Affiliate marketing spends in India are estimated to be Rs 2500 crore in FY 2023, constituting eight percent of the overall digital marketing spend, according to the State of Digital Marketing in India report. Despite the popularity of affiliate marketing, the model presents its own challenges, such as onboarding and managing affiliates, high commission fees, and vulnerability to fraudulent and malicious practices.
During a discussion at DigiPlus Fest 2023, marketers explored the evolving landscape of affiliate marketing and strategies to optimise return on investment (RoI). The session featured Nishant Jaiswal, VP – marketing, Zupee; Sachin Vashishtha, chief marketing officer, Paisabazaar, and was chaired by Saumya Jain, ETBrandEquity.com.
Essentially, affiliate marketing involves incentivizing affiliates with a commission or payout to drive a business action, such as a click or purchase. The practice began with blogs, websites, and email but has since expanded to include social media and e-commerce platforms.
Vashishtha observed that while affiliate marketing was one of the most profitable and RoI-positive ways for online businesses to grow, it didn’t take long for bad actors to leverage it for fraud. Affiliates with malicious intent began generating traffic for brands using any means necessary to earn a commission.
The practice started losing its appeal until the explosion of the creator economy and the rise of influencers. Additionally, improvements in technology and the emergence of attribution models like multi-touch attribution or view-through attribution started bringing transparency into the affiliate marketing model.
Jaiswal remarked that affiliate marketing in India is still nascent compared to global platforms, where many end publishers are not directly accessible to advertisers. He said, “With technology, many fraud-related concerns like click hijacking, app install hijacking, and click spam can be controlled by your mobile measurement partner (MMP) or attribution partner.”
However, despite technological advancements, brands still run the risk of being visible in an unsafe environment due to the way affiliate marketing models are structured. While advertisers primarily engage with larger affiliate networks, campaigns might be outsourced to smaller publishers, networks, and individuals, making it challenging to map where conversions are coming from. Additionally, smaller publishers or creators may create clickbait content or reach out to irrelevant audiences simply to drive traffic or act with malicious intent, harming the brand’s reputation.
Vashishtha stated, “You can go back to the affiliate network and ban the publisher, but it is still very difficult to work with the ecosystem the way it is now. We prefer to work with large publishers or content creators directly.”
By working directly with publishers or creators, brands can see how content gets created and deployed to generate conversions. Jaiswal suggested that brands could share a high volume of assets with affiliates directly to test their effectiveness and ensure that the brand positioning and messaging remain consistent.
While it is not entirely avoidable to discourage malicious activity, Jaiswal opined that assigning realistic key performance indicators (KPIs) while designing the campaign can automatically rule out any fraud from the equation. He said, “Marketers could leverage a combination of hard KPIs and soft KPIs, where soft KPIs can be click-to-conversion rate, sign-up-to-purchase rate, and hard KPIs could be cost-to-purchase or cost-to-sign-up.”
Affiliate marketing has its fair share of challenges; however, the ecosystem is continuously evolving. With new technologies like AI, affiliate marketing initiatives will become sharper and more targeted.
