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01/12/2022

Leveraging Customer Rewards and Incentives to Grow Affiliate Marketing Programs

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Customer Loyalty

As social media advertising and keyword search ads increase in price, it becomes more difficult to produce an acceptable return on ad spend (ROAS) from these types of buys. Indeed, executives at Tinuiti, a performance marketing agency, reported that pricing in these channels is the highest it’s ever been. With privacy initiatives coming into play, targeting social media ad campaigns effectively is becoming even more difficult, which serves to further erode the effectiveness of these campaigns.

With those top-of-funnel advertising methods producing lower ROAS, brands are shifting budgets one notch further into the user purchase funnel, targeting website visitors with incentives and rewards, which drive higher sales conversion, reduce cart abandonment and increase basket size.

"Coupled with the impending 'death of the cookie,' retailers must continue to look for ways to grow and scale their affiliate programs in newer, more efficient ways in 2022 and beyond."

Affiliate programs have long been known as one of the most efficient and high-ROI marketing channels for retailers. But finding more growth, or even incremental growth, in their existing programs becomes more difficult and time consuming as marketing teams continue to take on additional customer acquisition responsibilities. Brands must find solutions that will help them quickly ramp up their programs by increasing offer distribution and prospective audiences at scale, without needing to spend excessive time and money growing affiliate programs and building relationships publisher by publisher.

Rewards, loyalty and coupon platforms are an increasingly essential component in advertisers' mix. These types of publishers can have significant reach, as well as drive... wait for it, wait for it... incrementality.

While the CPC-based, top-of-funnel advertising methods are increasingly competitive, the ability to drive incremental sales through rewards and discounts present a more effective method to increase sales. When a potential consumer activates rewards or cashback at the beginning of a shopping trip, this in essence serves as a magnet that draws the consumer through the shopping experience and all the way to a converted sale. The psychology of “getting a deal” can’t be overstated.

In fact, at Wildfire, we see a direct impact on sales conversion and basket size. The global average sales conversion rate, from a website visit to a purchase, is approximately 1.77%. But, when a consumer activates cashback rewards, over 15% of them complete the transaction. The impact is also seen in basket size (i.e., if I’m getting a deal, I should buy more!).  

When consumers make purchases after having visited an online store from social media sites such as Pinterest and Facebook, the average order value is historically in the $60 to $70 range. Wildfire’s data shows that when consumers activate cashback and then visit that online store, the average order value is $130.

"The right distribution channels can fuel affiliate program growth."

Proactive marketing managers are meeting the challenge to grow their affiliate marketing programs in order to meet aggressive goals. There are multiple levers to pull in this regard. Distribution is a key component, ensuring that the brand is working with the largest publishers, and also building relationships with emerging one-to-many technology platforms that enable the rewards ecosystem. In addition, marketing managers are implementing traditional methods, including optimizing commission payouts and launching exclusive coupons.

The rewards and coupon platforms are often built upon the foundation of affiliate marketing, and with the rise in cashback and rewards programs, the affiliate sector will see a resurgence in 2022. That’s good news for the whole ecosystem, as affiliate marketing has historically proven to be an efficient and consistent sales driver. Additionally, with the percent-of-spend pricing model, the advertiser’s ROAS through affiliate marketing is protected because payment is performance-based. Brands must continue to find offer distribution channels that already have significant reach, with a large prospective audience. This means partnering with networks and platforms that can help magnify the brand’s offers across the internet, including coupon and loyalty rewards platforms that can produce incremental conversion rate increases and higher basket sizes.

-Jordan Glazier, founder and CEO, Wildfire Systems

Jordan Glazier is the founder and CEO of Wildfire Systems, which provides an enterprise platform that enables partners to embed social commerce, rewards and cashback offerings within their existing services. A veteran technology executive and serial entrepreneur, Glazier was an early executive at eBay, where he was responsible for building several of the company’s largest business units from the ground up. Prior to founding Wildfire, he was the CEO of Eventful, Inc., which he built into the world’s largest discovery platform for local events and entertainment before it was acquired by CBS.