Antiquated business structure and sibling rivalries between online and offline counterparts are preventing retailers from maximizing the potential of effective digital marketing efforts, such as affiliate marketing, to drive in-store sales. Smart retailers will tear down the walls and recognize the opportunity for effective, secure and profitable offline affiliate solutions writes, Jonathan and CEO, RevTrax
Affiliate marketing is huge.With billions spent every year, it’s a ROI beast that marketers pour dollars into. Since the early days of online shopping, brands have been tapping into affiliate partners to drive traffic and e-commerce sales.
Last year alone, U.S. shoppers spent $334 billion shopping online and 16% of those sales came from Affiliates. In 2017, U.S. retailers spent $5.3 billion on affiliate marketing, and that figure is expected to balloon to 6.8 billion by 2020.
Amazing as that sounds, those figures only account for online sales – with a much bigger pie left out there for retailers: in-store sales. Shoppers spent $2.9 trillion in stores last year – without any affiliate marketing.
So why aren’t marketers applying their affiliate strategies to drive in-store sales?
This is symptomatic of a larger issue that plagues many brands: a refusal to look at their issues holistically. Too many retailers still silo e-commerce and brick-and-mortar efforts – dictated by separate P&L ownership. Why should one party spend their marketing budget to fund the top line of the other, even though they work for the same company? Crazy, right?
The reality is that this internal competition will drive many retailers out of business because they are focused on the wrong thing. Protecting and growing sales anywhere in the organization is the ultimate priority, and that is getting lost.
So what’s the solution? Blow up legacy structures, focus on the customer and create a seamless online/offline marketing and shopping experience that customers want.
A great way to get started is to begin uniting the different components of the marketing channel. Right now marketers simply can’t connect a fully digital marketing channel like Affiliate to drive in-store sales. That seems crazy in this day and age, given everything else we know about digital marketing and measurement. Connecting the dots between online behaviors and offline purchase shouldn’t be that hard.
In fact, leading retail brands have already started expanding their traditional “online” affiliate program into the offline space.
For years, brands have been partnering with analytics firms to prove digital’s connection to in-store sales – via various methods (e.g. DLX, NCS, etc). But often these solutions take months, and cannot be acted on quickly. The key to in-campaign optimization is incentive technology.
With 1:1 trackable offers, brands can actually connect online data – like affiliates – to actual, in-store purchases. When offers are redeemed in-store (or online), all digital engagements, encoded into individualized offer codes are linked to purchase. These trackable offers form the connective tissue between digital marketing programs that often operate in silos.
Leading retail marketers are starting to unleash this approach into their affiliate marketing – driving offline sales, and creating a wake of valuable first-party data.
The potential for optimization and personalization makes this even more compelling. The feedback loop of in-store sales data will help create investment efficiencies. Marketers can now leverage more data points than ever before to optimize campaigns for the right segments and improve incrementality at the transaction level. Smarter offers and integrations with DMPs and marketing clouds, will allow retail brands to confidently personalize offers across audiences – new, existing, lapsed and loyal.
Affiliates win with this approach, too. More actionable insights linked to much greater in-store sales data can likely even help quell ongoing debates between advertisers and affiliates. Traditional online affiliates stand to gain more, as brands incentivize them to broaden to in-store sales. The potential for “offline affiliate” expands the opportunity for everyone involved.
But what about the biggest elephant in the room? Fraud.
Security and offer control have been a valid concern among retailers for a long time. Every year, hundreds of millions of dollars are lost to fraud. Retailers fear their coupons will go viral and affiliates fear their links will be copied or misused. Just last year, Toys’R Us had their digital offers misused through a security glitch.
But solving fraud in affiliate marketing is not only possible, it’s easy. Single-use, self-destructing codes, and other innovative security solutions can prevent digital promotions from being copied or abused – mitigating fraud risks for brands. Additionally, digital offers can even be linked to the SKU level and served in real-time. These solutions provide retailers much more control over the campaigns than ever before, while still allowing brands to incentivize customers with relevant offers.
So, do we have any evidence this actually works? A leading fashion retailer took this “offline affiliate” approach, and saw increased digital engagement and in-store sales, using the following approach:
- Dynamically generated offers – optimized for any device – were automatically delivered to customers as mobile barcodes or print-at-home coupons, which were redeemable in-store.
- Robust tracking provided detailed affiliate performance reports and deeper customer insights
- Secure, single-use links ensured offers couldn’t be replicated or over-used beyond the initial, approved affiliate sites.
- Syncing online behavior and in-store sales data back to the brand’s DMP and Marketing Cloud, created a feedback loop, allowing for personalization and continuous optimization.
- Offers attached at the SKU level gave them complete control of their campaign.