Partner marketing is taking over as an umbrella term for the various different areas of our industry. It is becoming apparent that we are no longer working in a siloed world. Successful partnerships and campaigns can include multiple marketing channels and technologies working together to meet objectives.
PerformanceIN recently managed to grab Matt Gilbert, CEO of Partnerize, for a chat to learn about what he envisions being the greatest trends of 2022, as well as the perception problems surrounding affiliate marketing.
I expect 2022 to be a year of accelerated innovation in our category as we continue to create white space between the legacy network model, and the software automation and service motions required to continue to accelerate the channel’s measured ability to drive material growth for both brands and partners.
Next year’s winners (and we certainly intend for Partnerize to be on that list) will have delivered attributable advancement in emerging areas that are critical to achieving that objective. Specifically, the enablement of activating and administering brand to brand partnerships which in their inherent construct, overcome the trust barrier so prominent in the next generation of consumers.
Motivating conversions predicated on trust and leveraging the first party data of complimentary brands represent a powerful counter to the loss of targeting resulting from ITP and the deprecation of the third party cookie. Additionally, winners will have delivered demonstrable progress towards two additional areas of needed improvement in the category. Dynamic creative optimisation, using data and predictive intelligence to drive a higher probability of conversion for brands and partners, and making progress to address the lingering lack of auction functionality designed for outcome based models versus impression based models.
Progress in these areas, along with meeting the heightened need to assist our brand partners in acquiring first-party data, and our supply side partners with the ability to actively manage yield or revenue per thousand pages in publisher parlance should underpin award worthy contributions in 2022. If we want more top tier placements from partners, be it editorial, influencer promotion, or brand to brand adoption, automating the calculations using deep datasets and intelligence is a core requirement. Winners will be attacking these opportunities and delivering meaningful innovation to the channel.
You’ve introduced the tagline ‘A better way to partner’ – is the Partnerize platform used solely for performance-based partnerships, or are you seeing other strategic partnership activity as the very definition of partnerships evolves?
The tagline has a dual purpose. In part, it is intended to acknowledge, with honesty, the old game, hindered by reputational challenges of the channel including the reliance on last click attribution, the opacity of the supply chain, fraud and bad actors, and the manual nature of channel administration. These have impeded the channel from realising its full potential as a creator of operating leverage for businesses over dependent on primary sales and marketing channels.
It then confirms that the realities of the past two decades have yielded to a new game, where the winners on both the demand and supply side of the ecosystem are leveraging the solutions and operating practices that have been developed to directly address those challenges and provide the capabilities required to support the go forward growth of the channel as it moves beyond the constraints of the narrowly defined affiliate channel.
The evidence is visible in the entrance of new brands to the category, the increase in attributable revenue contribution from our channel to overall partner revenue builds, the shift in ownership of the partnerships channel from transactional advertising budgets to strategic initiatives with new reporting lines and innovation in compensation models for partners. We are seeing all of that in our business and expect more of that heading into 2022 and beyond.
What particular trends are you noticing as we head into 2022?
One of the more prominent trends we see as we exit 2021 is brand focus on taking more control of their partnership’s channel via owned and operated resources. Our in-housing practice is in very high demand as brands increasingly view the channel as strategic at a level that supports running it “inside the walls” but they remain challenged in finding trained professionals to assume that ownership quickly due to an overall scarcity of trained professionals in the category (as compared to channels like sem and paid social).
At PerformanceIN we thrive to see affiliate marketing recognised as more than last-click. How can the industry tackle this perception problem?
Candidly, this is more than a perception problem. It was earned by the scaled 1.0 companies in the category who built up meaningful revenue stacked on a last click attribution model. When that happens, the incentives are misaligned and protecting that scale creates a significant barrier to improvement. You also had many brands, particularly retailers, who became accustomed to using the channel as a means to hit short term transactional targets with heavy dependence on a small number of large discount and cash back oriented partners.
Similar to re-targeting, this tactic became an addiction and forecasts became hostage to revenue often without regard to longer term ramifications of acquiring a low lifetime value customer. The disruptors in our category are taking the steps required to move the channel past the legacy network model and break down the stranglehold of last click attribution. We’ve done that through a deliberate and orchestrated approach to automate that partner discovery and recruitment process.
This enables diversified scale through automation and data driven partner discovery, by enabling in-channel attribution measurement that allows all partners in the channel’s clickstream to be seen and measured based on weighted contribution to the conversion, and the dynamic commissioning capability required to equitably allocate fractional payments in accordance with that contribution.
Perhaps most important, we have to stop grading our own homework, claiming incrementality when that measurement should be happening in a channel agnostic environment, in a system of record for attribution. We should not live in fear of how we will show in a true measurement environment, with proper hold out testing. Only when we open ourselves to be measured that way, will we get to where we aspire to be.
Earlier in the year, Partnerize announced a partnership with Publisher Discovery. Why was this such an important step and what else is in the pipeline?
The more high quality supply we can make available to brands in the channel, the greater the opportunity to drive meaningful conversions. The Publisher Discovery team built a great solution that allowed us to materially expand the supply side opportunities for the brand side of our marketplace with a simple API integration that is exclusive to our SaaS platform. We are perpetually evaluating opportunities to expand the quality of our offering through partnerships and M&A. While I am not in a position to share specifics, I would tell you that Partnerize will continue to be active on both the partnership and M&A fronts in 2022.
What challenges do you see lying ahead in 2022?
I think the challenges for the category next year will be heavily influenced by workforce related challenges associated with the ongoing presence of the pandemic. I think we all understand the benefits of the accelerated shift to e-commerce, but everyone I speak to in the industry is trying to determine the best way forward with regard to remote workforces, talent development, acquisition, and retention. We have real tailwinds in the category driven by the accelerated shift to e-commerce, but our ability to serve that demand depends on our ability to develop talent in a category that still lacks scale in its professional workforce. This is an area that, as an industry, we have learned together.
Finally, the creator economy is fast becoming the mid to long tail for brands. How important do you see the creator economy to brands in the near future?
Brands have a significant focus on trying to understand how influencer fits into the performance partnership channel. The platform and campaign workflows have significant overlap but the friction in commercial models, and the continued lack of trust that micro and nano influencers have in equitable participation in performance compensation sharing is still a very prominent theme. Brands prefer not to pay for duplicated technology capability, but consolidating stack capability doesn’t address the need to show influencers that performance models are a fair proving ground for them as they look to graduate to sponsorship models, and that for those who may not elevate to paid placement, that they will be measured and compensated fairly in perpetuity.
Therein lies the challenge and the opportunity as we believe that in world where the power has notably and perhaps irreversibly shifted from the brand to the consumer, where traditional ad placements have lost efficacy even in a climate of increasing cpm’s, brands are compelled to be present at every touchpoint and to be there in an authentic way. That is an expensive proposition and outcome based compensation models create leverage but brands need to proceed with caution here. Influencers are part of the success formula, but they are high maintenance, need to be perpetually refreshed as influence declines, and themselves run the risk of losing the trust of the consumer if they over promote.
It is clear that the partnerships channel, including affiliate, performance, brand and influencer partnerships, is an incredible opportunity for brands. Here’s hoping that this year we see more recognition of that, which should in turn lead to the development of solutions enabling partners to be in complete control of all areas of their strategies.
This article originally appeared on PerformanceIN on 1/17/22
