She sheds light on the challenges and opportunities in the affiliate marketing space, emphasizing the need to educate senior executives about its potential. Throughout the episode, Alex and Kerry delve into various aspects of affiliate marketing, including how to explain it to those unfamiliar with the industry, the influx of new partners, and the role of influencers and PR agencies in driving its growth. They also discuss the importance of measuring earned media value, diversifying marketing channels, and data-driven decision making.
Hello and welcome to the latest episode of Gen3’s Actionable Insights, a podcast for you to learn about performance and affiliate marketing strategies to grow your business
Today we are meeting with Alexandra Forsch from Awin, and our theme is going to be educating the C-suite, winning the hearts and minds of the senior decision makers.
Alex, please introduce yourself…and explain to us why anyone should listen to you today.
I’m Alex Forsch. I’m running our Americas division at Awin. In North America, most specifically, we help partners across both Awin and ShareASale. I’ve been with the business approaching 13 years.
That’s a good amount of time, but I don’t expect everybody to listen to me. That’s kind of weird, but I do hope that this podcast, the great guidelines you produced and all the other education that’s being produced that will inspire advertisers who are not working in affiliate marketing or not take it for what it can be, are inspired to take another look. I’m hoping for that.
Excellent, me too. So how do you explain what you do to people outside of the industry, your parents, your aunts, uncles?
Yeah, depending on who I’m talking to, I would call myself a glorified matchmaker or just leave it to a matchmaker. Essentially, we are in the matchmaking business, if you think about it in the larger sense, right? But what we’re effectively doing as a network is connecting e-com stores with websites who want to promote them.
And the beauty of our channel is that these e-com stores only pay for performance, so only if the website is successful in driving a customer within purchases of product or sales and that sale is a, sorry, a purchase of product or a service and that purchase is verified, then they earn a referral fee.
That referral fee is oftentimes paid in the form of a rev share. So, usually that answers all questions. If people want to continue, then I go into like just how great the performance model is the absolute certainty that you only pay for outcomes, and not promises is what attracts more and more investment into the channel.
Yeah, definitely. I love the matchmaker kind of analogy, because it’s so true, especially with your networks.
Okay, so one of the questions I always like to ask people just to show a bit of your personality and background is if you were to create a sandwich or a specialty meal, what would it be and where would you distribute it or sell it?
Okay, so yeah, that’s a tough one, but I’m less about the sandwich, I’m all about the bread. I don’t know if you know that, but I was born and raised in Germany and apparently there are 300 different kinds of breads. They’re distributed in Germany. I’ve maybe had 30, I’m not claiming that I’ve had them all, but it’s all about the bread, it needs to be good bread, real, like a few ingredients not the stuff that lives in a plastic bag and has an extensive shelf life, right?
So, if you have a good piece of bread, it’s very irrelevant what you put on it, is my opinion. But if I would have a choice, I think a good egg salad sandwich or a shrimp salad on a bread that I fancy right now.
So, how would I distribute the sandwich? I think that’s a tough one. You’ve got to find a market that is not gluten-free and low carb, maybe. But because the bread needs to be fresh, I would keep the distribution very close to where the bread is made and then also maybe set up next to Dunkin’ Donuts, so give people a really healthy alternative to the ones that, clearly there’s a market for carbs, so, give people a healthier opportunity.
I love that. I mean, you’re so right about the bread, and especially in the States where the bread is so sugar heavy. And I had a friend from Australia, and she was like, oh, your bread has sugar in it. It’s so sweet, and you don’t realize that one. And all the preservatives. So, love the fresh bread concept. And when you do open that bakery, I will be there.
Getting back to business, obviously, you… are an affiliate industry veteran because you started when you were very young. What do you love the most about our industry and what is it that just drives your passion? Why have you stayed so long?
I do love the results focus of it. I’m a very competitive person I like to understand how what I do matters. The impact that I’m having on the businesses that I work with, or also like even within the company, that the impact I have to a team, to reach into, to the business as a whole.
So that whole concept just works for me and drives me. What capped me really is the adaptability of the channel. It just has, it almost encompasses every aspect of marketing tactics that you can run. And in that in particular, I love the technology partners that, we have attracted because now we’re talking real marketing innovation, Web services that could actually sit on an app at a site and help improve conversions, delivering better experiences. Making personalized recommendations, refer business out. I mean, that stuff really excites me because you’re no longer looking at in the traditional very small sense of what the channel did.
It’s much larger now. And learning about every new incoming partner is really exciting and it keeps me going because the moment you think you know it all, you don’t, right, something else is happening.
That’s so true because obviously the industry has evolved greatly throughout your career but also especially in the last few years. So, what are some of the more recent changes and evolutions that you’ve been seeing?
I mean, when I started the, and I told you that before, the number one question was how we attract more channel investment. How do we convince senior decision makers to have a look and start loving it.
It’s been a rocky road. There’s a lot of great work that has been done, especially on the technology side, overcoming, regulations in terms of privacy regulations or preventing or supporting, tracking when in a world where browser tracking prevention exists, all this kind of stuff, right?
I think there’s a really good research study that we can leverage to actually see how much progress we have made. And that’s by the Performance Marketing Association. So, they released their study last year looking at 21 data. And the goal is to assess the market as a whole, to really tell it because hey, this is a big business industry, and you should partake in it.
And they assess it at 71 billion dollars, but most importantly, with almost a 10-billion-dollar investment and an ROI of 12 to 1. I believe that’s understated because there’s a lot of revenue, we don’t even track based on the contractual nature of, like a telco or a finance, lead that we’re supporting, for instance.
I think it becomes more meaningful if you compare it to the initial survey that they run about three years prior to that. And that really shows how that investment has almost doubled with a CAGR of 14%.
We are moving upwards and that’s really positive. We still haven’t won the hearts and minds of senior decision makers. I think we’re still at that point. Here I’m very optimistic that things are about to change. And one, it’s the unfortunate situation of the economic climate, asking real questions like how much value am I getting from my advertising spend today and with this moving a lot of activity into performance channel.
So, there’s an absolute opportunity for us to lean into this, re-educate, and showing that, really the proof is in the pudding, really, showing these advertisers everything, affiliate can do. But also, we have this interest in moving more upper-final activity like influencer and branding into performance as well.
And again, now we’re expanding the people that we’re speaking to within a marketing team. I feel like with this, we’re inching closer and hopefully can show a more comprehensive view of all the data that makes senior decision makers fall more in love with affiliates.
I think this is about the time that if we do it right, and if we continue the education, and if we continue to prove that we can deliver value, this will be a pivotal moment.
You had been telling me about how you’ve seen an influx of new agencies and partners join your network.
What are the trends you’ve been seeing there?
Yeah, so we’ve actually, there’s a lot of research like yourself, right? You even show that more advertisers are looking to move into it and making a change in this climate and then the majority of that moving into performance.
We’ve certainly seen that. So, on our network just in the US, in the first half of the year, we had over 2000 advertisers launching our network. And we also had about 36,000 publishers that were newly approved.
There is a great amount of them not approving. So, there’s a lot of work for a lot of people. And also, particularly on the agency side, I think we welcome 90 new agencies that we’re now working with. There’s an influx of new partners, definitely showing the relevance.
What excites me most is that we’re also looking at assessing the engagement. How committed are people to it? And if you look at from a time it takes a publisher to sign up to the network and then become click active. I’m just looking at Q2 over Q1, we saw 132% uplift in that activation rate.
The people that are joining us are very motivated. They want to get, get started. And then also what we’ve seen is a very high reactivation rate of partners. So traditionally, larger advertisers would come to a point where they’re questioning whether they need the big portfolio base, or if they would reduce it down to a smaller subset of partners and be more focused.
But now, at a time where they seem to struggle and fight for every sale, they are now opening these spaces again, and reactivating some of the partners, which is great news, particularly for the smaller partners that usually get wiped out of programs if they don’t deliver significant revenue.
And you’re seeing more PR agencies engage to kind of ensure that they can place their client content on the publisher sites.
As you’re seeing agencies on board, is that more of the PR agencies and performance marketing agencies?
I mean, there’s a good mix. I think traditionally it was all the OPMs, as we call them, outsource program managers. Especially with the pandemic, I feel like that was a big catalyst for more agencies coming into it.
It was a good mix of digital agencies, social media agencies. The largest portion of that was PR agencies. And typically, they came to us saying, can you help us because we’re trying to get an article placed with a magazine and we’re asked for an affiliate link, and we don’t know what that is. Can you help us plan this?
So, there’s a lot of education going on now. But yes, so the great thing is that first we attracted mass media about seven or so years ago. And now mass media is helping us attract new partners. That’s a really great journey to watch.
Yeah, and that’s a trend I think that will help, from my perspective, that’s going to help kind of elevate the perspective of affiliate because it does demonstrate that it is more upper funnel and more aligned with some of those sexier strategies other than the last click that people still kind of associate with affiliate.
And so, we talked a bit like, so you mentioned a lot about the different aspects of affiliate publishers, and in our recent research, we had identified how affiliate has expanded, as noted by more PR agencies getting involved, expanding across the customer journey and purchase funnel.
So, how are you seeing that evolution in the partners that are onboarding, in the brands, and other performance data that your seeing?
I mean, traditionally we’re being perceived as a bottom feeder, right? Because of that classic model and that favors cashback, coupon and loyalty. And I think that has been our problem, right? Because we’ve been pigeonholed to just deliver that. But as I said, about seven years or so, more notably, we saw mass media coming into the channel because display died, and they were looking for different income streams, right?
And they wanted to explore affiliate. I remember we had like somebody from Forbes on the panel said like, I’m brand new to this. I can’t really tell you anything, but we feel like there’s something here, right? Yes, that obviously contributes massively to upper funnel, mid funnel engagement according to your research, it inspires, and it supports research. Yeah, you can see there’s a far greater spread across the funnel but also, influencers coming into the space, they’re supporting this in different ways and then also look at all these technology partners or Fintech, buy now, buy later, there’s so much value that is distributed across the board that we are, we’re confident that we can say and prove in data that we’re engaging customers throughout the full marketing funnel.
But even that is a very outdated view because it suggests a very linear journey and I think they’re far more complex, and also, we’re not limited to just driving traffic to a site and I hope for the site to convert it. We’ve started using Scott Galloway’s clock model that basically divides the consumer purchase journey into three distinct phases. You have the pre-purchase phase where the goal is to drive prospects to a store, you know, and then you have the purchase phase where it’s all about how do you convert that shopper into a buyer, and then you have the post-purchase phase where it’s all about what happens after the sale, your CRM systems, your… loyalty programs, your shipping, your customer support, all those things are really important there.
What we are showing is that we’re no longer just playing that pre-purchase phase. We have partners now that can actually also support during purchase, so, the optimized conversions, and we have partners that actually can support post-purchase, right?
So, either yeah, technology partners that can, for instance, refer business out, turning customers into referrers, or also offering a component of media retail, which is the third big way, right? By connecting brands with non-competing brands for mutual promotion and benefit. So, it’s a far more encompassing journey.
And ultimately, what I believe this helps explain is that we’re no longer a technical channel we are actually quite strategic. Depending on what a specific brand is looking for, we can offer that now, across the different marketing initiatives and across the very different stages of where you’re looking to support your customer journey. So, I think that this is quite exciting.
And I think at this point, we just need to get more of these stories out because we almost made it so complex that now we need to find a way to contextualize all the different things that we can support on.
I definitely agree. And again, that’s where the value and to your point, we need to get more of the senior marketers to really understand the full impact and benefit. And so, one of the ways we’re seeing that is to kind of elevate or escalate the performance is from a measurement perspective.
So, have you seen brands? Have you seen brands change how they have, or your clients change how they are measuring performance or what they’re looking at to measure the effectiveness?
I mean, I think ultimately, by seeing these upper-funnel activities coming into affiliate or performance, right, they’re looking for our traditional measures, right? They’re looking for… the number of sales driven, the revenue, the conversion rates, the AOVs, the customer acquisition costs, et cetera.
So, these are really hard metrics that are highly desirable. So, I think what happens instead is that now advertisers will have these softer metrics around following and engagements and they can combine that. So, they’re now ultimately left with a far greater set that gives them hopefully a far more holistic view. If you think about social media, there’s a lot of conversations around social media value.
So how, essentially the share of voice that you have among, communications that are happening on the web and EMV is a very similar metric. The media value that kind of is even considered a leading indicator whether you’re going to be successful in six years’ time. But you can now combine that with the understanding of which channel which affiliate within the channel actually, helps drive a sale or supports a sale. You can optimize in very different ways. And the example I like to use in the influencer space, so you may currently pay a fixed fee based on somebody’s reach like lots of followers, lots of engagement, et cetera, and assume that this will contribute to a higher share of voice and hopefully also with that more revenue.
But when you start tracking this activity through affiliate and, and for instance, Awin is integrated with most leading influencer platform. So, we can actually track that now, still manage your activity in the influencer platform, but you track everything through, you now see whether these, influencers can actually, generate a sale or if they’re part of the, click path, right? That should now really guide your, fixed fees decisions. Because if, if you have an influencer that may have a smaller following.
And we see that very often between 2 to 3000 followers are the ones that are most successful in engaging and being these touch points that ultimately lead to conversion so you can shift your focus and operate in a far more efficient and ideal way.
So, I’m hoping that, the aggregation of data will lead to a smarter decision, but there’s, there’s one thing that I’m really hoping for too, is that with that, again, we can appeal to senior decision makers more because they also see the glow that affiliate offers, right? Because if you think about it, while the reward is happening on a last-click basis or whichever metrics you choose to use.
There’s a lot of impressions and a lot of clicks that are being unrewarded and that benefit other channels today, right? So, I would really hope that with this aggregation of data, advertisers will understand that glow and will see that if, for instance, they were to remove affiliate. What that impact would be on their search activity. I feel like that’s where the new data set is going to be more important than us telling a story.
And that’s where, again, that’s the story and the narrative that we need to get to the ear of the decision makers. And I think that’s just going to be part of our ongoing journey.
One question I have specifically though is how are you seeing clients or brands measure the earned media value? Because it is kind of a less direct of a click or impression.
Yes, usually that measurement happens on the side of the social media platforms, right? And now that we actually run more of these activities, sometimes we also manage it through the affiliate channel. We are seeing these results. We are understanding the effort, like the value it’s placed, but essentially what they’re looking at is, it’s an industry benchmark. They’re looking at their earned media value. So, if they actually, had to pay a TikTok fee for the exposure, what would that cost look like? And they have panels in assessing that data, right?
And because that’s the value versus what they’re actually paying. That’s one comparison. But then also, what is their share of voice and distribution based on the media compared to that of the competitor? If they’re moving up, if they’re gaining a greater share of voice, they believe they’re going to be more successful within the next six months or so, it seems to be the sweet spot. But… And talking to Conor Begley, I don’t know if you’re familiar with him, he’s now part of the CreatorIQ team, for instance, he’s talking a lot about EMV, I think he’s helped assess that value. And he’s doing a lot of the assessments for many, many clients, but he actually can see also how this yields, like an upward trend and our significant increase actually leads to higher valuations and sales of these brands. It’s quite fascinating.
Yeah, no, that’s definitely something that needs to be, to your point, attributed to and brought into the affiliate metrics and, again, the narrative. So, I mean, clearly, we know and you’ve spoken to the value and the importance and the impact that the affiliate strategies and channels can have for advertisers, but I want to pivot a bit to the barriers, right?
Again, to us it’s a no brainer that brands should be leaning in more, but what we saw in the research paper, we had affiliate often only accounts for 11% of the marketing budget, only 38% agree it’s a priority for driving sales and customer acquisition, 63% are saying it’s separate from their other marketing activities.
And this is after 93% are saying that it’s effective. So, we’ve got that like some are getting it and some are not. And I think it’s again just a couple of more barriers were the lack of resources, lack of experience, to your point, a lack of trusted measurement and attribution.
And one of the biggest barriers to the budget prioritization. 73% reported it’s that reliance on the other traditional and digital channels. So, what are our thoughts? How can we overcome those barriers?
There’s a lot to unpack here, right? But essentially like research studies, like the ones that you produced, right? I don’t know if this podcast can influence anybody. We’re putting out a lot of customers impact stories as well. As I said, I think that the problem now is to re-educate everybody on what the channel is.
I think that takes a lot of examples and a lot of success stories to even show what shapes it can take on. And of this stage, I do believe though that the market, and it’s also backed by a lot of research, will push more people into the channel, right? And with that, they will help overcome some of these obstacles naturally and hopefully see the benefit it can contribute.
I mean, I want to remain hopeful of that, right? So, for us, it’s really just being very intentional and showing them the options and guiding them in the right way they will help overcome some of these obstacles naturally will consider it more and bring those success stories back to their senior decision makers and hopefully look at data in a more holistic way to understand the true contribution this can have.
Like on a platform level, obviously we can do our part in making sure that’s part of the reporting suite. So, affiliate marketers are equipped with this data and can actually take it up level. I feel like there’s an obligation that we have in that education. But I also believe that, we should just lean into the things that are of interest. I mean, we can run uphill, or we can use that tailwind that we’re seeing right now.
People are exploring the topic of influencers or want to do more or accounting, seeing certain challenges with that, leaning into the conversation and showcase how we can support it. And then basically, say like, and we can all, we can do all other things as well. So, I feel like that’s where surprisingly now most of our acquisition conversations are centered on how we can actually, support on the influencer side, and then we open them to all the other aspects, content commerce as a whole, and then all the other partners that the channel can offer.
So, I feel like it’s a little bit of a step-by-step approach but talk about things that matter. This is the economy, how we can support it, the channel will creating the greatest level of margin control, guaranteed return investment, and then also, the ability to choose from… millions of partners across the entire funnel as we established, right?
And the ability to run a campaign that’s not, set to forget, but that can be quite personalized. And we’ve actually, done some studies there too. We’ve looked at advertisers who are, we call it adventures. They take us up on everything that we have to offer, work with us across the entire clock. For instance, purchase, pre-purchase and post-purchase. And compare that to those affiliate marketers that we call armchair, and brands that just lean back, it’s the set and forget mentality.
We saw that there was a pretty vast difference in performance. I think the difference was 17% revenue differential between the two. You can have a bad experience, but it’s ultimately, I think on you. You can use it and everything it can offer and then it can actually become a meaningful vehicle in driving sales. But the good news is even if you don’t really do a lot, you still have that cost control and you will still naturally, a growth. It’s just a much smaller percentage.
Yep, and you’re right about, I think influencers, like that might be one of the things that makes this our moment, because the big difference, you as the industry is kind of going gaga over influencers, and it’s complicated. I think the opportunity is for… The improved opportunity for brands to go with their affiliate partners for influencers is that we can track to your point. There is that glow, that halo effect, that earned media for its traditional influencer campaign. But when you can add that affiliate measurement to it, you add the affiliate link to the content It just opens up so many more avenues for measurement, for value, and then the whole concept of then owning your customer.
If they come through that link to your website and purchase, now it’s up to you to have that relationship to build and grow that lifetime value where traditional influencers, they’re building awareness. It’s great.
But then if they go purchase on a retailer. You’re never going to know that connection to that investment. So, I agree with you I think Influencer is going to help direct more awareness to the potential with the affiliate strategies. And then to your point, too, the mass media publishers through the PR relationship.
So hopefully with all of those together, we’ll… more and more CMOs and senior marketing executives will lean in. But it’s, yeah, I mean, that was part of the goal of our research paper and this podcast is that there’s so much potential. And then I think we are, was 60% still have a negative perception of the channel. And was it 63% said that their executive leadership lack of understanding is a barrier.
So, every little bit will help. It’s the rising tide, as I keep saying, hopefully. But Alex, so we always ask our guests to leave the audience with an actionable insight, something that we can kind of apply to their programs or strategies today. So, what would you recommend?
Move activities into the performance channel? No, I mean, honestly, I would love for every advertiser, brand to have a hard look at their ad spend today. Advertisers are falling in line with what we’re seeing in the industry with two-third of all activities going to just three sites, you know, Google, Meta, and Amazon, right? And right now, in this climate, when consumers are spending a lot less because they have a lot less discretionary income, they have to make tougher choices, it’s hard for advertisers to justify that return on ad spend that they’re seeing.
So, if performance is not backing out currently, I would love for the actionable insight to be take another look at performance, move it to a space where you have that control or regain that control, own the relationships with these affiliates you choose and where you can actually run truly customized campaigns that meet your business needs.
So, I would want to leave it with that. And hopefully on a more positive note than the negative stats you just stated.
We’re nowhere to go but up. But I agree with you. I think it’s that diversification and testing, right Like you said, the adventure clients, what was the phrase used? Those are always the best clients.
And to your point, those are the most successful because they’re willing to lean in and try new things. Whether it’s a fail fast or just let’s see what else will work. We need more brands to have a bit more tolerance to new things and change.
Alex, thank you so much for your time and participation. And now I definitely need to go find some fresh bread to make a sandwich.
But thank you and hopefully I get to see you in person soon. But again, thank you so much for your participation today. Lots of really good insight. Thank you.