The Brand:
International Pizza Chain, operating in over 90 markets, $20B+ turnover
The Problem:
The incrementality and purpose of affiliates was uncertain
The Approach:
Standard Model
- The purpose and incremental value of the channel was defined in a sentence; this sentence would inform what the channel would do and wouldn’t do
TAV
- CPA and tenancy media were assigned specific purposes and measurements for success
TFF
- The programme worked with fewer affiliates and strove to define and leverage the unique capabilities of partners
ACTS
- Media buying explored how partners could support the entirety of the purchasing journey
The Result:
Senior Management became confident that the channel could deliver incremental value.
The Journey:
Transformation of the channel into a demonstrably incremental means of influencing consumer behaviour would take months, tough choices and wholesale changes.
When designing the strategy, what the channel wouldn’t do was just as important as what it would do.
The strategy incorporated business and marketing objectives to ensure whatever the channel did, it went some way to supporting wider objectives.
The consumer was placed at the heart of everything. The goal was to be able to evidence changes in consumer behaviour as a result of affiliate marketing.
Creating new demand and capturing existing demand were set as the core reasons for the existence of the channel.
The business operated in a regulated sector and recent changes to discounting rules meant the channel had to be inventive.
The channel also had to justify incentives to 3rd parties on the basis of commercial viability due to margin considerations outside the control of affiliates.
While it isn’t possible to detail the full considerations in this book, an example of how to think about an upsell incentive is provided below:
- The business AOV is £50
- The Paid Media CPA across all channels is £5 (£2 for Affiliates)
- The minimum spend is set at £70 for a 10% discount
- The discount means the minimum basket value is £63
- At £63, assuming multiple channels contribute to a sale, the £5 is recouped leaving a £58 and an £8 assumed uplift or margin per redemption
- If customers spend £80 rather than simply aiming to meet the £70 minimum, then the approach is working, encouraging higher spending. In this scenario the AOV is £72 rather than the minimum of £63, and is £22 higher than the business AOV
In the example above the channel is able to drive higher-margin customers and modify consumer behaviour in a tangible and trackable way.
This was one part of the wider strategy that helped to persuade senior management that the channel could deliver incremental results.
Tenancy investment was a sizable portion of the budget; however, it wasn’t possible to evidence added value.
Tenancy was assigned a purpose to help direct investment and improve how it was structured, to allow for the assessment of added value.
Example:
Tenancy exists to tempt out-of-market consumers into making an impulsive purchase.
Partner A offers a package containing a category placement, newsletter feature and run of site display, with a rate card value of £5,000 at a 50% discount and £1,000 of added-value media.
It may be tempting to buy the media on the basis of the discount and added value; however, the strategy is looking for media to identify and target consumers who are likely to be out-of-market.
The first question to ask is, when are consumers in-market and what identifiers do they present, so that they can be excluded from segmentation.
If Partner A can do this then we can consider investment. The next question to ask is if Partner A can segment a relevant amount of consumers, who can be targeted with effective tenancy media.
Segments could include people who usually shop with a competitor or people who have not previously engaged with the brand.
Tactical targeting should be utilised to factor:
- Time of day
- Seasonality
- Pay day
- Weather
- National events
Football fans, for example, may want to eat while watching a match at home. What they eat may be a decision that they make during the 1st half.
If an affiliate can reach them during this period, with a message from the brand, then they may be able to influence a decision.
This type of approach lends itself towards added value, whereas buying tenancy for the sake of a discount and added value may not.
Commission media was focused on persuading in-market consumers to make a purchase.
The focus was on people seeking a meal who were undecided about which brand to purchase from.
Partners who allowed consumers to search for options were reviewed to assess where the brand appeared and what recommendations looked like.
For a pizza brand, the term ‘pizza’ is highly relevant for direct competitors. The term ‘chicken’ and other terms associated with fast food were also relevant, as all fast establishments were competitors.
The goal was to persuade partners to serve the brand as an option for all of these terms and where possible for them to offer preferential placements that maximised impression share.
Understanding the share of impressions was key, as was tracking it to determine if the optimal conditions for growth were being achieved.
Discussing impressions and behaviour with partners led to important conversations about the wider partnership and helped them cater media offerings to support the strategy.
Overall, the new approach demonstrated tangible and incremental value to senior leadership.
Sales rose, costs fell, processes and the use of data became both more efficient and effective.
The channel moved from buying media on the basis of the discount on the rate card, towards investing in media that aimed to produce value-adding consumer behaviours.
Get more help with affiliate marketing by purchasing our book, *Affiliate Marketing for Brands*; all profits support the APMA. Amazon – https://amzn.eu/d/0aXXU8wc
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