New affiliate programs redefine the consumer selling model as relationships between online retail and media sites mature. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), retail and media firms will share ownership of traffic, revenue, merchandising, and content to drive revenue and increase brand awareness. Affiliate programs will evolve from one-size-fits-all links to one of three models: syndicated boutiques, commerce networks, or elastic retailers.
“Commerce and content companies need each other more than ever,” said Jim Nail, senior analyst in New Media Research. “Today’s popular affiliate program structure will be replaced by what Forrester calls cooperative eCommerce, designed to satisfy increasing consumer demands for self-service, to diversify revenue streams, and to offer a shopping experience that will engender loyalty.”
Syndicated boutiques will replace simple links at small content sites, which represent the majority of affiliates today. These pop-up microstores use automated merchandising and store-building tools to offer a small range of carefully selected, branded products that visitors can purchase without leaving the content that prompted them to click through. Small niche sites will be able to convert customers on the spot through affiliation with brand names and intercept new customers who elude advertising by offering bonuses to first-time buyers.
In commerce networks, top media and merchant sites create new buying opportunities by combining exclusive content with relevant product offers. When an article generates interest, commerce networks deliver a one-click buying experience from a known and trusted merchant that delivers the product. Consumers value the efficiency of researching and purchasing in one session; increased consumer loyalty improves the bottom line for retailers and the deal structure for the content owner.
Elastic retailing evolves when merchants that target similar customer bases and offer complementary product lines create deep affiliations among themselves the way commerce networks link strong content to commerce. Merchants partner with complementary retailers to meet all their target customers’ needs for advice, recommendations, and products — thus stretching companies into adjacent categories. These affiliate relationships allow retailers to successfully target individuals, and to integrate marketing and fulfillment efforts. In sharing the cost of merchandising, retailers spend less per customer without changing their vertical economies of scale.
“Retailers need to have a plan in place once cooperative affiliation starts,” added Nail. “Merchants must define their audience, identify their dream team list, and turn business development loose to sign deals.”
For the Report “New Affiliate Marketing Models,” Forrester interviewed 50 retailers with active affiliate programs that have been in place for at least three months. On average, these retailers have more than 10,270 affiliates that currently generate 13% of total online revenues. Merchants expect affiliate programs to power ahead, driving 21% of revenue in 2003.