Beyond clicks: The new math of affiliate marketing performance

From its humble beginnings in the late 1990s, affiliate marketing has metamorphosed from a simple referral mechanism into a complex, AI-powered discipline that's part science, part sales, and entirely ruthless in its pursuit of performance. What started as a rudimentary "you bring the traffic, we'll pay you a commission" model has evolved into a nuanced mix of data, artificial intelligence, and consumer psychology.

As things stand, the digital marketing landscape demands precise measurement and strategic value creation. And affiliate marketing has emerged as a method for organisations to assess and optimise their digital marketing investments through detailed performance tracking.

At the recently held afaqs! Digies conference, a panel discussion on the topic 'Affiliate Marketing 2.0: Powering ROI-Driven Growth' provided insights into the current state of this marketing strategy.

The panel, moderated by Santosh Ghosh, who is the principal at Dentsu Agyle–a suite of media investment and financing programmes within dentsu International–included marketing professionals from various organisations: Ashish Pawar, head-marketing, Tata Asset Management, Tata Mutual Fund; Moneesh Chakravarty, vice president - marketing head, Business Standard; Tejash Kothari, leading brand and marketing - BBC Worldservice (India & APAC regions), BBC News.

Ashish Pawar outlined the progression of affiliate marketing: "It started with clicks, to leads, to OTP, to what we see now." For Tata Asset Management, the strategic approach centres on organisational outcomes: "We'll invest money when there is an outcome for the organisation."

The discussion highlighted several key considerations in contemporary affiliate marketing. Pawar emphasised the importance of quality leads and comprehensive analysis, including conversion tracking and verification mechanisms. 

“When we look at affiliate marketing, there are certain priorities: Firstly the quality, which is crucial since you’re speaking to the consumer via a publisher. Secondly, the analysis takes note of leads, conversions, and of course OTP verifications to quantify actual engagement,” he said.

He noted the potential impact of artificial intelligence, suggesting that "the cost per conversion will go down", potentially enabling more widespread and personalised marketing approaches.

Perspectives on digital engagement

Tejash Kothari from BBC Worldservice provided context on pricing and engagement, observing that marketing strategies are becoming more nuanced. He noted the importance of long-term audience relationships, referencing audiences that have been consuming content since their teenage years.

“Prices are getting more demanding, in the right way. While people still assess the CPCs, downloads, lead generation, etc, the space is evolving fairly quickly. One thing that has remained unchanged is the necessity of engaging your core users efficiently,” he opined.

“As a platform, we have audiences that first interacted with us when they were 14 or 15 years old. And they’ve matured with us, consuming the content and some of the advertisements that come with it. So there is a factor of credibility and engagement value that still remains the common denominator for the industry,” he further added.

Moneesh Chakravarty from Business Standard offered a critical perspective on current marketing approaches. He cautioned against fixating on numerical targets, arguing that such strategies are unlikely to be effective.

His approach emphasised adaptability, stating the need to engage consumers "wherever they are consuming the content, at whatever time they are choosing to consume, in whichever format they are consuming".

Pawar also shared similar views on pre-determined value expectations from affiliate marketing, suggesting a rather long-term approach.

He said, “While there is a focus on customer acquisition costs, we must also monitor the customer’s lifetime value. If the customer has been with us for multiple years, we assess the value they’ve added. Currently, marketers put an up-front expectation on the amount of value they expect. But for any medium to perform, you need to give it time. Over time, if you see value, then you readjust your investments.”

The panel discussion revealed several key insights into current affiliate marketing practices. The conversation highlighted a shift from simple transactional approaches to more sophisticated, data-driven strategies that prioritise quality engagement over raw numbers.

Technological developments, particularly in artificial intelligence and data analytics, are playing an increasingly significant role in marketing strategies. These tools enable more precise targeting and personalisation but also require careful implementation and strategic thinking.

Watch the full discussion below: