As digital advertising costs rise, fashion brands turn to affiliate marketing for greater efficiency

As digital advertising costs rise, fashion brands turn to affiliate marketing for greater efficiency

With the rising cost of customer acquisition and rising CPM, the effective use of advertising dollars is a major concern for fashion brands. Over the past year, there has been significant growth in the adoption of affiliate marketing by businesses, thanks to the lower vehicle cost and effective return on investment.

According to data from Partnerize, an affiliate marketing software company, the apparel industry increased its affiliate marketing spend by 22% in April year-over-year. As a result, average order volume for affiliate sales increased nearly 20% year-over-year over the same period. And the data suggests that the increased adoption of affiliate marketing isn’t going to slow down anytime soon. According to Gartner’s annual CMO Spend Survey, 65% of CMOs are increasing their affiliate marketing spend this year. At the Glossy Fashion & Luxury Summit in June, affiliate marketing and its effectiveness were common topics of discussion.

“It’s pay-for-performance,” said Maura Smith, CMO of Partnerize. “The model is inherently efficient. Return on ad spend is typically around 12 to 1 for affiliates [marketing]. And because it’s so efficient, it can help offset the costs of other channels that are more expensive. »

Running ads on TV, for example, can be very expensive – in the four- or five-digit price range – and the results are not easy to follow. But those expensive high-end marketing opportunities are still valuable. By offering a high return with a high level of traceability, affiliate marketing helps make those more expensive and larger swings possible. Typically, the average commission rate for affiliate marketing is 6-7%.

According to data from Partnerize, the majority of affiliate marketing revenue growth is driven by content-focused publishers like Buzzfeed or Vogue, as opposed to coupon- or value-focused publishers like RetailMeNot. The first derives more than 50% of its revenue from new customers. But increasingly, influencers are growing to make up a much larger percentage of affiliate partners.

Affiliate marketing has its limits, however. Smith said it works best for larger, more established brands. Partnerize CEO Matt Gilbert said any brand with less than $1 million in annual revenue isn’t ready to invest significantly in affiliate marketing.

Amy Riordan, vice president of ready-to-wear brand Sachin & Babi, said affiliation works best when focused on a specific audience.

“Sachin & Babi uses affiliate marketing very strategically, and we see it as an opportunity to pitch in front of a sophisticated client who does their due diligence, when it comes to investing in their wardrobe. “, said Riordan. “We also see great value in publishers who are fashion, beauty and wellness destinations because they lend credibility to the partners they choose to feature.” Riordan views affiliate marketing as a high-end growth channel and closely monitors returns, adjusting business investment as needed.

Others have had significant success with affiliate marketing as a growth channel. Brianna Mobrem, president of Clique Brands, said affiliate sales have grown significantly on the company’s Who What Wear site, increasing 230% during 2021.

The best approach, Smith said, is to diversify the publishers the brand works with. It’s not smart to have 10 different partnerships with very similar publishers or content creators all targeting the same customer, she said.

“Generally, the best affiliate programs are diverse,” she said.. A mix between high-end publications like Buzzfeed and those closer in the shopping journey like RetailMeNot is ideal, Smith said.

“Each partner brings something different to traffic and revenue generation. Better to be well-diversified than over-indexed.

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