Halloween is over, holiday decorations are overflowing store shelves, and Thanksgiving weekend marked the [unofficial] beginning of the holiday retail season. This often raises the question of how retailers will outshine one another, pining for people's cash as they shop for gifts with the best deals (fun fact: Americans spent $540 million between midnight and 10am ET on Cyber Monday, almost half was attributed to mobile). But beyond this surge in sales over this holiday season, how are retailers building out an effective marketing strategy that results in efficiency, highly-measureable data, and scalable opportunities?
According to eMarketer, this would be performance marketing. Specifically: affiliate marketing.
In the eMarketer report recently released— Performance Marketing in US Retail— the trend of performance-based marketing accounts for nearly half of digital ad spend, and is only continuing to grow. In particular, affiliate marketing accounts for 7.5% of total digital spend among retailers, making up a quarter of overall affiliate spending (or $1.19 billion of nearly $5 billion total in 2016). According to Tony Zito, CEO of Rakuten Marketing,
"this translates to [selling] hundreds of billions of dollars in gross merchandise volume that retailers are experiencing through the affiliate channel."
To break it down, at its core affiliate marketing is a relationship between retailers, where now service providers, ticketing and travel companies, and more fall under this umbrella (where a transaction can take place), a publisher (where discovery happens), and the consumer, all benefiting in one way or another. Commerce brands can leverage a person's point of intent within a publisher in order to drive that person to transact— commerce brands drive sales, publishers monetize on said sales, and the consumer easily fulfills their need. And the biggest winner we've probably seen in the space is Amazon; no surprise there given the retail giant was expected to hit $3.3 billion in sales alone on Cyber Monday and claimed Thanksgiving Day as one of their "busiest mobile shopping days in history."
Outlined within eMarketer's report are a number of factors increasing affiliate marketing spend, many of which we see often among our partners at Button. One includes the notion of better data through simply the sheer amount that's available, giving retailers real insights into their consumers' journey beyond the end result of transaction. Additionally, premium publishers have flocked to this idea, with 20% of the revenue from the largest publishers coming through affiliate according to Rakuten. In fact, as noted in the report, several companies "have developed technologies that skim pre-existing content and add contextually relevant links." Lastly, costs associated with affiliate marketing can be easier to justify since it works on commissions, meaning commerce brands only pay, and publishers only get paid, when desired actions result.
Specifically, by measuring attribution to power affiliate marketing, retailers are benefiting when it comes to understanding every step of their consumer journey and the drop off points, providing high-value insights into what makes or breaks a transaction. In fact, eMarketer estimates that nearly 40% of US companies now monitor this with multi-channel attribution, an increase from 31% in 2015 with an expectation to hit 58.5% in 2018.
But when it comes to the mobile space, the consumer journey starts to shift for retailers with new and challenging factors coming into play. As RetailMeNot CMO Marissa Tarleton mentions, mobile presents new ways to measure beyond the revenue-per-visit level. But on the flipside, mobile also poses attribution challenges that we don't see on desktop, with one of the "hardest parts [of mobile attribution] being the absence of cookies." At Button, this is something we've worked on for two and a half years, providing real-time performance tracking through our API for partners in our Marketplace.
Connecting to People, Not Channels
Another theme around performance marketing found in the report that's important to point out is this shift in today's marketing focus, going from "channels— and likely the demographics found on each— to individual people with inferred or expressed interest." In other words, looking at people's actual intent and fulfilling that as quickly as possible. A survey from LiveRamp found that over half of US B2C marketers said people-based marketing in digital channels other than Google and Facebook was "extremely important" and an additional 30% said it was "moderately important"— in total, 84% of marketers see the value in these other channels.
Echoed within the report is a focus on the person (versus the channel), meaning a more personalized and relevant approach— "people-based marketing" if you will. Vendors are realizing this resonates too, over, and over again. Look at our integration between Hotels.com and Uber, where an Uber Button only appears when relevant to the consumer's current location. And Foursquare's integration with an array of Buttons— Uber, Caviar, OpenTable, Ticketmaster, Delivery.com (among others); Quidco's integration with hungryhouse in the UK (where, notably, hungryhouse saw a 300% higher conversation rate for new users with Button over standard ad networks). Again, these only appear as they're relevant to the consumer's journey at that point in time, resulting in taps and transactions that aren't accidents— something all retailers can appreciate.
Overall, performance marketing is changing the game for retailers and ultimately how people purchase. If you're curious about what we're doing, hearing, and seeing in this space, check out our website or sign up for the Button blog. We're constantly evolving and adding new partners to our Marketplace for our Publishers and Commerce Partners, expanding the possibilities of partnerships among today's mobile economy.
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