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Despite it being the height of the holiday shopping season, this is a challenging time for many retailers. Many are encumbered by debt loads, overstored in the face of declining mall traffic and struggling to maintain margins in a highly competitive environment. To make matters more challenging, over that past several years there has been a discernible shift in the retail marketing landscape—a shift in power from marketer to consumer—and if you’re a marketer who wants to thrive in this relationship dynamic, you will need to adapt sooner rather than later. With the consumer calling the shots, it has become incumbent upon you to meet them wherever they are, on their terms.
Even with an awareness of that imperative, with Y/Y increases in Facebook’s CPMs at 18% and Google’s 8% increase in CPCs, for retailers attempting to adapt to this dynamic, the price to maintain omnipresence throughout the buyer journey is further undermining the unit economics of already struggling businesses. With Facebook and Google maintaining their seemingly permanent residency as the cornerstones of the digital marketers’ playbook, and Amazon a persistent and credible threat, the desperate search for scaled subsidies that enable revenue to grow faster than expenses and the operating leverage this dynamic yields has reached a palpable level of urgency. For some has become a matter of survival.
So where are retail marketers finding the answers?
Recent findings support the idea that today’s playbook requires updating to reflect the modern landscape. Marketers need to identify and invest in channels that deliver material growth at favorable unit economics. Reaching consumers with the attributes of your high LTV customers is not exclusive to the walled gardens, or other scaled pay-for-access channels. So, where are they?
Performance channels, like affiliate marketing, not only provide scaled audience reach, but with technology innovation automating historically manual processes and outcome based pricing models reducing spend waste, the formula to create operating leverage is yielding the intended results. For marketers who understand this formula, today’s affiliate channel, no longer defined by coupon and cashback sites and last click attribution, is delivering material subsidies to the costs of traditional primary sales and marketing channels and a competitive advantage is emerging.
Marketers who have embraced affiliate marketing understand well the power the channel has to create this subsidy. Pepperjam recently-commissioned Forrester Consulting to quantify the value that affiliate brings to executive-level marketers. The results confirmed that executive level respondents who have budget oversight and purchase authority for multiple paid marketing channels ranked affiliate as their number one channel for customer acquisition (54%) and consider affiliate as a top channel in driving revenue (52%). You can read the full results here.
Rip Up the Old Playbook
Like the D2C marketers who understand the power of performance channels, you can take the most critical and practical step toward adopting this approach. It starts with ripping up the old playbook and adopting an approach that never rules out a channel based on its historical performance or an antiquated view based on a relationship with a status-quo solution provider. To remain relevant and competitive, you must adopt a data driven testing methodology and challenge yourself to revisit old strategies. The results will follow.