Tech Duologue on Affiliate Marketing with Anthony Capano, Rakuten Advertising

Anthony Capano from Rakuten Advertising talks about how technology have transformed the Affiliate Marketing arena & the effect of loss of third party cookies on it.

 

“Affiliate marketing should be a primary pillar of any brand’s marketing mix.”

1. Tell us a little bit about your role at Rakuten Advertising?
I’m the Managing Director of North America at Rakuten Advertising, where I oversee the growth of our brand and performance advertising solutions, spanning affiliate marketing, programmatic display, search, social and strategic media buying across our owned Rakuten ad inventory.

We have a lot of momentum around our performance business, having been recognized as the Best Affiliate Network by mThink for the past decade. We are continuing to build on this success by growing and diversifying our global publisher network, and expanding our technology offerings to meet the evolving needs of our brand and publisher partners. Some areas we’re particularly invested in include multi-touch and cross-channel attribution to incentivize behavior at every stage of the funnel, AI-powered matchmaking technology that pairs advertisers with the publisher partners that will drive the most growth for their business, and technologies powered by our own first-party Rakuten audience data that allow us to provide personalized experiences across both affiliate and programmatic strategies.

Another one of my priorities is activating our advertising inventory across U.S.-based Rakuten businesses like Viber, Viki and Rakuten Rewards, and scaling our media offering across those properties. It puts us in the unique position to combine the benefits of brand and performance to help marketers achieve a range of objectives, from driving awareness and discovering new customers to engaging and influencing consumer behavior.

2. Tell us about your journey into the advertising field?
I spent the early portion of my career in media sales working alongside many of the world’s largest brands. I joined Rakuten in 2013 and have overseen our markets in Australia and New Zealand, APAC, EMEA and LATAM, before taking on the position as North America Managing Director. Throughout my career, I’ve been passionate about the intersection of data, technology and the human element, so the advertising field has been a natural fit for me, and I’ve been especially pleased that Rakuten Advertising has built such a strong business around these three pillars. It’s been easy for me to get passionate about this field and the opportunities to help advertisers and publishers grow their business through a diverse mix of advertising strategies.

3. What are the benefits for brands investing in affiliate?

Affiliate marketing should be a primary pillar of any brand’s marketing mix.

Firstly, it has a minimal up-front investment. With other marketing strategies, brands need to invest in content creation, creative assets, and media and distribution costs, which aren’t necessary for affiliate given the collaborative relationship between brands and affiliates.

Secondly, the commission-based payment model of affiliate means that brands are paying for performance and engagement. There’s no risk of launching an affiliate program and having to pay publishers who aren’t actively driving sales. Instead, publishers only get paid for conversions, so the ROI of affiliate is easy to measure.

Another important benefit for brands investing in affiliate is the authenticity and circle of influence that publishers provide. Publishers have devoted followers who actively seek out content and are more receptive to messages when coming from trusted sources. By picking publishers that align with the views of both your business and your target audience, affiliate marketing provides brands with access to consumers in an authentic and proactive way.

4. How has the affiliate marketing landscape evolved in the past decade or so?
There are several different trends that we have seen impact the affiliate industry throughout the last several years. Two that really stand out to me are attribution and personalization.

With attribution, we’ve seen a diversification in technology that goes beyond just the last click to reward publishers for their contributions across the funnel. This puts more power in the hands of content publishers and other upper-funnel contributors, which are becoming more integral players in affiliate strategies. This is something we’re heavily invested in at Rakuten Advertising. On top of our existing multi-channel attribution tools, we’ve also introduced a tool called Dynamic Commissioning that accounts for more factors than any other affiliate attribution tool on the market.

On the topic of personalization, consumers now have higher expectations for advertising to be more relevant and personalized to their experiences than ever before, but are also more protective of their privacy than ever before. It’s difficult to balance this expectation with industry evolutions like the loss of third-party cookies, but affiliate is well positioned to be able to deliver on that authenticity that consumers expect in a post-cookie world.

At Rakuten Advertising, we’re leaning into our first-party data to introduce personalized tools into affiliate. Our latest investment is our new Personalized Rewards product that leverages our programmatic technology to allow advertisers to personalize and target cash back offers with Rakuten Rewards and incentivize priority business objectives, like attracting new-to-file customers, inspiring repeat purchases, or incentivizing sales of high-margin product lines.

5. How has technology fast-tracked the advancement of affiliate marketing capabilities?
To my earlier point on attribution, technology is fueling the advancement of attribution beyond just the last click. By understanding how publishers across the entire consumer journey impact and influence a transaction, publishers are being appropriately compensated for their roles in any purchase decision – whether or not a click to their affiliate link was the last action before a sale.

Overall, the biggest driver of change within the industry is the access to and utilization of data. Affiliate marketing has become increasingly data-driven across the entire affiliate lifecycle – from matchmaking to attribution. Access to this data has allowed brands to make smarter decisions when investing in affiliate, such as deciding which affiliates to work with and what platforms are delivering the most ROI. As brands and publishers learn more about their own affiliate performance, they are able to identify strengths and weaknesses, and adjust accordingly. By adding in layers of AI and ML, brands and publishers can understand and respond to the data that they gather in real-time.

At Rakuten Advertising, we’ve built in a lot of transparency around our data, and frequently share insight into what strategies, brand/publisher categories, regions, etc. are seeing the most success, so advertisers and publishers can navigate the opportunities to best optimize their affiliate strategies.

6. What are some of the challenges facing the affiliate marketing industry today?
The biggest challenge that the industry faces is how it can be often underestimated. Affiliate has historically been thought of as a low-funnel conversion strategy – a vital part of the overall marketing mix, but not necessarily utilized to its full potential. It used to be a very manual process, and it faced significant limitations because of that. But now, with the advancement of affiliate technology and increased access to data, more and more marketers are starting to realize that affiliate is more than just a conversion driver. It is a great asset for other important strategic needs like discovery and overall awareness.

With these new advancements, marketers now can leverage affiliate to deliver the authentic experiences and engaging content that consumers have come to expect. It provides brands with a future-proof strategy for meeting business objectives and influencing consumer behavior in a post-cookie world. Those marketers that are still thinking of their affiliate strategy as only a low-funnel conversion driver are missing out on these proven benefits.

7. With the death of third-party cookies on the horizon, how will affiliate marketing be impacted?
The loss of third-party cookie tracking isn’t new, just more prolific, and the affiliate industry has had time to adapt. At Rakuten Advertising, we have multiple solutions that allow us to run affiliate campaigns without any reliance on third-party cookies.

More broadly, publishers will have to find ways to supplement losses to their cookie-reliant revenue streams, which may lead to more of an emphasis on affiliate marketing, where publishers will have more predictable sales. In turn, advertisers are going to become increasingly reliant on publishers to understand consumers, meaning publishers will need to provide transparency into their audience insights and how their content is performing, especially as contextual targeting becomes more relevant.

With that, the strength, reach and diversity of a publisher network will be more crucial to the success of an affiliate strategy than ever before. With the strongest publisher network in the industry, Rakuten Advertising is poised to help connect brands with publishers that are proven to attract audiences and drive conversions, even in a post-cookie world.

8. What gave rise to affiliate marketing in the pandemic and what are views of the same for post pandemic?
Like the rest of all ecommerce, affiliate marketing saw several new categories thrive during the pandemic. Our own affiliate network data shows that toys and software were the largest benefactors from this surge, with more than 100% lift in same store in 2020 over 2019. This was closely followed by categories like home improvement, housewares, and food & drink, which saw 86%, 84% and 67% lift in same store sales, respectively.

While brands in these categories were seeing growth, there was still an overall adjustment in the ways that brands were spending ad dollars across the board. What helped set our customers up for success was access to data that we provided to help those marketers make the most-informed purchase decisions. Another thing we saw in 2020, with the rise in awareness of social movements, was that brands became much more conscious of their messaging. We saw increased interest from brands in pursuing formats that allowed for flexibility and quick adjustments based on what was happening in the world around them, and affiliate is well positioned to meet those needs.

Going forward, with restrictions continuing to loosen and with vaccines now widely available, we’re starting to see a trend of consumers spending at higher rates and on larger-ticket items. Brands with goods and services that weren’t in demand during the pandemic are going to face massive surges because of a universal longing to get out of the house, take a trip and return to normalcy. This trend called “revenge shopping” is one that we are closely following and helping our brand partners navigate in order to take advantage of the surge.

9. What are views on affiliate marketing being future proof solutions for the digital market?
The market is currently undergoing a seismic shift with the death of third-party cookies, and affiliate is proving to be a strategy that allows brands to contextualize, personalize and authenticate their marketing efforts without relying on third-party data.

Authenticity and engagement are increasingly important to today’s consumers. With affiliate, brands can reach audiences in a way that is authentic and receptive, benefiting from the trust that the publisher has built through quality, engaging content. Marketers and publishers can leverage shared assets as well to ensure that they are providing consumers with the most-relevant ad experience – all while respecting data privacy.

Additionally, attribution technology has evolved to a point where we don’t need to rely on personal identifiers to run sophisticated tracking models. This allows for brands and publishers to have a transparent understanding of performance and influence along the entire marketing funnel.

The fundamental content-driven nature of affiliate, paired with the technological advancements that have been made toward matchmaking, attribution and more are all reasons why the affiliate marketing industry is one that will maintain relevance as the digital landscape continues to evolve.

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