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Affiliate Marketing is The Channel Smes Should Invest In During Times of Economic Turbulence

Martech Outlook | Friday, April 14, 2023

Smita Pillai, Customer Success Director at impact.com, tells us how SMEs can steer a safe course through the current financial downturn by embracing the power of affiliate marketing 

Regardless of what anyone might tell you about ‘spending through a downturn’, the reality is that as soon as the economy hits the skids, the marketing department is inevitably the first affected by any budgetary cuts. This is unfortunate, because there are certain marketing activities that are perfectly placed to help power a brand through tough financial times, and affiliate marketing is just such a channel - especially for SMEs.

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What is affiliate?

For the uninitiated few, affiliate marketing is a type of partnership marketing in which affiliates receive a commission for referring a brand’s product or service to their audience. It is a brilliant example of performance marketing, because the brand only pays once a conversion has been made, so it is extremely cost-effective. 

The sector has also come a long way in the last handful of years, and today the landscape has evolved from traditional loyalty, blog and coupon affiliates to encompassing social media influencers, business development partners and also paid media partners. 

SME benefits

And the good news continues, because investing in the affiliate channel will particularly help SMEs through tough economic times. This is principally because - as we’ve seen - affiliate marketing works on performance-based principles, meaning that businesses only pay for results. This allows SMEs with a small marketing budget to maximise efficiencies and gain access to a whole world of marketing expertise and experience through affiliates in their respective field. 

There are a number of other benefits that affiliate marketing offers SMEs, and these include a significant degree of data and campaign analysis, a high ROI (a sale through Google ads will cost 20x more than the affiliate equivalent) and boosted brand awareness. Affiliate marketing is even easy to integrate into other marketing activities, and is great for building campaign scale.

Downturn growth

These benefits take on extra importance during an economic downturn. Affiliate partnerships can be used by SMEs to fuel growth in even the trickiest conditions. For example, brands that invested in partnerships early in the COVID pandemic “reaped the rewards, seeing their revenue grow by 41 percent in 2021”. The performance nature of affiliate marketing allows marketers to prove the measurable value of an affiliate program, and double down on what works without fear of wasting marketing spend on less advanced forms of marketing. 

Affiliate partnerships also offer a more human-centric, authentic form of marketing and a welcome departure from endless, underperforming banner ads. Any partnership is, of course, a two-way street, but the brand gets to set the relationship’s commission rate, helping to control costs and ROI. This offers a good analogy of how you can calibrate and customise a campaign on the fly: it’s super-easy to amend your strategy to focus on high-demand product categories, for example, or those that generate the most revenue. True flexibility. 

Affiliate tips and tricks

Thriving during a downturn might be a daunting prospect, but there are a number of things SMEs can do to boost their chances of success in the affiliate marketing space. If you are already running an affiliate program, a good start is to strengthen your partner relationships, be transparent and ensure they have the necessary resources for success. Conversely, discard partners that aren’t working, and search for new ones. 

If you’ve yet to get started, invest in recruitment and keep commissions flat to offer what partners want at the moment: consistent payouts. Build customer loyalty, because it costs five times more to acquire new customers than retain existing ones, and move your campaigns away from fear-based messaging (there’s enough of that around). Finally, reduce wastage and improve efficiencies by leaning on data to ensure your campaigns are fit for purpose, and can prove their worth. 

Affiliate 2.0

We’ve already seen that the affiliate channel has evolved into a high-performance, high-precision marketing weapon, but there’s still much more to come. One trend we’re seeing develop in 2023 is affiliate and influencer marketing merging to form a formidable marketing powerhouse.

The affiliate space was worth $9.1bn dollars in 2021, and is expected to grow to approximately 14.3bn in 2023 globally. We’re also seeing an increasing number of influencers enter the channel and fuelling this growth. SMEs should nurture both influencer and affiliate channels for future success, and harness their combined power.

In some ways, the future of affiliate marketing is already here. Integrations that allow ecommerce platforms such as - in impact.com’s case - Shopify Plus and BigCommerce users to seamlessly incorporate the affiliate channel into their marketing activities. Ultimately, SMEs that embrace the world of affiliate marketing have the best chance of both surviving and thriving in the current economic downturn, because the affiliate channel helps narrow costs to the most effective marketing methods.

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