. My sons are now teenagers and my oldest is 16 and the youngest is 12. So, they all kind of like can relate a little bit to the consumer experience. And certainly, at their age, the e-commerce experience. So surprisingly, they get it. My parents, on the other hand, is another story.

Kerry Curran:

So obviously you’re an affiliate industry veteran and a performance marketing industry veteran. What is it that you love the most about our industry? What drives your passion? Like why do you stay?

Paul Tibbitt:

Yeah, I think what sort of got me interested in getting into it in the first place, sort of remains a driver for me, which is the accountability of it. I’m a quant person, always been super data oriented, and so, kind of that place where it seemed to have the most accountability of any marketing or advertising, I had come across. I mean, my background is…consulting, prior consulting and market research, and all these things are very quant-oriented. Like I said, I’m one of five kids. I was raised by my parents, my mother’s a teacher, my dad was a civil engineer, so it’s like very concrete linear type thinking, and measurable, et cetera, and accountability.

Kerry Curran:

So, we recently partnered together on the Gen 3 original research paper. And I’d love to hear kind of as one of our thought leaders who participated, what were your key takeaways?

Paul Tibbitt:

So first, thank you for including us. It was awesome to see that. I think we need more of that in our industry. I feel like other channels, other industries do a better job of talking about them. That’ll be one of the things I want to talk to you about is how can we do more of that as we go here? But… There was sort of, for me, six that I took away as being sort of the most impactful or the things that I could relate to the most and feel like are most important.

Three were consumer driven and three were marketer driven. The first was that, and I think it was even the first in your summary there was like, affiliate is no longer last click. I think it’s fantastic that we’re kind of breaking out of that. It’s taking a lot of hard work and time from a lot of industry veterans that have been doing this a lot longer than me to kind of open that aperture for the industry to be seen as more than last click and a lot of innovation from especially the publisher side to kind of tie into unique opportunities throughout consumer journeys. Our folks at CJ, Summer Arias kind of coined the term channel channels and that’s exactly what affiliate has become and it’s great that people are recognizing that. So that was one.

The second very related to that was the point about inspiration can be generated from multiple sources. It doesn’t always start with either Google or Amazon. And I think that’s super healthy for all of us. And again, it points to the innovation that’s taking place and the fact that consumers are open to being inspired in many ways. And now we have the tools to measure that. Across the journey, we’ve had that for some time, but we can do that and share that.

And then the last consumer driven one that really stood out was the cost consciousness. We all know people are a lot more cost conscious than they were even a year ago for lots of reasons, inflation, kind of pinching people and making them have to spend more of their budget on necessities. And so, then they’ve got to be really careful with how they spend on other things. I do think it’s important to remember that people are cost conscious, not just during recessions or… almost recessions and that never really goes away for a large cohort. And that’s why our channel is relevant all the time, but certainly one that makes us more relevant at a time like this.

And then the three on the marketer side is their planned increase budgets. That’s great. Again, I think that speaks to their understanding of our channel and, and because you spend more in the places that you lean into. That got me excited when I read that I was like, yay.

And then the punch in the gut comes next. Yeah. It’s like, but two thirds will separate omnichannel from, the rest of their omnichannel strategy from affiliates that’s like, okay, you’re right, we still have work to do. And the fact that the reliance, you know, the third kind of marketer take away was the reliance on other channels is driven by budget prioritization and lack of experience in affiliate. So still work to do, but you got me excited with the first of those marketer trends.

Kerry Curran:

Yeah, I agree. Those are six very key points. Big part of the goal behind the paper was to kind of expose the gaps between what the consumers are doing, how they’re engaging affiliate content, and then the gap between the marketers.

I agree. I think one of my favorite stats as well was the fact that inspiration is happening more on those mass media. sites, those online magazines, then at the beginning of the journey, more so than the big networks, so Meta and Google. But into your point of omnichannel, we’re not saying shift all your budget from one into affiliate, but it’s just, yeah, it’s like there’s so much more out there when they are relying on and not taking the omnichannel. approach. It’s like you’re missing out on so many opportunities. So that’s, yeah, I agree. It’s painful, right?

You’re like, it’s here, it works. Yeah, so why? Let’s dive into that. Why do you think that marketers have this perspective? Why is this a problem and what’s our solution here?

Paul Tibbitt:

Yeah, there’s definitely work to do. I think the CMOs problem is measurement and how do they measure and how do they demand accountability across their full omnichannel strategy. And if we’re going to solve this, you can’t dismiss this, this being affiliate as last click. And I think we’ll continue to struggle with companies reliant on third parties for their measurement until we get a better seat at that table.

And I think the good evolution has been a bigger seat at the CMO table. The next evolution needs to be then a seat at the measurement table. I think in our experience with like MMMs, for example, affiliate, it’s shown that our kind of unique model doesn’t blend well with them. It’s put at a disadvantage within some of these models because they weren’t conceived really with affiliate in mind. Let’s face it.

And we’re either typically too small in terms of the overall spend to get the fair shake of some of the other channels or delayed response and marketing activity. It just becomes very an unreliable way to measure the effectiveness of affiliates. For those reasons, we have to keep working with them. I think the solution, the second part of your question, is for the CMO to keep leaning into affiliate and learn more, right? I think they’ve come a long way, but they’ve got some more education to do on channel-specific data that’s available to them and to stop reliance on GA or other unreliable models to really understand our channel.

There’s a wealth of data that we provide more so than any other channel that they work with. And if they… continue to ask and push and ask questions, they’re going to get good answers, but they’ve got to look at us more deeply to be able to get there.

Kerry Curran:

Yeah, and so what are some of the questions that you would recommend the marketers, the advertisers are asking?

Paul Tibbitt:

I think they need to understand at the channel level, what kind of incrementality data do we have? What kind of ability do we have to understand every point and touch point of the consumer journey? Because I think they’re, logical assumption is that we’re just focused on affiliate, but we’re not, I mean, our technology has advanced to the point where we know what was happening if they have the appropriate integration with us to understand every step in that journey and that data is available to them through us and they don’t have to rely on a third party to get that.

So again, we saw this really nice shift in their mentality, which, you know, is to take us more seriously and consider pushing more budget. I think the next evolution comes from like making that connection point to outcomes and how we measure those outcomes.

Kerry Curran:

Yeah, and I would add to the questions as well, because that’s such a big part of it, to your point, is looking into the outcomes, the ROAS, the actual return, and also as we were talking about, and how are you measuring your more other channels when it is more of an upper funnel play? So, your linear TV, or your traditional PR, or even your influencer.

You have all these channels that also don’t drive a click, and let’s look at that more holistically. I agree, I think you’re spot on with trying to build that curiosity and get the marketers to start asking more questions. And you were talking about, you’ve seen this shift to the interest of more guaranteed outcomes. Talk to me more about that.

Paul Tibbitt:

Yeah, I’m still coming up on eight years and I’m still a baby in this industry. I feel like compared to a lot of my colleagues, especially within CJ, I feel like within our exec team, there’s so much knowledge and expertise and longevity.

What I saw when I came in versus now through a couple macros shifts, just really driven by the pandemic. I think we have a lot, a lot that we can trace back to that. Obviously, the overall acceleration of digital adoption by consumers in general, right, led marketers to really be focused on digital at a time when that was the only option.

But this whole notion of guaranteed outcomes came out of that as well as a moment where advertisers really saw that they could get, outcomes without any prepayment, right? And that’s not so much a channel discovery as a commercial model discovery. They were like, oh, you know, delivery on outcomes without prepayment became super critical at their time of super uncertainty.

These are positive trends for us. It led to more investment. It led to more learning. And it was really nice to say that you saw, CMOs coming to QBRs for the first time in maybe a long time or ever, and it really came down to again, the accountability that we drive and the technology that we have for advanced, you know, that have advanced so much in terms of driving flexibility and how they pay, what they pay for, dynamic commissioning, aligning payouts to, product level outcomes to all kinds of goals that they have beyond just sort of the simple last click mentality and being able to really drive outcomes at a discrete level that they weren’t able to do before and can’t do, frankly, with pretty much any other channel.

And so… making that connection point with them. I saw that shift happening through COVID and that pay for performance model really pushed them and the push towards digital really pushed them to get more educated and leaner in.

Kerry Curran:

We’ve talked about how, to your point, there’s so many KPIs, there’s so much data around the different touch points and how it can be measured. And we essentially have more data than any other channel. What else needs to be done, do you think?

Paul Tibbitt:

I think it can’t remain separate from the omnichannel mix. I think they have to, find a way in it. And this is the CMOs challenge. And I empathize with it because it becomes, um, a really significant question to solve for, for them, but they can’t keep, keep ignoring it or rely on last click and they need tools to accurately account for it. And I think if they speak to their partners in the affiliate channel, they’ll learn that we’ve got a lot to offer there, right? Look at CJ, we did this massive incrementality study and for many solutions to help address these questions.

Cross channel journey analysis is now possible again with the right integration, obviously new and lapsed customer analysis, all these things are available and at their fingertips if they ask the right questions of their partners. And that will help them understand sort of a cross-channel view of affiliates’ contribution. And they’ll see that it includes way beyond last click, includes discovery, awareness, consideration, every stage.

And they can be empowered with that kind of transparent view into that cross-channel journey. And that, I think, makes us unique. And if they ask those questions and really dig into that data and then start asking questions of those third party measurement partners, like, OK, then how are we actually integrating this and embedding this in an accurate way, then they’ll get the outcome that they’re looking for.

Kerry Curran:

Yeah, it’s interesting in the research paper, I think one of the stats around barriers was that internal teams battle over ownership of publisher relationships, included in affiliate and other aspects of the internal challenges of kind of ownership of those touch points.

I think that’s a big part of it to the point of like, even if we’re… going to that planning table and pointing out that, look, this is an affiliate strategy, this is part of what we’re able to do for you, there’s going to be an internal competition on taking credit for it, but that the real perspective, at least I think should be the rising tide, right?

Who cares where they come in from? Let’s make sure that they’re coming in. But yeah, the integration, the omnichannel aspect of it, I think is so critical and that’s kind of the drum I’ve been beating as well is like get affiliate a seat at the planning table, get it part of the two thirds that don’t integrate. So, thinking from that perspective, like the data, understanding the data, but what else has really stopped the brand advertisers from integrating affiliate and giving them that that seat at the table.

Paul Tibbitt:

Yeah, I think there’s still some myths that persist, right? That the last click thing is understood that it’s beyond last click for many, but there’s still a lot of folks who haven’t gotten past that yet. And just the overall impression of it being lower funnel is just not correct anymore.

Kerry Curran:

Why are they wrong? Like, how should they be looking at it?

Paul Tibbitt:

They should be looking at it as amplification, right? They should be looking at it as, as Summer says, channel of channels. It’s present at every step of the journey and way more sophisticated than last click. If you sort of embrace that approach, you start to think about all the different partners that you should be working with and how to create those partnerships at scale.

So as opposed to just kind of dabbling. in parts of affiliate really embracing the totality of it, and then taking a very strategic approach, an omni-channel approach to affiliate. So, if, again, you’re pushing a new product where awareness and discovery is key, you may be thinking of some traditional media or some social to kind of help you drive that. You should be thinking of affiliate as well, because we have lots of partners. within this channel that drive discovery and awareness.

Stop thinking of it as lower funnel and last click. Think of it as your amplification channel. Like how do you make all the rest of the money that you’re spending work even harder and better, but do so in a measurable accountable way, right? It’s not just impression spending that you pre-buy and hope for the best. It’s like accountable spending that’s based on actual outcomes.

I think that’s the right way to think about it. I think that the wrong way to think about it, and unfortunately, this is a path that’s been chased by some in our industry is to move towards kind of slicing up the tiny piece of the pie that’s already attributed to affiliate, you know, aka fractional commissioning or whatever. And it’s like, why would we do that? Why would we enable a diminutive view of our channel to be cauterized in the tools that we provide? Shouldn’t we be thinking of it as in an expansive way, right?

That Affiliate helped you close that customer, but these assisted in the awareness and discovery phase, let’s find a way to reward them as well. Because you wouldn’t say just because you gave it last click attribution to an affiliate partner, we’re no longer going to pay our display bill for the display video. So, why would we say, yeah, sure, a fractional, that makes sense. Let’s just think this really small piece of buying, like carve it up even more and give everybody a tiny piece.

It’s like, well, no affiliate or partners within this channel did both of those things and they should be rewarded accordingly. And so that’s the mentality we’re taking and trying to strategize with our partners on to make sure that that’s the way people are thinking of an expansive view of our channel and not a diminutive one.

Kerry Curran:

No, definitely. And I know within the CJ network, you have a very extensive range of publisher partners that are helping brands connect on the full funnel.

Paul Tibbitt:

Exactly. Yeah. And, and they again, they deserve the credit for finding niches or opportunities within the journey to say, nobody is serving this need yet. I see this opportunity and those publishers innovated and created relationships with their consumers that frankly, oftentimes are even stronger than the ones that the consumer has with the merchant, right? And so, kind of having an attitude of okay, well then, I, as a marketer, need to take advantage of that relationship that’s been created between that publisher and the consumer, and then reward that publisher, whether that be through, you know, flat spend as a way to reward them, or other tools that are available to you to make sure you’re giving them their due for their contribution to the process.

And… Again, if you take the view of it’s an amplifier of all media, it just kind of changes that dynamic completely from this kind of lower funnel closer mentality that still permeates.

Kerry Curran:

You were saying in our research paper, like we were saying at the beginning, that was such a key part of kind of the results from the consumer survey. Because when we asked them, where are you going for inspiration, every single publisher type or sub-publisher type was included. Of all the 2,000 consumers, every single publisher… type was mentioned for the inspiration phase. So to your point, even the coupon or the cash back loyalty sites that typically brands often think of as just last click and we get a lot of that, like, well, I would have gotten that sale anyway.

But the brand presence there still adds to kind of… all aspects of the consumer’s education and kind of figuring out what product they want. And then when we dug more deeply into the research consideration and purchase, yeah, the data shows it’s the research and consideration are the majority of touch points are the content that’s powered by affiliate links. And I loved your example of like… these publishers themselves have done such a good job, whether they’re niche or a larger cash back loyalty or price comparison to build that relationship with their audiences.

Yeah, in the research data for the consumer behavior, it’s research and consideration, inspiration research and consideration are dominated by content powered by affiliate links. And then, you know, as interesting as when the purchase and repeat purchase tended to happen at a marketplace or the brand.com website.

Third place for purchase was the coupon voucher sites, but I think that goes to the counter argument of the last click, right? If we, our data shows that consumers are going to the affiliate sites, but then maybe going directly to brand.com to purchase or going to Amazon, Walmart, or Nordstrom. to purchase. So, I think that’s, again, the more we can kind of socialize that broader customer journey to your point and like the different metrics and how we can, demonstrate the value across all the parts of the consumer journey and the types of publishers and subcategories.

And it just so much, so much potential. Again, thinking about the CMO, the C-suite, how we can get them to notice and to really value this. We always ask our guests to leave the audience with some actionable insights. So just how can the brand advertisers get the CMOs to notice, or how could we get the CMOs to notice? What are your thoughts?

Paul Tibbitt:

Yeah, I would say ask them to ask questions. I’ve never been in a meeting with a CMO that once they learned more about affiliate and what we can offer in the data available to them, that they didn’t change their behavior in a positive way.

When you have their audience, when you have their attention, ask them to ask questions and get educated, ask what data is available, what kind of… What kinds of things can I drive with affiliate? What types of partners are available at each stage of the journey? Who can help me with discovery? How can you help my campaign to launch a new product, right?

Which I would never have thought of for affiliate before. So just getting them to think beyond their, kind of old paradigm and ask questions is the best way to get their attention and get them to notice and go outside of your old reliable channels to see what else is out there.

Because the likelihood is that you’re going to find better ROAS or ROAS that goes down versus what you’re used to. You’re going to discover new partnerships and relationships that drive even better outcomes than you were getting before. Well, you didn’t, wouldn’t consider them before. So also ask them to test into it, right? This is a. guaranteed outcome, low risk channel. You can test into it and try different things.

And if they don’t work, you don’t need to continue doing them. And if they didn’t work, that means it probably didn’t cost you very much, if anything at all. So, I think it’s just getting them to be inquisitive, ask questions and ask for demonstrations of why it’s not bottom of the funnel that they’ve made the thought of this before.

Kerry Curran:

Paul, this has been super helpful. So, again, if it’s, we can get people to share this podcast and the research and your incrementality report from CJ as well. Hopefully we will make some traction with. with the CMOs.

I think another big resource for the senior marketers that CJ offers, I know you have a big event coming up. Can you, CJU, can you share more about the highlights and what you’re excited about and what the advertisers should be excited about and publishers?

Paul Tibbitt:

Yes, I’m very excited just three weeks away, which is super exciting and also terrifying knowing how much work is still to be done. But like we do every September, we’re all going to get together in sunny Santa Barbara with about a thousand of us in the industry to network, to listen and learn and of course do some partying and have some fun.

I look forward to having a drink with you, Kerry, when we can in the evenings and then, just, really reconnect with all those people in person, although we’ve gotten so used to the hybrid world, there’s something really powerful about that event and bringing a thousand of us all together in person and so much business gets done and it tees everything up really nicely for Q4, for all of our partners.

I know that they’re chomping at the bit to get out there as they are every year. So go to. Cj.com/cju if you haven’t registered yet, we’d love to have you and yeah, I can’t wait to see all of you there.

Kerry Curran:

I know it will be my first time there, but I’ve heard it is just a real powerhouse of publishers and brands and partners ready to plan some business for Q4 and beyond. And yet, I know you guys have some really solid content planned and there’s also, I guess it wouldn’t be a CJU without the Paresh Connect on the night before the conference starts. So, a little plug for that as well. But anyway, yeah, it’s always a huge opportunity for brands and everyone to learn. So, I know it’s going to be a really great event. So, we’re all looking forward to it.

Paul Tibbitt:

We can’t wait to see you there too.

Kerry Curran:

Yeah, absolutely. So, Paul, thank you so much. Hopefully maybe your sons will listen to this and get a bit more of an idea. My kids are like, but do you get to meet influencers? No…

Paul Tibbitt:

At least not the ones that you probably know, but there’s a lot of great influencers you don’t know.

Kerry Curran:

That is true. Thank you and we will see you in Santa Barbara, but thanks so much to you and everyone at CJ. This was really great.

Paul Tibbitt:

Thanks, Kerry. Appreciate it.