On September 14, 2016, I had the distinct pleasure of speaking at Commission Junction’s annual conference for the affiliate industry, CJU. I was honored to be invited to share what I think is the biggest problem our industry faces and has faced for more than a decade – selling the channel to those outside the channel.
There are many ways to prep for a presentation, I always choose to script out my entire preso. It helps me keep things flowing and allows me to really craft what I want to share with the audience. Below is that script. Now, it isn’t the exact same thing as my presentation, once I get there I don’t use the script, but it shares the same ideas and thoughts. I hope you enjoy it. Some of the humor loses its luster in text and you won’t get to see me dance, but if we get the recording, we’ll share that so you can take that all in. And please, read through to the end and join us in redefining affiliate marketing with the hashtag #affiliatemarketingis.
Here you go!
Good afternoon CJU! My name is Jamie Birch. I am the founder and CEO of JEBCommerce, a performance marketing agency. I stumbled into the affiliate space way back in 1999. For those of you under 30, yes we had the internet back then. You had to insert a CD_ROM, but we did have the internet. Anyway, I’ve been doing this performance marketing gig now for almost 20 years. I’ve seen our industry through the eyes of an affiliate (I made about $300), an advertiser and for the last 12 years, an agency.
Many of you, if you know me for that long, know me from my days at Coldwater Creek. While at theCreek I launched their affiliate program, then generated almost 40M a year, and grew into positions managing their SEO, PPC and Email Marketing. It was a very successful affiliate program, and at times, really broke new ground in the affiliate space.
Today I want to talk about one of the biggest problems our industry faces and how to fix it. We aren’t at the table when it comes to digital strategy. We are left behind. We aren’t called or consulted and regulation, decisions and budgets are thrust upon us with little involvement if any from our channel. But we can change that, and I’ll talk about that today.
And now, story time with Jamie…
I had no idea that during my time at Coldwater Creek I would be called a Luddite, a protectionist and would get very close to being fired for the first time in my life on a day I was planning to receive a promotion, and quite honestly, a parade for my amazingness. No lie, for some reason I thought that’s what happened. I can’t tell you where I heard of an employee getting a parade, but I thought I would be the first. Oh, to be young and stupid again… But, the wakeup call happened. And as you’ll see, they made me stronger, and I think we can all learn from my experience.
You see when I started working at Coldwater Creek, I was a one man department. The program had just launched and everything was new. The dotcom bubble was just bursting, so we all were moving quite quickly away from metrics like “runway” and “burn rate” to things such as $ and Cents, orders, clicks etc. It was a whole new world…
As the company grew to half a billion dollars, the need for a more solid and comprehensive data analyst team became more acute. Basically, and this had to be explained to me, we had many channels all reporting sales each month/quarter/year. When you added those numbers together, your total was widely different than the money collected and in the bank. Somehow we were over-reporting. I mean they, it couldn’t have been my channel. The business intelligence team was created during my second year and tasked with providing all channels with actionable data and finding out what was working and what wasn’t and what sales where coming from where.
Before that time, with only last click attribution, Jamie and the Giant Affiliate Program became the best selling book in many team meetings and on investor conference calls. It feels pretty amazing to be mentioned as a channel, when that channel is a channel of one, as one of the reasons the company is doing so well. There is a flipside to that, but that’s a story for another time. When it isn’t doing well you really don’t want to hear your name on one of those calls.
But as the BI team came on board, all that glittered, they didn’t feel was gold. They were tracking users across channels and saw some trends and data points that contested my revenue numbers. And the other channels pushed hard to contest my numbers and pull them into their channel. That was hundreds of people saying affiliate sales were crap. The fight was on and I felt it was the fight for my life.
That was 2000. Does that bell still ring true today?
So what did I do? I fought. They were wrong. Yes, this 26 year old with 2 years of experience was way smarter than hundreds of seasoned catalogers and retailers and data analysts. I mean, I had done this for a really long time yo. They had to be wrong, we were affiliate marketing and they just didn’t understand.
And I kept fighting. But what was I really saying? I am so scared you will find out, we will find out, that what I do for a living isn’t contributing to this company’s bottom line at all. And, I don’t care, I’d rather not know. You can’t test it, cause I won’t let you and I really don’t want to know truth. I’d rather just go on like this and not know. Ignorance is bliss right?
Then it happened. On the day of my annual review, I had put together my self assessment, which we all had to do, and it was amazing. I quickly realized that we would never get to the things I had written, truly parade worthy accomplishments, and I’d be wondering where I’d be working the next day.
I had pretty much painted myself into a corner. And I was about to lose my job. TheCreek was a company that tested everything and demanded that each channel work together to grow the overall strength of the company. There were no sacred cows. And, I simply wasn’t speaking their language. Margin, true margin was what they wanted. I lost all credibility and the channel was losing all respect. “If I don’t see a turn around immediately, you’ll be let go”.
Ugh, that sucks. Right? Yeah it did.
So, I relented, not because I was smart or forward thinking, I wish I had been, but because I had two boys I was raising on my own and I didn’t want to be out of work while trying to make ends meet. I could barely figure out what to feed those little monsters (you’ll have to ask me about the meatloaf incident) let alone do that while looking for work. So I drank the kool-aid and followed my boss’s lead and began to work with the other departments and we began to scrutinize the channel.
And guess what happened?
We started measuring the channel with the same metrics and rigor we did every other channel. We worked to identify and bridge the gap between network reported sales and our Business Intelligence system. And I learned more in the following months than in my previous 26 years.
The results were amazing. The affiliate program actually performed better than we thought. My channel added value!! We took the best shot from some of the smartest and most skeptical individuals and we learned that the affiliate channel was solid.
So, did I get a seat at the digital marketing table I so craved, we so deserve and need to have? Well, no. I quit shortly after that.
I saw what true power this channel has and I knew I could bring that to many other companies. Not only did we prove the channel, but during that time we went through a recession. As companies all over the spectrum “right sized”, our department didn’t lay off a single person. I saw the power of the channel to keep people employed and I knew I could have an even larger impact by working with more companies. Helping others become employed, find a job and start a career is super important to me. So much so that, at JEB, we say the only competitor we have is unemployment. So I quit and started JEB. (Thank you Beth Kirsch, Shawn Collins, and John Hobson for either being my first clients or referring my first clients to me)
But, our industry is still very much in that protectionist mode today. So, we continue to be marginalized within the digital marketing toolbox. We are the last channel called. Now there are examples refuting that, but those are the exceptions, not the rule. We protect ourselves and frankly do a really poor job of talking about our space and our role within the greater marketing landscape.
And just listen to how others talk about us:
- “The affiliate marketing channel isn’t congruent with our brand position” – former JEB client
- But it didn’t take long before an army of “get rich working from home” bottom-feeders began to play the system.Read more at http://jebco.de/2N
- “Now, the real money’s in coupon and voucher sites. They’re easy to build, they’re easy to promote and, again, they do absolutely nothing to champion your products or send you valuable new customers. All coupon affiliates do is interrupt your sales funnel, grabbing your customers at the very point when they’re about to convert (“Oh, I can type in a code here? I’ll just Google for one before checking out…”), then claiming anything up to 10% as a reward for stealing the customer you already worked hard to acquire.”Read more at http://jebco.de/2N
- 80% of the applications to our program are from “deal”, “coupon” or “virtual mall” websites. To me, these sites are total parasites that should be eliminated from the web. http://jebco.de/2P
- Let’s break down their so-called value. A customer is already on my site and ready to make a purchase. They see a “coupon code” box, open up a new browser tab, and search for my company name + “coupon code”.
No wonder we aren’t at the table. The digital marketing landscape thinks we are a joke and those within our community I would not describe as cooperative, transparent and willing to work within a broader landscape even though the reality is that this channel rocks! So the affiliate channel is left behind. We aren’t invited, in general, to strategy sessions. We aren’t at the table. That sucks! Damnit we do great work, across all channels. We should be leading those sessions!
But check out the reality:
- This year Forester projected that the affiliate channel will grow to $6.8Billion by the year 2020. Now, I know that sounds far off for some, but 2020 is really only 3.5 years away. Crazy. But $6.8Billion! That sounds congruent with my brand position!
- In the State of Retailing Online Report (Forester, Shop.org and bizrate) it was reported that 38% of online merchants said affiliates were one of their five most effective acquisition strategies. They say that affiliates are the unsung heroes of digital marketing. It’s time we start to sing right?
- Last year CJ surveyed their 4000 global advertisers. 72% of them said that they are either likely to increase their affiliate spend or extremely likely to increase their affiliate spend.
- This isn’t a bunch of people in their underwear creating crap sites to steal commissions.
We are better positioned to help drive online digital strategies than any one channel available right now. That is us, there are no other channels that have more insight over a broader range of marketing activities than the affiliate community. It isn’t even close. We are email marketers, data marketers, SEO’s, paid search experts. We are remarketers, display advertisers, loyalty professionals. We have experience AND data in every single channel. And we should be not only at the table, but enjoying a leading role in these discussions. Right?
So, imagine a situation where an organization is planning their digital strategy for the following year, and leading that discussion is the affiliate manager with specials guests that include network representatives, their agency and even their affiliates. Instead of being told about the strategy after it has been decided, we get to lead the strategy of the entire organization. Instead of being given financial and strategic goals as if God was handing down the ten commandments to Moses, we were helping to write them, plan them AND execute them! Has anyone ever experienced that?
So we are left out of those conversations. We are handed down strategy from other departments that we typically have no involvement in creating and our sales are all too often treated as “sort of valuable”. We continually have to defend our mere existence and, I don’t know about you guys, but I’m kinda tired of the friendly fire. Our departments are usually understaffed and expectations are rarely in line with reality.
I think as an industry, we share some of the same obstacles with Jamie year 2000. We are afraid. And maybe some of that fear is breading a sort of arrogance that we don’t have to prove our channel and we don’t have to operate within anyone else’s environment. I could be wrong, but it’s what I see.
But in my story of metamorphosis I think lies some steps we can take together to earn that seat and start leading where we rightfully should be. No more in the dark affiliate industry!
And just think what that will look like:
- Leading strategy discussions
- Cooperating with other channels
- Creating strategies with other channels, for other channels
- No more – “yeah but they would have purchased from us anyway”
- Other departments would seek out affiliate team’s knowledge and input
To not hear “we would have had that sale anyway” and not have our desk preverbal moved to the basement – oh how I would love to see our channel there!
So, what did I do that I think we can to get to Shangri-La?
We have to sell our channel better. Better individually and better as a group. Here is how:
Educate – We, you, me, all of us, we need to be leaders for our industry within our own organizations and the organizations we represent. We have to be proactive in that. How many of us wait to describe, inform and teach others in our companies only after we get a scathing email, a confused look or someone wants to close our program or just discredits the affiliate channel publicly. Guess where that puts us? Firmly on our heels and on the defense. At Coldwater, when the affiliate channel was mentioned on an investor conference call negatively, the CEO, COO and CFO all came running to my cube wondering what the heck was up. At that point I lost all ability to educate, I was in survival mode. Literally hoping they didn’t fire me. Contrast that now with all our agency clients and, well, my heart rate and overall mental health is considerably improved. You see, we do several things to educate our clients, up, down and across the chain, on the affiliate program. Here are some things we do:
- Monthly newsletter to clients – These newsletters while including some fun and interesting things, provides our client contacts with necessary, easily digestible information on the affiliate channel.
- Management Outreach – During the first two weeks of our relationship with an advertiser, we identify those people on their senior management team who need to know about the channel and our Director’s reach out to them twice a quarter to give them 10 minutes of easily understandable and executive actionable data on the channel.
- Weekly Reports – Our weekly reports include an easy to understand, comprehensive and easily shareable executive summary. This informs and allows anyone to send this across the organization. So while it informs our contact in depth with all the things they need to know, it provides snippets for them to share across their organization.
- Quarterly Trainings – We hold quarterly webinars and invite anyone in our client’s organizations to come.
These things are proactive, informative and they are out there in the light, so everyone can see. It provides space for others in the organization to think critically of the affiliate channel, how they can benefit from it, and what more they could be doing within that channel for their own success. We do many of these things every time staff changes occur at our clients as well. We start over and educate, before they need it. No defense, just partnership. We aren’t hiding and it works.
In 2016, one client has 6 staff changes in one position. The position we interface with. Each time we were handed someone who didn’t know what we did, what the channel had to offer and they had a negative view of it. We went into our education mode, and every single time we came away with an internal champion for our channel. You can’t put a price on that!
That investment up front is making a difference in our experience. If the entire industry did this consistently, I believe we’d be in a much better position. How can you educate your organization? Let me know in the comments, or contact me if you need help.
Scrutinize – it’s time we look at all affiliate relationships individually and measure them in similar ways that other channels are measured. And I’m not saying we stop at who is overwriting cookies and who isn’t. We have to look at each partnership in the eyes of the advertiser, through the glasses of new customer acquisition, margin contribution or whatever goals they set out.
At ColdwaterCreek, we ran several tests to answer the question “Do affiliates provide any incremental sales?” Some of you affiliates in this room may remember when we did that. We actually stopped working with several affiliates for 6 months to see if the customers who purchased through them in the previous two to three years purchased within the regular pattern. How crazy it was to terminate a relationship to test the value of it, at least in our space it’s crazy, but we did it. Because CWC started out as a cataloger, we tracked our users back to households, not email or name, but actual physical addresses and to the ad and affiliate they came through. We tracked them that way for decades. We knew that each household made on average two orders a year and we would be able to see if, when we paused relationships, their users who have been purchasing from us would continue to purchase or would stop because they didn’t find CWC on their favorite affiliate. And they didn’t. 60% of them stopped purchasing. That meant 60% were incremental and don’t happen without the affiliate involved. I did my happy dance, ordered myself a banana split from the cafeteria and reactivated those affiliates with a nice commission bump! (this is where you would have seen me dance, if you were there)
A large clothing and accessory retailer that we manage the affiliate channel for wanted to leave and terminate the affiliate program entirely just 6 months ago. They didn’t see a ton of value and there were so many nexus concerns. We had to expose the true value. Internally they struggled to prove the value of the channel. Fortunately, we had heard this type of thing so often that we acquired an analytics company in January. Ed, now our Director of Analytics and Search, got logins to their Google Analytics account and in about 1 hour he was able to identify exactly how much value the channel provide. If they did cancel, they would have lost millions of dollars without question. By measuring the channel in the same way they measured all the others, we were able to show TRUE and REAL value and help them avoid making a huge and costly mistake. A mistake that would have cost jobs. Scrutiny saved the affiliate channel. Measuring through their system, in their words and their ways helped us save the channel and most likely jobs. Serious impact.
While at Coldwater Creek we looked at every single affiliate and compared with other macro things going on at the Creek. We were able to see trends of how affiliate sales increased exactly the same day a catalog dropped. I saw data that suggested strong correlation between retail sales and affiliate orders near those stores. So we leveraged that in many different ways. We removed low quality affiliates that added no value and we gave tools to increase sales even more around catalog drops and around geographic locations. Together we became better.
Share – We have to start touting each other’s successes. Why don’t we do that? Actually does anyone have a good answer? We share successes with our friends, but not across our industry. Anyone have an answer?
Look at these conferences. They are either solely built on case studies, or rely heavily for their content on case studies.
- Shop.org Retail Digital Summit – They have at least 7 presentations that are detailed case studies.
- Shop.org The Big Show
- The Market Research Event
- All of these events are built around case studies.
- Why are advertisers ok with sharing at these events, but not at ours? Education and Scrutiny? Maybe.
Cooperate – Other channels have the ears of the decision makers and budget coordinators more than we do. Look at those channel managers as partners, people you can learn from, and people and teams that are vital to the success of your program. And not only the SEO and SEM leaders, but also the data analysts and the Business Intelligence team. And don’t forget the CFO and her team.
One of our clients, an Internet Retailer Top 10 health and fitness company, invites us every year to spend time with their entire digital team planning their strategy. And it all starts with the data. The scrutiny. But it also involves education. We get to spend time with this client and all their channel heads informing them of new partnerships, how affiliate marketing works, the numbers on all our top producers and up and comers. They in turn provide us with amazing cross-channel data and we work together to outline the strategy for them as a whole. Last year, we actually led several retail initiatives that happened because of our relationship with them and our unique insight into all channels. A merchandising plan from the minds of the affiliate managers and realized and executed across all channels. Nirvana! And it increased overall sales across all channels during those promotions.
You see, when we go to other channels and departments and we ask for more data and we cooperate from a point of improvement, not defense – it changes the dynamic. It changes how they view us. They don’t view us as this little channel over where trying to protect itself, they view us as a vital team member working towards a common goal – their common goal.
Speak – This is the most interesting one of all. We have to start talking about affiliate marketing different. And that is where I need your help! Obviously I think this is a vital thing we need to be doing. How do you say what we do now? How did I define affiliate marketing? I use to say “affiliate marketing is SOPS – Selling Other People’s Stuff”. Well you know what else is SOPS? Garage sales. Flea Markets. When you are talking to people who manage companies producing hundreds of millions of dollars or even billions, SOPS is not what they want to hear. And affiliate marketing is so much greater than that!
So, I want to redefine affiliate marketing together with you and with our industry together with all of you. So, what do you say affiliate marketing is? Add your voice to the conversation of what #affiliatemarketingis. Then you can tweet your addition with the hashtag.
So feel free to do that now. Here are some things I tweeted this morning:
- #affiliatemarketingis profitable digital marketing
- #affiliatemarketingis all digital channels
- #affiliatemarketingis access to new customers
- #affiliatemarketingis expertise in all fields
- #affiliatemarktingis efficient exposure to new markets
What do you say? Will you help us redefine the definition of affiliate marketing?