Only a few years ago—practically an eternity in internet time—an email newsletter called DailyCandy was the belle of the marketing ball.
Brands elbowed each other out of the way to reach the newsletter’s large (and demographically alluring) subscriber base, and eventually this competition drove up prices. What was once a great deal became, essentially, a bloated ad buy. Many brands were priced out entirely, and those that stayed on board found themselves scrambling for another way to reach new customers when the newsletter shuttered in 2014.
We’re seeing the same thing happen today with pay-per-click marketing platforms such as Google and Facebook. While these platforms still have their pluses, high demand has driven up the price in recent years, meaning that brands are often left paying more for the same level of performance.
This doesn’t mean that companies should stop advertising with Google and Facebook. But it does illustrate the importance of building a diverse marketing portfolio. One way to do this is through partnership marketing, a term that applies to any outcome-based partnership enabled at scale via digital technology.
Based on my experience, here are three ways partnership marketing helps brands diversify their marketing efforts—and how to get it right.
1. (PRACTICALLY) UNLIMITED PARTNERS
As a channel, partnership marketing has diversity “baked in” to the model. Some companies do take a somewhat limited view of partnership marketing (for instance, retailers that limit their activity in the channel to deal and coupon sites), but this is typically not the best strategy. In my experience, the brands that see the best success from partnership marketing are the ones maintaining relationships with hundreds or even thousands of partners, including bloggers, loyalty, deal, specialty content sites, and traditional news and consumer content sites. It’s a bit like buying into a mutual fund, rather than investing in individual stocks; you’re able to minimize your risk and give yourself multiple chances to reap rewards. Also, companies are able to leverage the credibility of these partners, who have built valuable relationships with their readers and followers. It’s one thing for a company to place an ad saying some version of: “Our product is great!” It’s another thing entirely for an army of internet voices to rave about what you’re selling.
By keeping their eye on up-and-comers, companies can position themselves to take advantage of undervalued marketing opportunities. This approach also insulates brands from the quirks of search engines, which can drastically (and suddenly) de-value a given marketing partner with a slight tweak to their search engine optimization (SEO) algorithms.
2. COST CONTROL
The reason DailyCandy eventually became overpriced is because a large number of brands were competing for a small number of spots. It’s the same reason a 30-second Super Bowl spot goes for $5.5 million: simple supply and demand. By contrast, in partnership marketing, companies can decide how much they’re willing to pay for a conversion, and then hold the line on costs. There’s no danger of “running out” of partnership marketing opportunities, and therefore brands don’t need to worry about getting into bidding wars with competitors who drive up prices. Instead of feeling at the mercy of the market, brands should essentially set their terms on what they want to pay the market. That’s a huge difference.
3. GUARANTEED PERFORMANCE
That $5.5 million price tag for a Super Bowl ad? It has very little to do with the performance that companies can expect to see when they make a buy. (Rather, it is a reflection of the fact there are dozens of brands waiting in the wings that would gladly pay $5.4 million if given the chance.) Any company that spent significant sums on advertising and marketing has likely seen at least one campaign fizzle out, with little to show for the investment. In partnership marketing, however, brands only pay when customers actually make some move toward making a purchase, such as clicking on an affiliate link. Even better, companies can set different values for different types of performance and pay partners accordingly. For instance: Instead of partnering with a coupon or deal site to share traditional coupons or vouchers, brands might instead launch a campaign offering discounts that compel customers to buy in-store products within a certain time frame to move inventory or meet strategic business goals; or brands can offer bonus incentives for bloggers (or news sites, or podcasters, or influencers) to bring new customers to their digital doorstep.
Businesses today have an opportunity to shift away from how things have always been done. This strategy does require more management than traditional marketing (due to the large number of partners involved), but if done well, the results can be worthwhile. By focusing on the outcomes they want—and finding a diverse array of partners who can deliver those outcomes—business leaders can seize this moment and build diversity into their marketing portfolios.
Matt Wool, President at Acceleration Partners.