How does affiliate marketing work for publishers?

Apart from running ads alongside content, one of the ways a publisher can earn money in online publishing is with affiliate marketing. Affiliate marketing is when a website creates content around products and then provides links wherein a reader can click and make a purchase.

Thanks to low ad rates, some publishers are taking this route, attempting to become a funnel for e-commerce players and drive traffic to them while increasing the time spent on their own site. How can publishers make affiliate marketing work for them? What are the promises and pitfalls?

These questions were discussed by a panel on the third day of Digipub Week 2020. The panel consisted of Nitin Mathur, the co-founder of 91Mobiles.com and Porush Jain – the founder and CEO of Sportskeeda. The panel was moderated by Anirban Roy Choudhury, the associate editor of afaqs!

The presenting partner of the discussion was AdPushup, the cloud security partner was Akamai Technologies, the technology partner was Quintype, and the associate partner was Chartbeat.

Sportskeeda’s Porush Jain says that they have tried affiliate marketing before but there tends to be a bias towards CPM ads and direct selling. Mathur says that the most well known form of affiliate marketing is done by e-commerce sites (led by a few large players and a few smaller ones too) and on the publishers side.

Jain adds that his publication has tried affiliate marketing, but they prefer using CPM as a marketing tool as it lets them have more control over what goes on their platform based on the audience they get.

Jain explains that there are some variables in affiliate marketing that affect our revenue – the offer being run, the UI/UX, how good the landing page is, etc. He admits that affiliate marketing has worked for them in the past, but 99.5 per cent ads on Sportskeeda are direct ads .

Mathur says that for an advertiser, affiliate marketing probably constitutes 5-10 per cent of the digital advertising pie. There is also a branch of affiliate marketing which is not related to commerce, but it’s used to push for app downloads, website visits in industries like finance and SMB – this is the advertiser side of affiliate marketing.

Mathur adds that with publishers, how effective affiliate marketing will be, depends on the website itself – is the publisher a mainstream site? What kind of reportage do they specialise in? How many readers do they have?

Which niches work best for affiliate marketing?

Affiliate marketing has proven to work well while used in conjuncture with influencer marketing and while creating content related to gadgets, but where are some other places where it can work?

“It depends on the kind of publisher. There are some publishers whose nature of content and the traffic on a site lends itself more readily to affiliate marketing. For example, affiliate marketing would work well for a coupon or a cashback site and it would be the main revenue stream," he says.

Mathur mentions that there may be sites that don’t have that option because for some reason or the other, network ads (AdSense) don’t work there.

"If you’re a site on gaming or betting or mp3 downloads, a lot of networks, including Google, have policies on where they will and won’t show their ads. You can’t get a good fill rate on your remnant inventory if you’re a site like that, then affiliate marketing is something you’ll be reliant on,” says Mathur.

He adds that if a site that specialises in financial reporting, it would make more sense for them to add an affiliate link to a credit card or a similar financial product – since they enjoy a sense of credibility among their readers.

Mathur explains that one common affiliate marketing pitfall is conflict in ad inventory. “Another factor for vertical sites is how much remnant inventory they have to deal with vs what you make with affiliate marketing. When you’re working with brands that are paying CPM, it’s a slippery slope because if you are offering them affiliate marketing, then you will be earning lesser from your ad inventory. It’s foolishness to do that and every publisher needs to figure out how to eliminate the conflict from ad inventory pipeline and affiliate marketing,” he says.

Jain explains that in India, Dream11 and other fantasy players are not that big, but affiliate marketing is quite popular in other countries in the area of fantasy league games.

“In other countries there are a lot of niche football scoring websites but that’s not allowed in India. But for a lot of sports publishers, affiliate marketing is the only source of revenue they have. For some of them, it brings huge CPM and RPM returns,” he says.

Mathur adds that in some cases, it could be that a brand advertiser and the affiliate advertisers are separate entities altogether.

“It could be that the people you're working on affiliate partnerships with are people who would never be brand advertisers for you. With our case at 91mobiles.com, since there's just a handful of brands, we do both types of businesses, we manage. Our display inventory is not on an affiliate basis, its on a CPM basis but with affiliate marketing, it requires creating different properties for different kinds of marketing content,” says Mathur.

Mathur mentions that 20 per cent of 91mobiles.com’s overall revenue is from affiliate marketing. But he also adds often that the people who write content for affiliate marketing purposes don’t know how the article will be monetised or to which extent – since affiliate marketing links are algorithmically placed with the content that is created.

While linking products on various pages, the system understands what product it is, whether it's available on a particular store, and then inserts the link. He adds that editorial integrity is important and sites should be wary of any manipulation of recommendations. “If its affiliate, it should be clearly tagged as a sponsored piece,” says Mathur.

“From a technology standpoint, I would say that the market is is mature. I think it's plug and play for anybody, but for an advertiser and a publisher to be able to track what they're driving. From an overall market maturity standpoint, what's happened is that the heydays of e commerce from an affiliate standpoint are behind us. The market was very vibrant a few years back and now it's slowing down. When that is the case, then you know, increasingly there'll be a downward pressure on on rates and what the sites are able to make,” he says.

One of the questions posed to the panel was if India was ready for a model where sports journalism websites (like Sportskeeda) could monetise their offerings with a paywall. Jain recalls a time when ESPN tried a similar venture with a website called cricketmonthly.com but it didn’t work as Indians were not ready to start paying for sports content yet.

According to Jain, while doing Affiliate Marketing pieces for Flipkart or Amazon in the past, he mentioned ensuring that the article was of the best quality possible, written by a health and fitness expert so as to ensure that he gets a returning audience. Quality of content is what keeps readers constantly coming back, increasing chances of conversion to a transaction.

Watch the full discussion below.