This article was originally published on PerformanceIn.com.
Peanut butter and jelly. Holmes and Watson. Netflix and chill. Some things just go together. Now, it’s time to add direct-to-consumer (DTC) retailers and affiliate marketing to the list.
If you’re a retailer looking to expand your reach, improve your return on investment, and inspire new interest in your products, direct-to-consumer affiliate marketing is worth a look. Below are five reasons why.
1. Affiliate marketing is a proven ROI-booster.
Let’s start with the money. To give you an idea of how lucrative affiliate marketing can be for DTC retailers, companies like Amazon and Walmart reportedly earn 40% of their $100 billion annual sales via their two million affiliates. Additionally, the average order value of sales driven by affiliate marketing is 21% higher than other channels, and it can help increase annual consumer revenue by up to 58%. Not surprising, seeing as 38% of marketers say affiliate marketing is one of their top customer acquisition channels.
Sounds like a no brainer, right? It gets better …
2. Affiliates connect DTC brands to new audiences and m-commerce.
If part of you is hesitant to leave the far-reaching audiences of the duopoly, you’re not alone. But that same hesitation on the part of other marketers may prove to be a boon for your business. Yes, most affiliate marketers will have a smaller audience than Facebook and Google. But their smaller audiences allow advertisers to tap into new niches of highly passionate, engaged, and targeted followers. And many of these niches are found on mobile, even though they may not seem like niches at all.
Take Instagram influencers, for example. These affiliates are popular with Millenials and Gen Z, the next generation of consumers, and provide a direct path for marketers to highly-sought-after and highly-specific mobile customers. That can lead to big payoffs for brands, as a recent survey found Instagram to be a major factor in the purchase funnel:
- 83% of respondents said Instagram helps them discover new products and services
- 81% of respondents said Instagram helps them research products or services
- 80% of respondents said Instagram helps them decide whether to buy a product or service
For direct-to-consumer brands willing to take the leap, affiliate marketing can help them break into the mobile sphere and connect with new audiences. And with the right partners, setting up a mobile partner program isn’t as hard as it may seem.
3. Affiliate marketing for DTC retailers is low-risk, high-reward.
The beauty of affiliate marketing is that it’s based on return on investment. In most models, affiliates don’t get paid until they successfully refer a new customer to you.
For example, direct-to-consumer shoe retailer Zappos offers 7% commission per sale, luxury consignment shop The RealReal offers 5% commission per sale plus a $50 cash bonus for each new customer, and watch company MVMT offers 10% commission per sale. So for DTC retailers looking to minimize their risk, or only pay out of money they’re making, affiliate marketing makes perfect sense.
4. Relying on just Facebook and Google is a risky strategy.
First of all, it’s no secret that Facebook and Google are where just about everyone is advertising. That means dealing with more competition, having to stand out in a sea of similar ads, navigating consumers’ inevitable ad fatigue and blindness, and putting your DTC business success in the hands of walled gardens.
Not to mention, Facebook and Google come under more scrutiny every year for privacy issues, ad manipulation, and user mistrust. This is a trend that is, unfortunately, likely to continue in the coming years as technology gets more sophisticated. Another challenge of advertising through the duopoly is that their once keyed-in targeting features are becoming more limited due to new privacy restrictions like those found in the European Union’s General Data Protection Regulation.
In other words? It’s worth looking for a few other baskets to put your eggs in.
5. Affiliates can unearth new insights about customers.
Finally, affiliates are often experts in their market. They know what resonates with their audiences, what tone of voice to use to engage them, what time of day they’re online, what kind of content they go crazy for. As a direct-to-consumer retailer, you can learn even more about your customers from the affiliates who know them best. (And you’d be in good company; in 2017, 81% of brands were already using affiliate marketing programs, and the channel is only expected to grow in popularity.)
You can also lean on affiliate partners to help with your marketing materials. Once you have a program going, give your affiliates some messaging guidelines, then allow them to add their own unique flavor to advertising. This can take some of the heavy lifting off your shoulders, while still bringing in the results you seek. Try letting affiliates do their thing, reward them when a new lead, customer, or sale comes through, and continually monitor and refine your best partnerships.
Find Your Bliss in Direct-to-Consumer Affiliate Marketing
Excited to dip your toes in the water of direct-to-consumer affiliate marketing? Get an introduction to the industry and the specific tools you’ll need to succeed in our two-page DTC Playbook, or go in-depth with our Ultimate Guide to Partner Marketing.
When you’re ready to up your game with a sophisticated solution to track, manage, and pay out on retail campaigns, request a demo or trial of TUNE.
Becky is the Senior Content Marketing Manager at TUNE. Before TUNE, she led a variety of marketing and communications projects at San Francisco startups. Becky received her bachelor's degree in English from Wake Forest University. After living nearly a decade in San Francisco and Seattle, she has returned to her home of Charleston, SC, where you can find her enjoying the sun and salt water with her family.