Saturday, March 31, 2018

Q&A on programmatic performance marketing (aka affiliate marketing)

A good marker is always in search of the best ROI or maximum impact for his marketing budget. What ever our goals are, there are clear differences between metrics we can gather between Email, Search, Display and Social marketing. The above article explores the headwinds and tailwinds programmatic marketing faces. Programmatic marketing or affiliate marketing are nothing but vendors that use computer programs to manage marketing budgets across different digital marketing channels.

1. Is affiliate marketing actually incremental to traditional marketing or is it cannibalistic?

Per the author, affiliate marketing is "marginally incremental" when measured within the online-only ecosystem. Affiliate marketing doesn't usually get credit for offline conversions because of lousy attribution models or tracking errors. Additionally, the price elasticity exhibited in media auction marketplace makes budget allocation all the more harder.

So, to truly understand the incremental value programmatic marketing adds to your campaign, you need to entirely shut it off and perform a A/B testing. Even then, there is always the challenge of measuring the tangibles. For example, you need to make sure that your affiliate marketers are conveying your intended messaging and positioning to your target audiences.

2. Have you found that customers gained through affiliate programs are of quality lifetime value (LTV)?

No, they are of lower LTV because you lack the ability to target specific customers.

3. Do your clients actually view affiliate as a growing category?

Clearly a yes, given the push to performance marketing or ROI.

4. Would you invest your money in the affiliate category if you were an investor?

Holy grail in digital marketing especially performance marketing is a central dashboard that does the following:
  • Merges non-PII data with transactional data across every paid touch point.
  • Overlays offline media and earned media.
  • Lets one create either A/B or fractional factorial experimental designs.
The goal is to maximize both short and long term sales. This is easier said than done. Aggregating data from closed networks like Google Search, Facebook etc. is very hard and possibly a pipe dream. The minute these networks start sharing their data they loose their pricing power. 

Additional headwinds include:
  • Mobile not being as trackable as desktop. Its getting better with apps tying location to retail purchases.
  • Offline tracking still lacking. This problem can be mitigated with adoption of mobile wallets.
In summary,  A/B testing after completely shutting down your affiliate channels is the only option to understand their influence today.

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