A Message to CMOs: How You Treat Affiliate Partners Will Have Long Term Repercussions
It’s critical that brands understand the long term repercussions of mishandling their relationships with their affiliate partners in the short term. Lindsay Hittman, President and Co-Founder of BrandCycle Inc. sat down with Acceleration Partner’s Lenox Powell to discuss the trends we are currently seeing at BrandCycle between our publishers and the brands they promote. See the full article here.
Acceleration Partners: BrandCycle works with many different affiliates/publishers. Explain how your business model and platform makes that possible.
BrandCycle: Within the affiliate world, our business model is referred to as a “sub-affiliate network.” We serve both brands and publishers – bloggers, influencers, website owners– who are also referred to as “sub-affiliates.” We help these publishers (sub-affiliates) monetize their blog, website, social channel, etc. on a cost per action (CPA) basis.
Our publishers want to monetize their content but don’t want to have to join all these different networks and programs and have to figure out the whole ecosystem. We alleviate those aspects for them by acting as the affiliate of record within a brand’s affiliate program and then we provide the centralized link building, communications, reporting and payments to the publishers.
We also get the promotional details, creative and messaging directly from the brand and provide those resources to our network of publishers, which adds significant arms and legs to the brand’s performance-based marketing campaign. After we’ve driven the desired conversions for the brand, we distribute a large percentage of that compensation to the publishers within our network who also contributed to those conversions.
AP: What is BrandCycle and the publishers on your platform experiencing right now?
BC: Communication from brands has been all over the place and pretty inconsistent. In addition, we’re also seeing that although the products one would expect to do well right now are certainly selling, the actual brand mix of who is doing well and who isn’t has changed pretty significantly.
We also have a lot of content creators within our platform – mom bloggers, etc. They too are trying to juggle the demands of their audience, who are often fellow parents looking for an increase in deals, products and promotional information, and those of the brands they promote.
On top of that, they too are trying to manage working from home with their kids and their school day and all the chaos that can come with that. Many of these publishers are also experiencing a household shift in income because their partner has lost their job, so they’re feeling even greater pressure to generate more income via their affiliate business.
In typical times, we are cognizant to not over-communicate with publishers about what’s coming down the pike from brands, but right now, all we’re hearing from publishers is more, more, more, more. Please send us more products to promote, more content, more creative, more deals to share with our audience.
AP: How are you creating order out of the chaos?
BC: The best way to describe it is a triage situation. The brands who are keeping the communication lines open, who are keeping commission levels the same—or even increasing them—and who are treating us as their partners—are the ones we’re putting our trust and time into; and we’re definitely prioritizing those relationships and programs with our network of publishers.
We learned pretty quickly throughout this crisis who those brands are– and who they are not. For example, we had a brand whose business increased drastically because what they sold suddenly became highly in demand. To support them, we spent hours pulling skus, creating newsletters for our publisher base and sending the information and resources out to our entire community. Our publishers then started promoting the brand and their products. Barely a few hours later, we received an email from the brand telling us that they were shutting us and other publishers off to multiple programs.
This sort of thing has been happening consistently, which has been really disappointing, especially since we and the publishers on our platform have been loyal, high-value partners to these brands, in many cases, for several years.
AP: With regard to brands suddenly shutting off their programs or setting commissions to zero – how has that impacted BrandCycle and your publishers?
BC: One of the biggest challenges we’ve faced is brands shutting us out of their programs with zero notice. For example, one brand that we’ve promoted for years and drove $5M in sales for in 2019, shut us and everyone else down overnight with no advanced warning. No personal phone call or anything, just a canned email that the program was shut off. It’s really similar to an employee being laid off in a short, curt e-mail.
That kind of behavior is the exact opposite of what a partnership is and should be.
It also costs us money because there’s a gap period between when the brand shuts us off and when we can reasonably turn off our publishers’ links for that program and let them know to shift to another brand. Within that gap period, those publisher links are still live and converting, so all the publisher sees in their report is that their marketing efforts drove results for the brand.
Those publishers have done the work, they’ve driven the sales and delivered what they promised to the brand. As such, they deserve to be paid and because of our sub-affiliate network business model, that ultimately leaves us to pay for all those sales that happened within that gap period, even if the brand doesn’t pay us.
This same situation applies to brands who have started extending their payment windows. From a publisher perspective, the typical net 60/90/120-day timeframe from when a publisher-driven conversion takes place to when they are paid is already pretty long in a pay-for-performance model.
What we’re seeing right now is that many brands are extending that pay windows even longer to net 160 … net 180. Essentially, what these brands are asking publisher to do is take all the risk upfront and not get paid until 4-6 months later.
That is very unfair to the publishers, many of whom are small businesses without access to credit or capital. Going back to my earlier example of many content publishers suddenly finding themselves on one income, the vast majority would much rather get paid a lower commission with a shorter pay window so they can make ends meet.
AP: How have these decisions (shutting off program … delaying payments to affiliate partners) impacted brands and their affiliate programs?
BC: I’d say the most acute thing we’ve noticed is the drastic and rapid migration of publishers to brands that are communicating, who are treating them well and are maintaining commission rates. This is especially true for brands that are actually increasing their commission rates. Some of these brands are seeing upwards of 2600% increases in sales via their program.
One retail brand that we partner with on our platform has kept their commission rate the same throughout all this, which is actually a rate a bit higher than market. In just the last 30 days, we’ve driven over $1.5M in sales for them because everyone on our platform is actively promoting them.
What this means for other brands who offer similar products – i.e. their competitors – is that they are experiencing a significant loss of both market share within their programs and potential new customers.
BrandCycle is the communication line to over 2,500 publishers; we’re the gatekeepers to what brands our publishers hear and learn about. If we don’t trust what that brand is going to do because they aren’t communicating well with us, we’re not going to be inclined to promote them to our publishers, give them spots in our portal, feature them in our daily deals email or in our newsletter, etc.
AP: If you were sitting down with the CMO of one of these brands who just shut off their program with no warning or thoughtful communication, what would you say to them?
BC: I’d emphasize that publishers understand that brands will be challenged during this time— they are not living with their heads in the sand. But these are your partners. They do not work for you – they work with you and they deserve both respect and transparency.
I’d also remind them that it’s the publishers – not brands – who take on the risk in an affiliate partnership. The benefit to brands is that they get to pay for their marketing after a conversion is made – which makes the affiliate model incredibly unique and valuable. However … just because they have the upper hand in that model doesn’t mean that it’s acceptable to treat their partners poorly and arbitrarily decide not pay them, especially when those partners have delivered on what the brand asked of them.
Shutting off your program with no warning, cutting commissions and not communicating effectively about it … all this is simply bad decision-making that will have long-term repercussions. Increasingly, brands who’ve suddenly cut commission rates to publishers are going to find those partners turning away from them because, from their perspective, it’s simply not worth the risk to work with those brands.
I’d also call out that, while sales may be down right now, competition is actually up. If that brand has any expectation that they’ll reopen their affiliate program and recoup sales after this crisis abates, then it’s vital that they maintain the trust and respect of their existing affiliate partners.
AP: What are some blind spots you think brands have about how their actions toward publishers will impact their business?
BC: One is that I think some brands assume the affiliates within their programs are siloed and don’t really communicate with each other, and this could not be further from the truth. Affiliates are very connected to other affiliates. The average affiliate promotes multiple brands – including competitors. As such, they talk to each other about brands and their programs; they share information, strategies and opinions.
Bottom line. How you treat the partners within your affiliate program will quickly become known to other publishers and will affect whether or not they choose to promote you when things ramp back up in the new normal.
Right now, all publishers are looking very closely at every single brand they promote. If there’s a brand that’s does not treat them well, does not communicate with them, doesn’t convey empathy or respect for the publisher … there’s a high probability that they will not work with you going forward. What they will likely do is double-down their promotional efforts on the brands that do treat them with the respect and regard they deserve.
These short-term shifts will absolutely have long-term repercussions for many, many brands and their affiliate programs; it’s going to create noticeable winners and losers.
Another blind spot is forgetting just how fickle consumers are. Many put their trust in what publishers and content creators have to say – not in what brands have to say. If a blogger or influencer that the consumer knows, likes and trusts suddenly doubles-down on promoting your competitor because you have not treated them well, that shopper is very likely to make the switch to your competitor – especially if there are strong deals associated with the products they are promoting.
Aligned with this, shopping habits are also likely to change long-term. Yet, I sense that there are still quite a few brands that firmly believe their customers will return to their physical stores in the same numbers. Time will tell, of course, but I think a significant shift has taken place where consumers are now far more comfortable shopping online and far less comfortable going into brick-and-mortar stores to shop.
This is even more reason why brands should rethink how they are treating their affiliate partners right now; brands will need their affiliate partners more than ever in the coming months—and long after all this is over. But publishers also have a long memory… if you hurt or devalue your partners during this time, it’s unlikely they’ll be enthusiastic about rejoining your program when this is all over.
AP: What advice might you give to CMOs at this time?
BC: In addition to looking at all this through a partner-relations perspective, which I think is critical to do, it’s also essential to look at this from both a short- and long-term financial perspective.
Case in point. We have a brand on our platform that sold products primarily through their brick-and-mortar stores. They can’t do that now, so they’ve shifted to selling online. Last year during the same 30-day period, we drove $30,000 in sales for this brand. This month, same 30-day period … we drove $832,000 for them.
Another example. In 2019, we drove $15,000 in sales for another brand over this same period. Here we are, a year later in a COVID-19 reality, and we’ve driven $284,000 in sales for them over this same period. And this is with no changes to commission rates, no changes to their communication, etc.
A key reason for their growth, in addition to there being more consumers shopping online and looking for their products, is that they now have a lot more publishers enthusiastically promoting their brand.
Another piece of advice I’d offer is that the time has never been better to test new partnerships. Most of the brands who are experiencing calmer waters through these turbulent times have really opened their doors to all sorts of new partners, some of whom they’d rejected previously, such as coupon and deal sites.
For example, some of the brands we partner with have gotten more creative in their promotions by offering exclusive discounts and offers to us that we can share with the publishers on our platform. In many cases, these are for products that were previously only available in-store or are in lower demand right now. And let’s be honest, it’s really hard to push non-discretionary spending right now in many categories without a compelling deal or offer.
Lastly, even though I may sound like a broken record at this point, I just can’t emphasize strongly enough how important it is to treat your partners well. They genuinely want to be a good partner to you. Working strategically with them, not against them, can drive significant value for your business at this time, as data from our platform and others has proven.