Affiliate Marketing

Mitigating the risk of global expansion

For companies looking to sell in overseas markets for the first time, partnership marketing offers a more reliable way to introduce products to new customers.

There are a lot of reasons for businesses to expand internationally. Done well, entering a new market results in new revenue opportunities, access to new talent pools, global brand exposure—just to name a few. But the move does not come without threats. Approaches that work for one company may not work for another.

What are some of the common pitfalls? And how can companies avoid them?

First, it’s important to accept that any business venture comes with some level of risk, and this is especially true of expansion into new markets. However, in my experience, a common misstep is not taking local culture and preferences into account. Too many organizations enter new markets blind to local culture or customer preferences. When Starbucks expanded into Australia in 2000, for example, their offerings didn’t cater to local tastes, and the company racked up more than $100 million in losses over its first seven years Down Under. And the history of marketing is littered with examples of companies missing the messaging mark in new countries. For example, when milk producers took their famous “Got Milk?” ads into Spanish-speaking countries for the first time, marketers quickly learned that their home-run slogan roughly translated into “Are You Lactating?”

One way organizations can mitigate risk is by investing in partnership marketing. (Full disclosure: My company specializes in helping brands with their affiliate marketing partnerships.) This approach provides a sort of backstop that prevents such glaring messaging misfires. If a company is working with a wide array of trusted influencers and traditional publishers in the markets where they’re expanding, these partners will be able to tell the brand if there’s some local reason that a given message — or even a given product — might fail to land with customers. Partners can even provide valuable insights about the competitive landscape of the unfamiliar market, which might inform a company’s expansion strategy.

When companies think of partnership marketing, they sometimes think of coupon and deal websites designed to reach large numbers of people in a short amount of time. These partners are great at luring in people who are already at least familiar with a brand. However, when entering a new market, brand familiarity often isn’t high. That’s why partnership marketing programs that leverage influencers and traditional publishers are actually an excellent fit for this product-introduction work.

Aside from acting as an awareness vehicle, partnership marketing also provides brands with empirical data on what is working and what isn’t. And because the partnership marketing model is pay-for-performance, there’s a built-in mechanism to drastically reduce risk. A multi-million dollar television ad campaign is a much faster way to raise awareness with a large swath of potential customers. But if these potential customers don’t end up becoming actual customers, there’s no return on that money and no way to get it back. By contrast, the dollars that a company spends on its partnership marketing efforts are typically the result of actual clicks and conversions.

To be successful with any partnership marketing effort—but especially one in a new market—companies must spend time and energy vetting potential partners and building up relationships. Partnership marketing isn’t a set-it-and-forget-it tactic, but rather one that requires constant care and feeding. Very basically, companies must ensure they have a partnership marketing platform in place that is capable of tracking their in-country partnerships and paying out partners in the local currency. At a higher level, companies must ensure that they’re aligning with partners that make sense for their brand values, and whose reach is really as deep and extensive as they claim. Companies may even work with partnership marketing firms that conduct test buys of paid search ads, paying these firms a performance-based commission. This will sometimes be more expensive than working through a standard digital agency, but it’s also a safer bet as the brand only pays when a customer buys.

For companies that opt to pursue a partnership marketing strategy in international markets, their local partners may end up serving as the “tip of the spear” in their efforts to make inroads with new customers. That is to say, partnership marketing is a low-risk way to gain a foothold and learn about the new market, but brands may ultimately decide to expand their marketing and advertising strategies to include more paid search and traditional media. When they do, these subsequent investments will likely be much less risky because of the partnership marketing work the brand has already done.

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