15 min read

How to maximise your affiliate channel performance this Christmas

Key takeaways

  1. Q4 is the best time to test and learn
  2. Identify gaps in your affiliate channel now
  3. Plan ahead, but be fully prepared to change your approach.

Introduction

In our recent webinar, our senior affiliate marketing managers discussed the effect of the coronavirus pandemic on the affiliate channel and how this could impact performance going into Q4. In this article, you can read more about the discussion and how you can prepare your affiliate channel to maximise your brand’s festive period, with added input from experts at Awin, Partnerize, Commission Factory and Impact.

Learnings from 2019

One key learning from 2019 was the success that critical dates can provide for different brands and verticals across Q4. We found that for some brands in the fashion and beauty sector, Singles Day was crucial – in fact, in the US alone Singles Day was worth $30 billion in 2019. Luxury brands also benefit from Singles Day, as the discounting only lasts 24 hours compared to Black Friday, which can last up to two weeks. 

However, for other verticals like menswear and sportswear, Black Friday and Cyber Monday remained crucial in 2019. For these brands, transparency and flexibility over this period was key despite careful planning. One client’s competitors launched new, aggressive strategies in the final lead up to Black Friday. This required us to make last-minute changes to campaigns to ensure the client’s offering remained competitive and appealing to their consumer base. 

Proactive communication and collaboration was critical to ensuring success, and some changes needed to be made on Black Friday itself! Despite initial plans going out the window, this flexibility led to our client surpassing their original growth targets and maintaining ROI.

Offer fatigue was something we had to consider for brands that had run discounting strategies across the year. We looked at how we could still engage the consumer, but not repeat an offer they’d already seen. For this reason, we explored added-value campaigns, looking at gift cards and relevant brand partnerships where we offered a brand’s services when a consumer completed a purchase. 

This approach was received extremely well, as we tailored offers to the audiences that we were targeting. In turn, we saw positive engagement and results.

What can the affiliate channel expect from Black Friday 2020?

Rosalyn Berrisford, Client Partnerships Director at AWIN, said: “In 2019, many brands viewed Black Friday with caution, with a series of unknown elements causing concern – it fell on pay day for many, and six days later than in 2018, pushing Cyber Monday into December – would this help or hinder the usual peak?  

“However, Awin tracked more than €500m across the Cyber weekend and witnessed double-digit year-on-year growth. There were some interesting publisher moves, with the share of code and cashback sites actually diminishing (despite still driving the largest chunk of sales) and replaced by a surge in commissions tracked via social media channels. Black Friday 2020 raises different questions; most digital marketers are expecting it to be big, but just how big? Will retailers suffer the availability issues seen in the early days of lockdown with the huge surges in demand? What will Amazon do after their recent strategy changes with their affiliate programmes? 

“eMarketer have provided an updated forecast of a 16.5% ecommerce growth rate in 2020 factoring in the pandemic’s effects (down from 20.2% last year). There are also many rumours about delayed product launches now being pushed back to October and November, such as the PS5 and the new Google phone. Some shopping habits are starting to return to normal post-pandemic, but it’s likely that consumers who have tried online shopping will continue, at least for occasional purchases. 

“Looking at Awin data before and during the pandemic, YoY performance is still very strong across most Retail sub-sectors reaffirming that Black Friday 2020 will be the biggest yet.”

What can we expect from Q4 2020 overall?

Daisy-Blue Tinne, Agency Development Director – EMEA at Impact, said: “Q4 2020 is expected to be substantially different from Q4 2019, but just how will the differences manifest themselves? 

“Some trends we expect to remain the same; 2019 was the biggest Black Friday the Impact platform has ever measured and we expect 2020 to be larger still. Whilst the days of websites crashing under unprecedented demand have passed, it’s still important to plan diligently with partners. Clarity and communication remain watchwords in modern digital partnerships. 

“Lockdown will have caused gluts of supply in certain areas so watch out for exceptionally high discounting as retailers try to shift excess stock. The large volume of sales trapped inside a highly unpredictable couple of days remains a daunting prospect for many advertisers. So expect to see deals coming out well before Black Friday itself, these are aimed at emptying consumers’ wallets early and spreading the demand across a wider period of time.

“Whilst we still forecast Black Friday to remain highly deal focused, the overarching trend of growth in partnerships is expected to continue over the remainder of Q4. Consumers are more and more reluctant to engage with traditional advertising and anything that is obviously trying to sell to them. As such partnership types like native technology, brand-to-brand and influencer, are going to blossom further during the holiday season.”

Timing is key

The customer is savvy! If your consumer is confident that the discount you’re running is the highest discount they’ll receive, they’ll purchase. However, if they know that you’ve launched a 10% discount and it’s a prelude to a 25% discount on Black Friday, they won’t be fooled. 

In 2019, deliberately staggering offer discounts actually had an adverse effect, so it’s important to balance the needs of the business with the needs of the consumer. One example of this from last year was Curry’s PC World’s price guarantee, which guaranteed that if an item was reduced further later in the Black Friday period, the consumer would receive a refund for the amount. That serves to build trust and guarantee that the consumer is getting the best deal at the best possible time.

Additionally, key dates falling in late November and December can have a big impact for brands. In these instances, people largely focus on buying gifts for others. For the homeware sector, one thing we noticed last year was a slight drop in AOV compared to previous years. This is because we didn’t see as many sales for large items like furniture, because customers were concerned that they might not get them in time for Christmas. It’s important to have conversations about how we can reduce the loss if we see a drop in AOV. What tactics can we put in place that will help build it back up? 

For example, we might look at offers with a minimum order value or at tiered cashback where consumers get more cash back the more they spend, or we might work with certain types of partners that have an audience with a higher disposable income.

Planning and testing

In Q4 particularly, brands need to plan. While 2020 has shown us that it’s impossible to plan for every eventuality, it’s important to do as much planning as possible but also to be prepared to be reactive. In 2019, we worked with some clients to have two different versions of an offer ready to go, with codes and artwork ready for both, and then chose the version we thought was right at the time, often based on the decisions competitors had made. 

Brands should be particularly aware of what their competitors are doing, and should be positioning themselves to that their offerings are strong enough they don’t get lost in the market space. Loyal customers remain a brand’s most reliable source of income in uncertain times, so it’s also a good idea to work with loyalty publishers, cashback sites and content sites to strengthen a brand message!

Q4 is also a good time of year to gather as much data as you can while the volume is there and you’re able to see what works and what doesn’t. This means that you can build out your case now if you need extra budget signed off to test new things, whether that’s an influencer campaign or expanding into brand-to-brand partnerships. Now is the time to kickstart those budgeting conversations – this will give affiliate managers the best chance to showcase the channel internally.

Awin reported last year that 7% of their sales over Black Friday were from the influencer channel, which is certainly starting to come to the forefront of the mix. If this isn’t built into a brand’s strategy already, they need to be thinking about adding that in, and the same applies to brand-to-brand partnerships which is becoming ever more important in the affiliate mix.

There's no 'one size fits all' approach

For some sectors, the approach to Q4 is very different. For the food, home and garden sectors, Q4 is not necessarily a peak time compared to, for example, Q1 when consumers go back to work and back into routine. In this instance, Q4 can be a great time to think about brand building and how to get the brand in front of new audiences in the lead up to Q1, using tactics such as A/B testing, smaller-scale campaigns, etc. 

Q4 is often still a smaller peak period for these verticals, but unlike luxury fashion, menswear, sportswear and the like, the spikes for these brands come generally around October and after Christmas, such as Boxing Day. Instead of trying to be visible across the whole of Q4, brands in these verticals should know their calendar, know their peak times and focus on building awareness and ramping up to Q1. Align your calendar with your consumer behaviours.

The impact of Covid-19 on the affiliate channel

Covid-19 has had an obvious impact for beauty, skincare and fragrance brands, where the consumer experience has changed drastically. These verticals typically rely on in-store experiences such as free samples, but have seen an obvious shift towards online that will likely lead to sampling being run through the digital channel instead. 

It’s also a tough climate for a product launch, so we will likely see a big push towards iconic products or ‘safe bet’ products, such as popular fragrances rather than new ones. We also need to consider the impact of everyone wearing masks – beauty brands are unlikely to launch a new lip product during this time, for example. 

Miriam Tremelling, Director of Marketing Strategy and Operations at Partnerize, said: “According to August 2020 data from Periscope by McKinsey, e-commerce grew more in the past three months than in the past 10 years combined. Given that consumers in many places may not feel comfortable returning to malls and retail stores this holiday season, affiliate can bring needed value and targeted understanding to consumers and brands.”

The impact of Covid-19 on affiliate networks

Janina Hagen, Client Service Team Leader at Commission Factory, said: “From a network point of view, we have seen exponential growth across the food, activewear and gym equipment sectors. We have also seen the demand for recreational and hobby industries surge as people look to entertain themselves at home. Many fashion brands have adjusted their communication where possible to home and loungewear rather than social events apparel. 

“Brand response to COVID-19 has varied, with some brands starting to invest more heavily into digital, specifically in the affiliate channel. Brands with physical stores that were/are affected by lockdowns have notably done this, while others have pulled the plug on everything. 

“We recommend brands continue to invest in affiliate marketing and focus on what consumers want now. With the ever-changing environment, brands should not solely rely on past years’ data to plan for Q4. Instead, they should use the past months’ learnings of consumer behaviour to prepare. With social restrictions most likely continuing, a lot of Christmas shopping will be done online this year. Being able to meet the demand and prepare for a shift from offline to online is key.”

We may not know the full impact of the pandemic until we can compare at the end of the period. However, many brands now offer an extended return period due to Coronavirus, meaning that consumers have a longer period in which to return items and could do so if a purchase has become cheaper, such as an item going into a sale. All of these elements can have a big impact on revenue during the quarter.

How can we set brands up for success in Q4?

One element to bear in mind when planning for Q4 is changing purchasing behaviour. Consumers are likely to want more ‘insurance’ behind big-ticket purchases so we’re going to see customers using credit cards and systems such as Klarna, which instils confidence that they can afford the product overall. 

Miriam said: “With upticks in digital content consumption and social media usage since the onset of the pandemic, advertisers have pursued greater diversity across their partner mix. This should continue into the holidays, when it will become even more important to interact with shoppers throughout their purchase journey. Purchases made on social media rose 84.7% year over year during the early months of the pandemic. Leveraging influencer and content partnerships will become an important part of raising brand awareness, driving purchase decisions, and increasing revenue. 

“Shoppers will be looking for tangible savings on purchases, so working with traditional affiliates like coupon and cashback will continue to be wise – 86% of people worldwide are interested in hearing from brands that are running promotions.”

Engaging with relevant trends

Brands should focus on ideas that are in the public eye, for example sustainability, which is becoming more important for the modern consumer. Right now, we’re seeing many brands looking to incorporate this into their business model where possible – using recyclable packaging, more eco-friendly products, cutting down on plastic and providing paperless receipts. 

Sustainability is also a big topic within the food industry at the moment, and it’s been at the forefront of customers’ minds during lockdown. Consumers have become more mindful of the food they’re consuming which has led to a reduction in food waste – and they want to keep up good habits and food management at a good level now lockdown is over. 

Brands that are transparent in their approach to sustainability will benefit going forward, as there are many new niche publishers entering the market with a focus on sustainability. For example, some publishers will reward actions that reduce carbon footprint, some take an educational approach. For brands that are looking to get involved in the sustainability movement, it’s a great idea to work with these types of publisher to demonstrate brand ethos.

Talking technology

It’s important to ensure you’re undertaking any website testing in Q3 rather than Q4, apart from any last-minute changes that absolutely need to happen. The reason for this is that implementing something new can create a barrier to conversion, which you obviously don’t want to do in such a crucial period. You want your purchasing process to be as simple and familiar as possible, so don’t change things like your checkout during this period. Think about championing staggered payment methods such as Klarna and Clearpay, which give your customer that reassurance the product is affordable.

In the run up to Q4 we also need to think about the volume of traffic we’d expect to see come through to your website and double it, triple it. Work with your technology partners to ensure they’re prepared and your website doesn’t crash, losing you valuable sales.

Daisy-Blue said: “The true key to a successful Q4 will prove to be both automation and volume of partnerships. Now is the time to take advantage of partner discovery tools (both in- and off-network) in order to increase the number of partners promoting your brands prior to the Q4 rush. Managing this diverse array of complex partnerships will require a technology that is able to automate the different needs of partners with speed and efficiency. This will be more vital than ever with many companies still either furloughing staff or putting a hold on new hiring leaving some stretched teams.”

Miriam said: “With mobile shopping during the pandemic surpassing previous holiday shopping levels, delivering seamless shopping journeys on mobile sites and apps is going to be critical this year. Making it easy for shoppers to not only convert, but utilise offers and promotions on mobile web and in-app will be valuable for converting browsers to purchasers. In addition, for affiliate and partner marketers, deploying tracking that can capture these sales is important for understanding the value of each partner and optimising accordingly.”

If app tracking is not implemented, approximately 40% of affiliate channel revenue is missed and therefore cannot be tracked back to your affiliate programme, so it’s critical to ensure app tracking is set up and functional.

Final thought

We will undoubtedly witness to a very different festive season to what we’re used to in 2020, so it is key that brands plan and prepare in advance, test new approaches and use the right technology to maximise their affiliate channel throughout Q4.

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