Offline Affiliate Marketing – Affiliate Summit West 2009 Session Report

In the grand scheme of the marketing/advertising world, affiliate marketing still holds the spot of the redheaded-stepchild — if only because many mainstream publishers and advertisers don’t really understand what it is. While some of that is slated to change as the economy coaxes advertisers into looking more at ROI-driven campaigns and less at CPM buys, there still remains one daunting obstacle for affiliate marketing, and that’s the brick & mortar (B&M) world. In other words, if Affiliate Marketing could break into the B&M world (and offer conventional retailers the cost-benefits of a performance-based model), the industry would both gain the legitimacy of which it’s worthy and experience explosive growth.

Well, on day 1 of Affiliate Summit West 2009, the CEO of RevTrax, Jonathan Treiber, delivered a presentation (Powerpoint slideshow below) called the Future of Affiliate Marketing – Offline. In it, he discussed:

  1. Offline Affiliate Marketing Models
  2. Tracking
  3. and Implications for the Industry write large.

Overall, offline affiliate marketing is neither rocket science or a distant prospect. Rather, it uses some methods that are a few decades old, is very much in full swing, and seems poised to undergo some considerable growth in the near future.

Offline Affiliate Marketing Models
There are essentially three offline affiliate marketing models, and they are all compatible with CPA and CPL incentives: (1) offline-to-offline referrals, (2) offline-to-online, and (3) online-to-offline. The offline-to-offline consists in traditional media such as newspapers or radio running ads with either coupon codes or specialty 1-800 numbers that let the advertiser track conversions. Similarly, the offline-to-online model consists in traditional media running ads with specialty URLs.

Where the near future gets interesting for internet marketers, however, is with the online-to-offline model. This model offers affiliates two new opportunities: (1) to make commissions on the kind of B&M sales that they have been generating for years, and (2) work with an entire new array of brands and in niches that haven’t been available to them before.

First, you have products that consumers research thoroughly online, but prefer to purchase in a B&M environment where they can touch it before buying. In essence, then, affiliates help these consumers make a purchasing decision, and then lose the referral. By offering consumers coupons for those items, however, affiliates can retain the referral.

Secondly, you have a variety of fast-moving-consumer-goods (FMCGs) that consumers never buy online — such as coffee and fast-food. Buy offering coupons and gift cards for these items, affiliates can get in on a massive new set of opportunities.

Tracking
When it comes to tracking referrals offline, the technology isn’t all that hi-tech. In the case of coupons, barcodes can be used to include affiliate IDs. Similarly, gift cards with a magnetic strip can also be programmed to include an affiliate ID. And, of course, in the case of phone-in offers (CPL), custom 1-800 numbers can be set up to correspond with an affiliate account.

These tracking methods also open affiliate marketing up to a variety of offline businesses. While any point-of-sale (POS) that scans merchandise can track referrals through barcodes, any POS that is set up to swipe cards can track referrals through the magnetic strip on gift cards. This makes affiliate marketing possible for both retailers and restaurants — e.g. while a Starbucks or McDonalds can’t scan barcodes, they can swipe cards.

Industry Implications
The ability to take affiliate marketing offline has three major implication for the industry. First, it opens things up to a variety of new publishers and advertisers.

On the one hand, print media, TV, and radio can avail themselves of a performance-based revenue model. On the other hand, FMCG merchants (such as restaurants) can now tap into an entirely new marketing channel — which is considerably important when you consider geo-targetting and local search. As there’s an influx of mainstream publishers and B&M brands into the world of affiliate marketing, moreover, the industry as a whole will reach entirely new heights of legitimacy.

Second, and more importantly for current affiliate marketers, publishers will be able to capture a lot of lost revenue. As consumers take site deals into stores, affiliates will be able to receive commissions on B&M sales that they’re responsible for generating.

Finally, there will be a whole new level insight and analytics. By tracking the user from online to off, we’ll have an array of new intelligence on consumer behavior and how it affects B&M performance. This will result in a win-win situation for merchants and affiliates because they’ll be in a much better position optimize their respective campaigns.

Offline in 2009
As the economy works out its issues, consumers will continue to go online to find savings. For products that they can’t buy online or prefer to purchase in a B&M location, gift card and coupon opportunities will become increasingly important verticals for affiliates.

More importantly, though, as mainstream media and multinational B&M brands adopt affiliate marketing, the industry is going to receive a new level of legitimacy. That legitimacy, in turn, is going to fuel considerable growth through a multiplier effect: more brands, attract more agencies, attract more brands, etc. In a nutshell, then, offline offers are something that serious affiliate need to start giving some serious thought to when planning their strategy for the next two years.

About CT Moore

A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over a decade experience leveraging search, social media, and content marketing to help brands meet their business goals online. He currently provides digital strategy consulting to start-ups, SMBs, enterprise level companies through his consultancy Socialed Inc.. CT is also an accomplished blogger and speaker who educates groups and companies on how they can better leverage different online channels.

Twitter: gypsybandito

15 Responses to Offline Affiliate Marketing – Affiliate Summit West 2009 Session Report

  1. Seth says:

    There's a lot of interesting data around this – especially using online ads to drive in store.

    Here's a good stat:

    – Almost 90 percent of the incremental sales generated by online advertising take place in-store

    http://www.comscore.com/press/release.asp?press=1

  2. CT Moore says:

    Wow, Seth, that's quite a percentile. I never realizes that such a large proportion of incremental sales were generated online.

  3. Interesting idea! I was thinking about this model a year ago to integrate Cash on Delivery method with affiliate marketing.

    But there is one thing that I can't understand. How the publisher is guaranteed to be paid by the merchant? What if the merchant doesn't pay the commission to the publisher? What kind of guarantee is there for publisher that their commissions are to be considered and paid by merchants.

    Thanks

  4. Reza,

    With RevTrax, we run an in-store affiliate program for the merchant.

    The publisher is guaranteed to be paid by the merchant because the barcode on a coupon, which contains the affiliate ID, member ID, and other info on a coupon is scanned at the point of sale.

    Here's an example:

    http://images.revtrax.com/RevTrax/couponPrePrint….

    Regards,

    Seth

    Seth@RevTrax.com

  5. Thank you for the respond. Another question that pops up in my mind is that, you said the barcode on the coupon is scanned in the POS. why the merchant should do that? Whatif he/she forget/ignore to scan the barcod?

  6. CT Moore says:

    @Reza,

    It seems to me that the consumer will make them scan the barcode so that the discount is applied to their purchase. Most POS terminals now scan everything before they can be included on the bill, even coupons.

    Of course, there is room to cheat, still, but I doubt that large brands like BestBuy or Dominos Pizza would do so as they seem to scan everything.

  7. […] offline affilaite marketing and traditional online offers, affiliate marketing may just allow the print-based publishing […]

  8. […] is a really interesting blend of mobile and offline affiliate marketing. Offline affiliate marketing is a particularly interesting niche for three reasons: (1) it allows […]

  9. […] is a really interesting blend of mobile and offline affiliate marketing. Offline affiliate marketing is a particularly interesting niche for three reasons: (1) it allows […]

  10. […] methodologies, and working them into a model that only charges advertisers for results would be a winning combination in my book.  Advertisers use affiliate marketing to drive sales, leads, clicks, etc, but only pay […]

  11. […] methodologies, and working them into a model that only charges advertisers for results would be a winning combination in my book.  Advertisers use affiliate marketing to drive sales, leads, clicks, etc, but only pay […]

  12. I'm excited about the possibilities of offline marketing using coupons as well as pay per call campaigns, but I've yet to have any success with either. There are not too many advertisers who have jumped on this yet, and Im not sure why. My experience with pay per call has not been a good one. My initial test calls were not reported and nobody from the network or ring revenue ever returned my calls or emails. Not a great sign. Also, campaigns are quickly expiring.. not too much to choose from.

  13. CT Moore says:

    Maybe success rates depend on the vertical or the region. I saw a presentation by Jason Treiber from RevTrax (and offline affiliate marketing company) at SMX East, and one campaign expaerienced 3 times as many downloads as expected, and twice as many redemptions as expected: http://www.nvisolutions.com/blog/seo/smx-east-cas

  14. […] offline affiliate marketing. Jonathan gave a session at Affiliate Summit West 2009 that was called Future of Affiliate Marketing – Offline. After the session, we caught up with Jonathan, and he was nice enough to take the time to discuss […]

  15. “The publisher is guaranteed to be paid by the merchant because the barcode on a coupon, which contains the affiliate ID, member ID, and other info on a coupon is scanned at the point of sale.”
    .. What prevents the merchant to NOT scan the coupon and enter the discount – hence getting around paying the affiliate?