As digital advertising costs soar, fashion brands are turning to affiliate marketing for efficiency

As digital advertising costs soar, fashion brands are turning to affiliate marketing for efficiency

With the cost of customer acquisition and increasing CPM, efficient use of advertising dollars is one of the main concerns for fashion brands. The past year has seen significant growth in affiliate marketing adoption by companies, thanks to the tool’s lower cost and efficient return on investment.

According to data from affiliate marketing software company Partnerize, the apparel industry increased its affiliate marketing spend by 22% in April compared to last year. Accordingly, the average order volume for affiliate sales increased by almost 20% year-over-year over the same period. And the data shows that growing 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 effectiveness were common themes discussed.

“Pay for performance,” said Maura Smith, CMO of Partnerize. “The model is efficient by nature. Return on ad spend is usually around 12 to 1 for the affiliate. [marketing]. And because it is so efficient, it can help offset the costs of other more expensive channels.”

For example, advertising on TV can be very costly – in the four to five digit price range — and the results are not easy to follow. But these expensive, top-of-the-funnel marketing opportunities are still valuable. Affiliate marketing offers strong returns with a high level of traceability, enabling these more expensive, larger fluctuations. Typically, the average commission rate for affiliate marketing is 6-7%.

According to data from Partnerize, the majority of affiliate marketing revenue comes from content-focused publishers like Buzzfeed or Vogue, as opposed to coupon or value-driven publishers like RetailMeNot. The former accounts for just over 50% of all affiliate revenues. But increasingly, influencers are growing to make up a much larger percentage of affiliates.

Affiliate marketing also has its limits. Smith said it works best for larger, more established brands. Partnerize CEO Mark Gilbert said any brand with an annual revenue of less than $1 million is not prepared to invest significantly in affiliate marketing.

Amy Riordan, svp of ready-to-wear brand Sachin & Babi, said the affiliate works best when it focuses on a specific audience.

“Sachin & Babi uses affiliate marketing very strategically and we see this as an opportunity to get ahead of a sophisticated clientele who takes due care when it comes to investing in her wardrobe,” Riordan said. “We also see great value in publishers who are destinations for fashion, beauty and wellness as they bring credibility to the partners they choose to feature.” Riordan sees affiliate marketing as a top-of-the-funnel growth channel and monitors returns closely, adjusting the company’s investment as needed.

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

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

“Broadly speaking, the best affiliate programs are diversified,” he said.. A mix between top feeds like Buzzfeed and feeds closer to the purchase journey like RetailMeNot is ideal, Smith said.

“Each partner makes a different contribution to traffic and revenue generation. It is better to be well diversified than over-indexed.”

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