Partnership marketing is not just a rebranding of affiliate marketing. While both share similar foundations, partner marketing is much more bold. Instead of focusing on what an 'affiliate program' can look like, brands can now ask 'who can promote my brand?'. This shift in mindset accompanied by the change in technology stack are the key factors driving the partnership marketing space.
Historical Context
Ten years ago, if you heard the term “affiliate marketing,” as someone on the growth team, you thought of people who promoted your products in exchange for a percent of the sale. Typically, this meant coupon sites, deal sites, and lots of bloggers. On the blogger end, instead of dealing with thousands of bloggers yourself, you may have worked with a CPA network (or subnetwork), which basically connected you with thousands of small sites but showed up as a one partner in your system. For their contribution, they retained a small portion of the commissions and passed the rest on to the blogger or affiliate. Generally, this wasn't a great place to invest your time and energy.
As a result, this whole network of external sites promoting your brand might have been outsourced to an affiliate network. These affiliate networks used their own tracking software to manage programs for brands. They also had marketplaces for both the affiliates to find brands and for brands to find affiliates. They also handled the day to day account management for the brand. For all their services, brands would pay the affiliate networks a percent of sales generated through the program.
This all sounds great in theory until you realize the incentives were misaligned. Since affiliate networks were being paid a percent of sales, they wanted to increase sales as much as possible, perhaps including instances where if the brand were monitoring and allowing partners, they would not have allowed it. They were also incentivized to care less about fraudulent sales since that would potentially reduce their earnings.
These challenges presented an opportunity to separate out the tracking and payment technology from the account management services. This gave rise to the Software-as-a-Service model: now you could pay a technology company a monthly fee for just the technology that powered affiliate programs. In fact, the founders of today’s leading SaaS platform were the founders of one of the leading affiliate networks.
Brands Using SAAS Tracking and Payment Platforms
As brands can now manage programs on their own by paying for the technology, they need to either dedicate internal resources to grow their programs or outsource it to an agency.
Partnership Marketing
As the SaaS tracking and payment platforms became better and more sophisticated, they started asking why affiliates should be limited to a very narrow segment of what could be considered partnerships? Aren’t influencers just individuals who are promoting through Instagram or YouTube instead of a blog? Aren’t business development deals between two companies just partnerships that are more involved and require some custom contracts and creatives? Some deals may be more complicated and nuanced because of additional aims outside of revenue and engagement numbers, yet many are purely acquisition driven. Why should a purely technology-driven partnership platform be limited to affiliates? All these instances share the same framework: promoting your products and brand through a world of external marketers, or partners.
Early on, brands were still paying for payment and tracking platforms for use by their affiliate teams. However, now that brands were paying for an impartial tracking platform, why couldn’t other teams within the company also use the platform? At first, as an exception and for ease, business development deals started running through these SaaS platforms—the same platform that the affiliates team was using every day. Over time, because of the thought leadership of both the SaaS platforms and the agencies that managed these programs, brands started seeing the opportunity to build out a robust partnership program that was managed by one platform and housed all sorts of partnerships from million dollars business development deals to working with the subnetworks that make up thousands of individual sites.
The benefits of this arrangement are obvious: brands have a clear view of performance across all their partnership efforts. It’s much easier to compare the ROI of an influencer campaign to a business development deal when both are measuring the same key KPIs. Even if brands give allowance for attribution and incrementality nuances, it’s easier to make decisions knowing one partnership is 50% efficient and another is 300% efficient. Measurement and visibility allow for effective management and allocation of time and resources.
Meanwhile, brands realized they needed avenues of scalable growth outside of search and social. With the SaaS tech platforms focused on helping automate as much of the partnership lifecycle as possible, partnership marketing is now a viable candidate to represent a sizable source of a company’s acquisition. The opportunities to be innovative and experiment within the umbrella of partnership marketing are endless for forward-thinking brand
What’s Next for Partner Marketing?
In the midst of all this, the affiliate networks of the past, who are still charging on to a percent of sales, have to decide how to respond. Likewise, even older agencies who manage programs for brands using a SaaS platform have to decide if they are willing to move out of their comfort zone and work on cutting-edge opportunities or stick to what they have known for the last ten years.
For brands, the clear option is to go with an SaaS platform and either build out an in-house partnerships team, or work with an agency that truly embraces partnership marketing and not just affiliates.
When we worked on the brand side, we couldn’t find an agency able to keep up with our expectations of an ambitious partnership program, so we decided to build Hamster Garage. We don’t like calling ourselves an affiliate agency because that’s a fraction of what we do. Instead, we actively push our clients to think beyond affiliates by bringing them opportunities for brand-to-brand partnerships and helping them navigate the complexity of channels like podcasts and influencer marketing, where attribution is less clear. As we address these issues alongside our client’s internal teams, we’re writing the playbook for the next ten years of the industry.
It’s very possible that companies come to embrace the idea of partnership marketing over the next decade. At least, that’s where we are putting our bets.
This article was written in 2019 when we first started HG.
