Episode Seven: Up-leveling your Affiliate Strategies

Overview

In this episode of Gen3’s Actionable Insight podcast series, Kerry Curran hosts Maura Smith, the CMO of Partnerize, to explore strategies for enhancing affiliate marketing beyond short-term KPIs.

Maura brings her extensive 20-year experience in the affiliate marketing space to shed light on the challenges and innovations within the industry. She also shares real-world examples of brands that have leveraged affiliate data to drive strategic growth and discusses the diverse roles affiliate marketing can play within organizations. The episode emphasizes the value of taking a longer-term view of affiliate marketing to assess its impact on customer value and business growth.

Transcript

Kerry Curran:

Hello, welcome to the next episode of Gen3’s Actionable Insights, where we bring thought leadership and learnings to strengthen your affiliate strategies. Today’s guest is Maura Smith:, the CMO of Partnerize. Our theme is up-levelling your affiliate strategies by looking beyond short-term KPIs.

So, welcome Maura, please introduce yourself and tell us a bit why everyone should listen to you today.

Maura Smith:

Hi Kerry, thank you so much for having me. My name is Maura Smith and I’m the Chief Marketing Officer at Partnerize.

For anyone who’s not familiar, Partnerize is the global leader in partnership, automation software, and services. and we help global brands drive profitable growth from their partnerships.

And why people should listen to me, bit of a loaded question, but I guess what I can share is, I’m a category veteran, I’ve been in the affiliate marketing space for more time than I would like to admit going on 20 years.

So, I’m very in tune with the challenges that this space has long faced.

Kerry Curran:

Great, and so one thing I always like to ask our guests, because what we do is a bit unique to the outside world, how do you explain what you do to people outside of the industry?

Maura Smith:

Good question.

What I would say I typically default too as my response is telling people that I work in MarTech or marketing technology and if the person that I’m speaking to is a little bit more digitally savvy or they work adjacent to our space, I’ll start to tell them about affiliate marketing, which usually results in having to break down an example of how a consumer interacts and makes a purchase through the use of affiliate or partner marketing sites.

So, that’s usually for the hyper curious. And depending on their generation, they either get it and comment on their own use of affiliate marketing sites, or they might ask me a question to the effect of, does this mean that you are the one that pops up those ads on the internet?

Which is definitely not what we do.

Kerry Curran:

But so, I mean, as long as you’re connecting them with the products they’re trying to buy, it should be all set.

So, one of the other questions we always like to ask to show a bit of your personality and what you like outside of work is, if you were to create a sandwich, what would it be and where or how would you distribute or sell it?

Maura Smith:

This is a tough one because I don’t eat a ton of sandwiches.

If I eat a sandwich, it would be like a turkey club with Dijon mustard, honey Dijon mustard. But my family does own a restaurant and I have gotten them to take their Nashville hot chicken sandwich and convert it into a wrap.

So, maybe that would be my response is a Nashville hot chicken wrap.

And how would I sell it? I’ve helped them build their website and set up DoorDash and Grubhub.

So maybe that’s my default response is through delivery.

Kerry Curran:

I think you need to give the restaurant a little plug so, we can check out that sandwich or wrap.

Maura Smith:

If you’re in Pennsylvania, specifically Kingston, Pennsylvania, it’s Flaherty’s Irish Pub.

Kerry Curran:

I will put it on the list.

Awesome, thank you.

See, you had a good answer. Now I want Nashville hot chicken.

So, you were talking about how you’ve been in the industry a long time. So, what is it that you love about our industry and what drives your passion for continuing to grow your career here?

Maura Smith:

Sure, it’s a good question.

And what I would say that I love most about the affiliate and partnership marketing category is that it’s ever-changing.

And I think that that’s largely because of the model. Affiliate and partnership marketing can really be infused across nearly any digital channel, any medium, really any consumer touch point.

And that makes affiliate marketing ripe for innovation, which gets me… really excited about the space that I’m working in.

So, I think because of its uniqueness and how it can persist across the consumer journey, there’s always innovation happening with existing partners. We also see a lot of new partners emerging every year.

So, it really keeps things interesting and relevant to the consumer behavior and trends that are taking place.

So that’s what gets me excited.

Kerry Curran:

Yeah, I definitely agree.

That’s one thing I love about it as well is the evolution and the innovation happening.

And so, what are some of the more recent changes and evolution that have stood out to you?

Maura Smith:

So, I guess what I would say is that in my time within the affiliate and partnership marketing category, what I have observed is that it has made strides in reaching more… reaching engaging more senior member marketers on the brand side than it has in years past.

These are marketers who’ve been able to really uncouple themselves from historical labels or misperceptions about affiliate and partnership marketing.

And they really understand well the value that this channel offers and what it can deliver on behalf of their organization.

So, I think that’s one of the more recent trends on the brand side are that we’re starting to make strides in elevating the profile of our category to those that control the purse strings.

So that’s exciting. But I think I would counter that by saying, we need to do more as far as reaching these individuals because they are the ones that control the dollars that flow into this channel and will enable its growth.

When you think about that, it really means that we need to remove ourselves from the echo chamber.

Where we might often spend time continually talking to the same people who exist within the category, which is we, versus bringing in new participants that we can reach a critical mass in not only expanding knowledge and understanding and acumen of the affiliate and partnership marketing category, but also, to infuse more dollars.

I share this because I really think it’s important. And it’s not a knock to any longstanding industry veterans, because I’m one of them.

I think it’s just the point that we need to infuse more outsiders on the brand side so that we can continue to raise the profile and subsequently the investment into the affiliate marketing space.

Kerry Curran:

No, I definitely agree.

And I’ve seen that myself coming in from the outside of the affiliate world. Everyone’s like, oh, I’ve been here for 20 years, 12 years. One person was like, oh, I’m new. I’ve only been in the industry for eight years.

So, I definitely agree. And with that comes so much wealth of knowledge and experience.

So, why do you think there’s not more cohesion and collaboration and integration with the other marketing and media initiatives.

Maura Smith:

Well, first, I would probably start by saying that when you think about the affiliate marketing space and let’s say within the US specifically. There have been recent reports from the Performance Marketing Association, which is a great organization.

They’ve reported that the industry in the US has grown from $6 billion in 2018 to over $9 billion in ad spend, I think in 2021, 2022.

And so that really looks great on the surface. But when you think about that in comparison to other channels, it’s relatively small.

This is not meant to be negative or a knock, but I think it’s really an opportunity to highlight the potential for exponential growth for the affiliate marketing category.

If you take, for example, paid search, eMarketer has sized paid search in the US $99 billion category of spend. That was in 2022.

So, when you compare affiliate marketing in the US to paid search, paid search is 11 times the size of the affiliate marketing space.

And when you compare to paid social, paid social is a $65 billion opportunity in the US in 2022.

So, we know that these are the go-to channels for marketers. the cost of operating within these channels are continuously on the rise. We as marketers ourselves know that other marketers need to be present in these walled gardens because consumer expectations really demand that they are there meeting them across their journey.

But it’s expensive. And so, I think that marketers are really in desperate need for other options to stay omnipresent across that consumer journey.

And I think that affiliate marketing can help them gain that reach when subsidizing costs of being present in paid service or paid social or other expensive channels.

So, the point is that affiliate is relatively small in the grand scheme of things, but it has so much untapped potential to grow even more.

And I think, back to your question, when you think about why isn’t there more cohesion or collaboration?

There are still senior level marketers who just don’t understand the affiliate or partnership marketing space. Partnerize did some research with Forrester a few years ago to ask senior level marketers, what is holding you back from embracing affiliate more so than you do today.

And the top three reasons cited by these senior level marketers were that number one, they don’t understand affiliate marketing, they have difficulty quantifying and understanding its impact to the organization, and then they have a historical preference to using other channels to simply have a greater level of comfort in them, which is paid search, paid socials and the likes of those behemoths.

So, and when I think about that research, I believe the research you just commissioned for Gen3 also came to the same conclusion, right?

Kerry Curran:

And many years later, too.

Maura Smith:

And so, the point is, we are still facing the same obstacles that still existed several years ago, in present day. And, you know, more specifically, when you think about the measurement challenge, I think that makes sense to a degree, because for many, many years, affiliate and partnership marketing data was really relegated to the confines of legacy affiliate networks, or perhaps not part of an organization’s reporting source of truth.

And when you consider that, when affiliate channel data, partnership channel data is not side by side amongst its counterparts, and it’s relegated to a spreadsheet or some other reporting system, it only adds to the lack of understanding and the misperception that senior level marketers have about the channel’s ability to deliver value for the organization.

Kerry Curran:

Yeah, and it’s interesting as well, if they could compare the percentage of revenue driven from affiliate.

It’s challenging to measure the impact of kind of the engagement stages before the clicks that are measured for affiliate. But when you look at when you do measure the clicks and come through the… revenue driven by affiliate, it’s a fair percentage.

I know I’m sure you see like, we’ve seen 10 to 20% for our retail clients, 30 to 60% for our financial services clients.

So, you’d think that level of data and importance to the business goal and driving revenue or customer acquisition would help that argument, but I agree with you It’s a challenge to get the marketers to think beyond what they’re comfortable with and what they know and have worked with.

But I echo what you’re saying is as paid search gets more expensive, as social gets more expensive, as programmatic gets more expensive, as you have to pay for more and more data sets once you don’t have access to third-party cookies, it is time for the brand marketers to lean into and recognize the strength of affiliate.

And so hopefully… The more we have these conversations and publish research and kind of get the word out, I’m hoping we’ll make some traction there.

Maura Smith:

I think that revenue contribution also plays a role, right? When affiliate and partnership as a channel becomes more sizable of a revenue stream for an organization, it often warrants more resources, whether they’re in-house or otherwise, and then it starts to get more eyeballs.

So, I think that also plays a role in the organization’s ability to really lean in and start to… take an active position in just really trying to understand and build a strong educational foundation and acumen around what this channel can deliver on behalf of its business.

Kerry Curran:

We’ll get there. Like you said, there’s so much, so much potential.

Speaking of potential and where the value of affiliate could go, you had shared some really compelling and valuable stories of brands that you’ve worked with where they’ve gone, used that affiliate data to really influence their business strategy.

Do you want to kind of share through some of those examples?

Maura Smith:

Yeah, so I’m happy to share some observations of more sophisticated organizations that have really leaned into their affiliate marketing practice or their partnership marketing practice and thought about this channel in a way that is not so commonplace.

So, one company that comes to mind It’s an example, the example is of a Fortune 100 brand. And they don’t really think about their affiliate and partnership marketing program just as an acquisition vehicle, if you will, or another digital channel.

They’ve really decoupled themselves from any sort of historical notion of what it means to have an affiliate program and have instead integrated their affiliate and partnership efforts across their entire business operations.

So, they aren’t just using it as a means to reach a new audience and drive conversions for the sale of a product, but rather they’ve integrated it not only into their operations but across their partners.

So, they’re tracking their wholesale partners so that they can understand what products have been purchased at the wholesale partner level, what subscriptions have been activated at that level.

They even get so granular as to look at the customer level of information through this lens.

So, they can look through their affiliate and partner marketing tracking to understand which customers have lapsed, and then they reactivate them through this channel using dynamic commissioning because that’s a highly valuable customer for them to acquire back.

So, the point is, is that they aren’t just using affiliate and partner marketing to drive new sales, but they are using it to manage and track channel partners, reach and engage both existing and lapsed customers throughout their entire lifecycle.

So, it’s a really great example of a brand that has just taken a far more sophisticated approach to the use of affiliate marketing and not really siloing themselves to historical labels or perceptions about what this channel should be.

Kerry Curran:

I mean, it’s impressive and it sounds like it took internal team members to recognize the potential and connect the data points and be able to set up that tracking infrastructure.

But the fact that they’re able to leverage that data to bring back lapsed customers and measure what’s happening in store, it’s very impressive and definitely somewhere we hope some more brands can get to and it definitely sounds like something Partnerize can help with.

So yeah, tell us more.

I know you had another example as well.

Maura Smith:

Yeah, and I think you just made a great point is for an organization like that to really embrace the power of affiliate and partnership marketing.

It’s not something that you simply turn on. It really requires an internal champion who can drive the strategy and build consensus with cross-functional teams.

And I think that person, team, group are also responsible for continually educating and demonstrating the value that this channel plays on behalf of their organization.

And I think that speaks earlier to what we are talking about, and what needs to happen in order to capture more attention from senior level marketers or the C-suite is, once an organization has taken the time to dedicate those resources in-house or otherwise, one of the unspoken responsibilities of that person or team are to be that champion.

And to drive education and knowledge across other stakeholders, because they’re really the bridge between the in category participants who are operating an affiliate and partnership marketing daily, the bridge between that and then the brand side, C-suite executives who just need more knowledge and education about what the role affiliate and partnership marketing can deliver.

So, I would say that the example I gave, definitely, has a team of internal champions who are continually reinforcing what affiliate and partner can provide.

But there’s one other team, or one other organization rather, that comes to mind that we talked about, which is another Fortune 500 company.

They have a very significantly sized affiliate and partnership program and resources to support it.

And I think this is another good example of internal champions. This team has really realized the growth potential of the affiliate and partnership marketing practice that they have internally and how it could be effectively used not just as a lever, but as a strategic growth driver for their organization.

So, they’re taking a really more strategic approach in their internal operations because of this growth potential that they’ve pitched.

Reorganizing teams, reallocating spend so that affiliate and partner marketing can be its own unit and used more so as a complement to other channels and business drivers and not just siloed off as another digital channel.

Kerry Curran:

Yeah, and we definitely need more internal champions, but also having those champions feel empowered to share that data.

And I think to your point, it goes back to when they’re kind of siloed off operating in their own echo chamber.

It’s hard to bring that out and say, look, like this is the impact we have or could have

Maura Smith:

Absolutely.

Kerry Curran:

And so, one of, with the examples there of having the team resources or leveraging the affiliate channel to advocate for more, one thing that we talked about was how it’s interesting where a brand’s affiliate team or affiliate strategies kind of live within the organization.

So, in our research paper, we had asked, one of the questions we asked was, who is responsible for affiliate marketing and the choices were paid marketing, sales and marketing, the CMO or head of marketing or the chief digital officer, customer acquisition, brand, marketing specialist, analytics, CEO, founder, innovation and technology consultant, chief operating officer and business development.

And I think what the data you and I were looking at is so interesting is that first of all, we split it between big companies and smaller companies, bigger companies, more than 100 million and smaller, under 100 million.

And I think one thing that was interesting that you and I kind of noted on was that there’s not much difference.

It’s almost the larger companies aren’t necessarily, haven’t caught on to something that the smaller ones haven’t and vice versa.

But that, so there’s not much difference in the size, yeah.

Maura Smith:

Yeah, there’s not much difference.

We did take a look at that.

But I think you were sort of foreshadowing this.

There’s still a lot of different titles and functions in the mix. So, I think you just named maybe like 15 different titles or functions of were affiliate and partnership marketing could exist within an organization. I don’t know that there’s necessarily any right or wrong answer about where it should or shouldn’t live.

I think, with a smaller sized organization, you might tend to see more ownership of the affiliate and partner channel at, a PP plus level.

And then the larger organizations, there is more mid-level manager titles that are in control of, that spend.

So yeah, I don’t think there’s any right or wrong answer about where it should live. But what I would encourage is that regardless of your organization size, so long as the channel has proper representation from a senior member of the executive team, typically the chief marketing officer, that’s best practice.

You need to have some sort of connection to those that ultimately control where the dollars flow.

Kerry Curran:

And especially integration with paid marketing and if there’s opportunity to get a larger piece of the paid media budget for sure.

And so, do you think that there will be a shift? Do you think as brands, like the two examples that you gave as brands, do you start to understand the value or get more sophisticated about the potential?

Do you think we’ll see a shift into some sort of home or alignment, or do you think to your point it’s… it really could live anywhere.

Maura Smith:

I think it can live anywhere.

I’ve also seen, I don’t know if you mentioned this one or if it was in the research, but I’ve even seen affiliate live within the PR team in some cases or within social.

So, I don’t know that I have a prediction per se, but as long as there is alignment to an executive leader, and that person has the ability to Optimize not just within the channel but cross channel, you know, that’s a given naturally.

Kerry Curran:

And I think that’s what we’re seeing is that primarily it was living with paid media, paid marketing, but also the customer acquisition.

But it’s interesting the point of PR. And I know Martech record, Mike McNerney is looking a lot at living with brand because it is such an important part of the brand experience.

So, I think maybe that’s it, is because it’s such a ubiquitous strategy that is full funnel and can live with your PR, your upper funnel brand, or your more mid funnel paid media or your customer acquisition.

But so, I guess as long as there is a voice and some influence and the, again, the empowering that the affiliate team to share that data and get a seat at the planning table and being able to voice the potential and the value of the data.

Hopefully it will just continue to strengthen the positioning wherever they live.

Maura Smith:

Absolutely.

Kerry Curran:

Maura, this has been great.

I have loved speaking with you both in the prep and other conversations. So much potential and you have so much experience.

And so, you know, what would you leave the audience with as your like actionable insight that they could use in their affiliate programs today?

What would you recommend?

Maura Smith:

Sure, so I think one recommendation for those that are in control of their affiliate and partnership marketing programs and driving optimization is to approach this channel with a little bit more of a longer-term view.

And what I mean by that is I think often as marketers, we tend to… look at the channel one-dimensionally, specifically looking at short-term metrics to gauge efficiency of spend.

So, what I mean by that is, what has the channel delivered in terms of ROI or return on ad spend?

How effective were the dollars at helping me to convert traffic into conversions?

And what was the CPA rate on a per publisher basis?

Those are fine. Those are efficiency metrics, and they’ll show us like, effective we are at converting the dollars that we’re deploying into the channel. But I think it needs to be a two dimensional look at both the short-term metrics and then the long-term metrics.

That is, what type of conversions is the brand able to yield from their partners in their affiliate or partnership marketing program?

Are they driving long term value? Once the conversion has taken place, are they sticky? Are they driving repeat purchases? Are they making purchases that are higher than their normal basket size?

Those are really tough questions to answer, and they take a longer-term view.

But I think that will paint a long term picture of what is the value that affiliate, and partnership marketing is delivering on behalf of your organization in aspiring to reach the optimal customer set that have that high CLTV.

So, instead of just looking at the short-term metrics, couple it with the long-term views so that you understand which partners are able to help you generate those outcomes you so desire.

So, that would be my recommendation.

Kerry Curran:

That’s great.

Thank you so much.

Very excited to talk to you again and I look forward to the next time.

So, thank you for your time today.

Maura Smith:

Thank you, Kerry, and great to be here.