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What Pay-for-Outcome Models Mean for Affiliate and Influencer Marketing | Sponsored Content

This article was contributed and sponsored by Pepperjam.

Throughout the past three months, with COVID-19 as a likely catalyst, influencers have been in trade publications frequently for perceived drama pertaining to seemingly abrupt changes to long-standing affiliate marketing programs. Journalists covering the space sought to understand the fallout between affiliate programs and influencers, campaign suspensions, and shifting compensation models. But as with everything in our space, understanding the truth is more dynamic than what may originally meets the eye. An evolution can be seen in retail marketers’ collective shift toward diversified programs and away from last-click overreliance. At the same time, influencers are responding to slashed upfront campaign fees by migrating to pay-for-outcome compensation models. These factors come together to seed a new relationship.

Over the last twenty years, affiliate marketing was heavily dominated by last-click coupon and loyalty publishers. But the affiliate marketing model made it too hard to assess the value of content creators and allocate compensation for their role in achieving a brand’s desired engagement—whether it be a registration or conversion. Affiliate technology was originally built to attribute compensation on last click. So for a long time, this system afforded no earning opportunity for influencers, simply because they were often the introducer touchpoint in the consumer journey.

As a result, the popular fixed fee monetization and commercial strategy around the creator marketplace was primarily developed as a defense mechanism.

For the dynamics between retail marketers and influencers to take hold, the affiliate industry needed to accelerate its evolution, to develop a way to prescribe value based on any given influencer’s explicit role in the consumer journey on the path to purchase, whether it be introduction or something more mid-funnel. The industry also needed to develop technology for precision influencer discovery, so that brands could find the right influencers based on specific attributes.

The welcome and collective move of brands and influencers toward pay-for-outcome models bodes well.

Now that affiliate technology is evolving beyond last-click publishers, there are opportunities for more sophisticated monetization. According to Pepperjam's weekly indexing, over the last two months, content publishers, like influencers, have realized year-over-year gains not only in revenue performance but also in their percentage share of revenue across the affiliate pie. And brands are responding—by investing more on a variable compensation basis, upwards of 127% year-over-year. With measured and proven performance, affiliate tools are finally a real option for influencers—they present an opportunity for high-level compensation for playing a measurable role in the ultimate conversion.

Combined with other recent events like brands dumping their fixed-fee campaigns, this technology evolution within affiliate marketing has created an environment for influencers to readily embrace the pay-for-outcome model. Influencers certainly felt the impact of recent budget cuts, but there’s been a palpable realization that they can offset these losses with alternative revenue streams, like affiliate. This trend toward pay-for-performance models has persisted week over week, and we feel that this position as a primary sales and marketing channel will stick after the pandemic, having been put to the test during the most challenging of times.

—Maura Smith, CMO, Pepperjam