Episode Two: Behind the Research

Transcription

Kerry Curran:

Hello and welcome to our second episode of the Gen3 podcast, Actionable Insights. Today we are joined by Linus and Mike from London Research to explore the background of our first to market original research paper exploring the affiliate marketing landscape. So, first Linus and Mike, please introduce yourselves. I would love to hear who you are and why people should listen to you today.

Linus Gregoriadis:

Thanks, Kerry. Thanks for having us on today’s session. My name is Linus. I head up London Research. We work with marketing technology companies and agencies to produce thought leadership content. So, we are writing a lot about the trends, consumer trends, marketer trends, marketing.

Mike Nutley:

Thank you, Kerry, for having us on the show. I am Mike Nutley. I am a B2B journalist, and I am a principal writer at London Research and have been working with Linus for a few years now.

Kerry Curran:

Great, thank you both. I should mention this is also not our first rodeo together. Linus and I first worked together on an original research paper exploring a new advertising platform called Amazon back in 2016, 2017. So, I am excited to have them both here with me today. So, before we get started, a couple of other questions I have for you. When you explain to your family members and friends outside of the industry, how do you explain what you do?

Mike Nutley:

So, my explanation is simple. I just tell people that I turn graphs into something that people might want to read. So, there is a story behind them. And that seems to that seems to work.

Linus:

And I say that I write about internet trends and how I used to be a more newspaper journalist and then moved more towards business. So, I am still employing my interviewing and writing skills there. But some people do say, even after I have explained, oh, so you work in IT.

Kerry Curran:

So, as I mentioned, I have worked with Linus and Mike in the past, in my previous roles. My third paper with Mike and fourth with Linus, and so when I started at Gen3 five months ago, one of my first calls was to Linus because I knew that I wanted to explore the landscape of the affiliate marketing industry.

The approach we have always taken together was to look at consumer behavior, marketer behavior, and how are they complementing each other, how are the marketers meeting the behavior of the consumers, but also where are the gaps? Historically, we explored Amazon, we have explored digital and omnichannel and e-commerce over the years. So, looking at the affiliate landscape, what I see as a little bit of an undervalued tool and for marketers to really drive customer acquisition. I knew we needed to dive in with some actual data and research. So, with the typical approach of quantitative surveys for consumers and marketers and then qualitative interviews, we put together a plan here to really identify the impact of the affiliate publishers have on the consumer behavior across the full funnel purchase journey, buying process, and how we can create a report that becomes a tool for those marketers to maybe get more strategic and lean a bit more to those opportunities to improve their sales and business results.

So that is a bit of the background of the paper. As I mentioned, Linus was one of my first calls. So, Linus, can you explain a bit more about the… approach and interview and research process.

Linus:

Yeah, I think you have described some of the methodology well there. Thanks, Kerry. One thing I need to mention is the interviews we did, I guess the qualitative research to complement the survey-based approach we took. And what was important, we had all agreed, was to get a good representation from various parts of the… affiliate marketing ecosystems. So, we spoke to publishers, we spoke to brands, some who were on the record in the report, some wanted to be, some prefer to be anonymous. We spoke to the technology providers, and we had a good representation. Am I missing anyone there? Agencies obviously in the form of representatives from Gen3 who are really at the coal face and experts in particular verticals, whether that be financial services or travel and publishers as well.

It was great to talk to the guy who heads up, Reviewed as part of that. And in terms of the surveys, you’re right, we did want to use an approach we have… used in the past which is both consumer surveys to get some really rich data and be able by having 2,000 consumers some quite robust research across different age groups and then I’m sure we’ll come on to some of the differences there and the survey of 250 senior marketers within businesses as well.

And one of the challenges was to think about how we could understand those gaps in terms of the opportunity for businesses and how we frame the questions for consumers and how we can then map those against the several types of, for example, affiliate publishers. because obviously consumers do not necessarily talk in the same language as marketers.

Kerry Curran:

Among creating the questions, we really were looking at a variety of insights. So, I know for the consumers, we were asking about not only the importance of finding deals and savings when shopping online and the importance, but also what I thought was a key finding was how their interaction and engagement with the affiliate publishers would impact their brand choices.

So, inspiration or willingness to try a new brand or product, as well as where they are seeing that. So, is it, as you mentioned, with the affiliate publishers, the upper funnel, the mass media, more popular magazine sites, all the way down to the coupon sites? And which… which stage of the journey those were impactful. And then with the brand side, I think for me, coming from a broader media, omni-channel media buying agency, knowing that the investment levels in other channels that might not be as ROAS driven is typically much greater.

It was important to me to see, to get more insight into the brand marketer’s head of how you are prioritizing your channel mix, which channels your investments across both digital and linear TV channels, but also how are you integrating affiliate into that strategy and planning. Is there an omnichannel? My goal is to get the affiliate marketing specialists a seat at that planning table when brands are looking at what is our ultimate business goal and how are we going to get there with the digital landscape. And so those were some of the questions that we were digging into from the brand marketer perspective as well as barriers to maximizing affiliate. investment and how brands are managing their affiliate strategies, planning, and activation within their organization or with partners. So, some really, solid insights from that perspective that I know will become a useful asset for brands going into their broader planning. So, Mike and Linus, overall… And Mike, you can tell us, what was your thoughts on the data? What were your thoughts on the data as you started, we started getting back the survey results?

Mike Nutley:

Yes, there were two ways of thinking about this. One is what really surprised us and what did not surprise us. And what really struck me, I mean, I have been a business journalist covering this area for a long time and it was not really a surprise to see how widely used affiliate marketing is. Affiliate marketing has always been, pushed to one side a little bit. It’s always been a sort of a bit of a poor relation, as you say. But you don’t have to look very hard to find out that it’s widely used it is and how powerful the tool it can be.

So, it wasn’t really a surprise to see how much people were using it. To have that, to have that kind of anecdotal sense confirmed. And that was, that’s cool. But what then did take me by surprise was despite this, and despite the fact that we had the survey respondents, the marketer survey respondents, saying that more than half of them were using affiliate marketing at the top of the final or mid-final, and half of them were using it for acquisition and conversion.

What we found was that only a third said that they actually regarded affiliate as being part of their omnichannel strategy. And only a quarter, in fact less than just over a quarter, said that it was strategic. So, there was this very surprising disconnect between what’s actually being done in terms of… full funnel activity and how it’s being how it’s perceived and how it’s being managed. And that seemed to me to be something that they would really be something that marketers should be aware of and should be thinking about, rethinking their approach.

Kerry Curran:

Yeah, I agree. Linus, what was your take on that?

Linus:

Yeah, I mean, thinking about the consumer data, I guess we’re bombarded with news about slightly often quite sort of gloomy economic news and generally consumers, everyone struggling with inflation, that type of thing. So, it didn’t surprise me how cost-conscious consumers are and how much that’s changed even within the last year and the appetite for deals across all age groups didn’t surprise me to see that growing but maybe the extent to which people were eager for offers and things that did surprise me a bit.

I was intrigued, surprised by the breadth of sites that we’re using as consumers. So, it’s not just coupon loyalty sites. It’s all sorts of touch points on the journey. It could be like a benefit site because through your employer. because you’re a student, it could be a comparison site, I guess in the world of financial services, it could be a credit score checking site to just as often might be the start of your journey and in travel, it could be everything from the brand’s own website to travel influencers, the trip advisors of this world. So, it was good to see it brought to life the richness of the customer journey.

Kerry Curran:

Yeah, I agree with you both. I think that was really eye-opening to me as well. There are so many touch points and so many opportunities for brands to invest and lean into being there at the beginning of the inspiration phase, whether the person is intending to purchase or not, just getting inspired to make that purchase.

Mike, you’re saying that the gaps, I think the gaps between were surprising to me as well. I think from the inspiration stage, where you really have the opportunity to engage your target audience, your consumer, what surprised me the most was that actually the publisher, mass media publisher sites are what consumers refer to as popular magazines, Vogue, Good Housekeeping, Better Homes and Gardens, GQ, when they asked about those types of sites, those were actually favored 60% more than the retail media marketplaces. So, 37% of responders said that they start with popular magazines versus 21% starting at the retail marketplaces like Amazon, Walmart, Kroger, Target, and with 24%, just a bit more starting on search engines.

To me, that’s proving a need for that broader media mix. Being in the industry, we know retail media networks are the hot, hot topic and brands are scrambling and tripping over themselves to make sure they’re present. But what our data shows is that those are the most popular destinations for purchasing. But if you want to introduce a new customer or a returning customer to your brands and products, you really do need to be part of the affiliate publisher networks or publishers in a broader reach approach. That to me was interesting because all 2,000 respondents to the survey reported a fair percentage of starting their journey on affiliate publishers with affiliate links, whether it’s just information, reviews, deals, discounts. But then those also dominated in the research and consideration with purchases happening on the retail media and the brand sites the most.

So again, it’s that broader media mix that, or publisher mix that brands need to start incorporating into their media planning. The disconnect with the brands, again, didn’t surprise me. But what did surprise me was, pleasantly surprised, was that… It was at 33% of brands, I think strongly agreed that they were increasing their affiliate marketing budget in the next 12 months, proving that it was the number one channel that would see an increase in budget. And so, brands are starting to get it.

There’s still a lot of opportunity. But then when we see the barriers of… lack of senior executive buy-in or as you said, lack of strategy, seeing it only as a tactical execution channel. So again, I hope that we meet some, that more brands are going to listen to this podcast and check out the paper so that they can go back to their internal teams and agency teams and say, we need to really look at. the affiliate landscape to drive more impact and maximize the potential there for us to connect with our audiences across the full funnel. So, for me, again, those are kind of my takeaways and what I was both surprised and not surprised about in the paper. So, I guess Linus and Mike, if you were to share your top takeaways for both brands and from what you learned creating this paper, what would it be?

Mike Nutley:

I guess I go back to this point about taking a strategic approach and integration, because I think just to pick up on the point that Linus made about the richness of the customer journey, I think we’re seeing this massively complex journey and we see that as the price of the item, or product or service goes up, the amount of research being done increases dramatically.

We’re seeing this complex dance across a number of touch points. And if brands aren’t there, supplying a coherent, consistent presence, and this seems to me to be the absolute crucial point here. It needs to be joined up. It needs to be consistent. It needs to work at every level for the real brand trust and brand engagement to really work. If you’re just doing this in a kind of a, you’re doing all your other stuff and then you’ve got affiliate down at the bottom, which you’re just doing, you know, tactically, you’re not going to deliver the best value.

It’s got to all tie together. It’s got, you’ve got to understand, as a brand, you’ve got to understand that what you can deliver on your own properties is only a small part of the entire journey. So, you’ve got to identify all these other touch points, whether it’s the inspiration stage or whether it’s further down the funnel. And you’ve got to tie them all together with meaningful resource and content that. that delivers this coherent, consistent brand experience. And that seems to me to be the thing that I would offer to brands and marketers as being the key lesson from this.

Kerry Curran:

Yeah, definitely agree there. And Linus, how about you?

Linus:

I would reiterate certainly what Mike’s saying about the need for a more strategic, integrated, holistic approach. And that obviously straddles everything from the technology and data and metrics through to content. It means thinking more full funnel. So, the education piece is really important.

The champions of affiliate marketing within the businesses or within agencies really need to make sure that senior leadership within companies understand how affiliate marketing has moved on. And it’s not just about the last click players and then the discounts. They’re certainly important, but it’s not just about the sales, it’s about… the opportunity for top of funnel awareness and brandings.

I see the range of affiliate publishers there are now, the whole performance PR piece, commerce content, affiliate marketing is now encompassing quite a broad range of sort of sub channels or discipline that all need to be considered and understood but the end goal is really still about performance marketing and hence people should be listening within the business and less wedded to I guess traditional digital channels if that’s not a contradiction in terms but the paid social and the display advertising and the search instead of pouring all your all your budget into the Googles and Facebooks, and I guess even increase the Amazons of this world. It’s how do you leverage affiliate marketing and how do you get more budget for more effective performance?

Mike Nutley:

Yeah, and just to pick up on that point, I mean, we did actually find that the biggest barrier to increased use of affiliate marketing is reliance on existing channels. So, it suggests that, the highest levels of the business, affiliate marketing has an image problem or an understanding problem. Yeah, and that’s something that needs, as Linus says, that’s something that needs to be addressed by the champions of the channel.

Kerry Curran:

Yeah, I agree. I’ve been saying that for a while that the affiliate marketing industry needs a major PR campaign. So hopefully this is one step in the right direction. Because again, as Linus and Mike, as you guys said, with the performance aspect of it, it’s the always positive and guaranteed results of a positive ROAS and return on investment coupled with the… the control of where they’re going or what they’re seeing when they go to these sites and that you own the customer relationship when they purchase through your site versus when they’re purchasing through the third party retail media sites.

Once they come to your site, you start building that relationship with them for loyalty and increased lifetime value, which is going to be increasingly important. when the cookies finally go away.

I think absolutely across the board, there’s so much potential and untapped potential. And I think that the brands that are really going to efficiently and effectively move the needle on their new sales and new customer acquisitions, new account opens, new bookings, are the ones that are going to look at affiliate with a strategic lens. And I think that’s what’s going to happen. That’s what this data really supports. And from that, any other kind of key ideas or takeaways you wanted to share?

Linus:

I think on a more granular level from the research in the consumer survey, and I think this underscores the importance of brands really understanding their target market. We found there were some quite big differences between the over 55s and under 55s, not that the threshold is necessarily 55 when you become old. it was the elder demographics were a bit more sceptical and less trusting of different types of information source, a bit more sceptical about brand sponsored endorsements, recommendations, the younger demographics it didn’t seem to make that much difference to whether they trusted information.

That’s not to say the elder demographics are interested in deals. We know from the research they are, but there’s some nuance around the approach that needs to be taken.

Kerry Curran:

Linus, one of the things we’ve talked about is how important this type of research is to industries and learning more about consumer behavior. How would another brand or agency or other entity connect with you if they want to get involved and explore their landscape with you?

Linus:

Please do reach out to us. I mean, we work closely with a range of clients. I think the important thing is to understand the goals and objectives, which areas or sectors or disciplines that they really want to, I guess, own in terms of thought leadership and work together to come up with an original research idea that will be of interest to their target audience.

There’s a decision in terms of the type of content and output, do they want more, comes back to the funnel again, to the top of funnel trends of research, or do they want a buyer’s guide type output or the vendor comparisons if they’re in the technology world.

What I think is great about the report we’ve done with you at Gen3 is that it covers the trends, but there are also some actionable recommendations. Hopefully, we can continue to work with Gen3 and other technology companies and agencies moving forward.

Kerry Curran:

Linus and Mike, thank you so much both for your partnership and the patience throughout the process, but also for taking the time to share your thoughts with us today. Yeah, definitely look forward already to next year’s paper where we explore the year over year trends as well. Hopefully we’ll see a major uptick in the brand prioritization of the affiliate channels.

But thank you so much and hopefully we’re encouraging everyone to download the paper to learn more about the details. So, thank you both and we will talk again soon.