What is an affiliate? We will explain in an easy-to-understand manner from the meaning and mechanism, the flow of affiliate regulation, the impact of affiliate regulation on companies and future measures.
What is an affiliate? Glossary / Meaning / Definition
When a website or e-mail newsletter links to a company site and a visitor registers as a member or purchases a product on the company's site via the link, the media operator of the link source site is paid a reward. It refers to the performance-based advertising method . The Associate Program of Amazon.com, which started in 1996, is said to be the beginning of affiliate marketing.
Benefits of Affiliate Mechanisms
Affiliates benefit both the media side and the company by forming a partnership with a website or e-mail magazine (media side) operated by an individual or another company different from the company to disseminate the attractiveness of the product. It is a marketing program aimed at that.
For companies, it has the advantage of being widely promoted about their products through channels different from their own, and it can also be expected to reach out to potential product interests through affiliate programs. Since it is a performance-based advertising method , it is easy to manage cost-effectiveness, and it has rapidly become popular as a method that is easy for many companies to work on.
On the other hand, for the media side as well, by participating in the affiliate program, the content required for the company's website and e-mail newsletter can be obtained from the company side, and it has the advantage of being able to generate profits. Many individuals and companies are participating in affiliates because the mechanism can be realized only by embedding a simple tag .
Also, for the viewers of the media, by seeing the product introduction from a different perspective and perspective from the corporate site, there is an advantage that the judgment material when selecting the product increases, and when you want it, you can immediately EC from the link. It has the advantage of being able to access the site. In that sense, it can be said that it is a program that is beneficial not only to the media side and the company, but also to the users who are the viewers .
Problems that affiliates have
Although it should be a program that is originally beneficial for companies, media, and users, the media side creates articles and advertising sites that use too much falsehood or exaggerated expressions to seek affiliate rewards, which consumes them. There are many cases where people suffer disadvantages, which has become a problem.
- Posting review articles of products and services with episodes that seem to have been experienced even though you have not experienced it in particular
- Introducing products that use expressions that are contrary to the facts, such as acclaimed by entertainers
- Introducing products that use expressions that touch laws such as the Pharmaceutical Machinery Law
The proliferation of these articles leads to damage to the advertiser's brand image . In addition, it is the responsibility of the advertiser who publishes affiliate advertisements (uniquely) to ensure thorough compliance with laws such as the Landscape Law and the Pharmaceutical Machinery Law .
In fact, there have been multiple cases of alerting companies that have placed affiliate advertisements using expressions that violate the law, and ordering measures.
Tightening regulations on affiliates
In order to take a big look at these issues, the Consumer Affairs Agency has launched a large-scale fact-finding survey of advertisers, ad creators, and intermediaries. In parallel with the survey, we also hold an "Affiliate Advertising Study Group" by gathering experts (* 1). The study group was held five times from June to November 2021, and the direction of the study group's compilation to optimize the display in affiliate advertising is "law enforcement for problematic affiliate advertising" and " Discussions are being held on three issues: how advertisers manage affiliate advertising (efforts to prevent it) and "building a public-private cooperative information sharing system for affiliate advertising" (* 2).
In addition, the ASP side, which provides affiliate programs, and the search / advertising platform side are also tightening various regulations.
For example, in December 2017, Google implemented measures to display more reliable and useful information in the medical and health fields at the top , which affected up to 60% of the information in this field (*). 3). The rankings of the sites that had been ranked high in the search for health and medical related words were changed across the board, which had a great impact on the companies that were newly acquiring from affiliates in the mail order of health foods and cosmetics.
In May 2019, Yahoo! announced a change in advertising standards for "Yahoo! Promotional Ads." All services provided by Yahoo Japan Corporation and affiliated partners can no longer place advertisements on sites that fall under the category of "things whose main purpose is to make advertisements click, etc." (* 4). As a result, it has become virtually impossible to publish performance-based sites, including affiliate sites, on Yahoo !, which has had a major impact on companies that used affiliates as their main source of inflow.
Impact of Affiliate Regulations on Companies
In response to these tightening regulations, changes are beginning to occur in the way mail-order e-commerce companies spend their newly acquired advertising budgets .
According to the results of a survey conducted by Allied Architects in 2020 with 17 well-known companies in the mail-order industry that sell cosmetics and health foods on EC, affiliates are one of the "advertising media with the highest conversions" in 2018. It occupied the largest proportion, but we can see that the proportion has decreased since 2019. Companies that used affiliate advertising as their primary means of acquiring new customers are under pressure to develop new means that do not rely solely on that model .
What are the measures against affiliate regulations?
First of all, in order to continue to effectively utilize the excellent advertising program called affiliate, it is essential to build a relationship of trust with affiliates. Companies will need to make efforts to "select as a partner" for better media rather than "using media" for promotion . It is important not just to raise the number of performance rewards, but to create products that can be featured in high-quality media, provide product stories, and approve and pay appropriate performance rewards. It can be said that companies are required to have the morals of seriously facing the affiliate program.
At the same time, it is indispensable to develop new acquisition routes that do not rely solely on affiliates, devise ways to ensure conversions of the influx of customers, and make efforts to have customers who have purchased once continue to use the product for a long time.
① Development of new customer acquisition routes
Shift to operational advertising
In the future, it is expected that there will be a move to avoid over-concentration on affiliates and shift the budget to operational advertising such as SNS advertising . Coupled with the trend of third-party cookie regulation, the routes of acquisition-type programmatic advertising tend to be concentrated, and soaring CPM and CPA will be inevitable .
Creative becomes more important
Among them, it can be said that the importance of creativity is increasing as a key to continuously producing results . Each company needs to actively work on new creative development such as utilizing videos.
Build an acquisition mechanism that does not rely on advertising
In addition, we will build relationships through the practice of "operational UGC" that maximizes UGC related to our products, measures involving influencers who send out high-energy about our products, and communication with consumers and fans. It will be even more important to build a system that does not rely on advertising, such as efforts.
(2) Ingenuity to surely lead inflow of customers to conversion (CVR improvement measures)
In order to maintain the target CPA while the CPM in operational advertising is inevitably rising, it is necessary to devise ways to increase the conversion rate (CVR) of customers who have flowed in from advertising .
As measures to improve CVR , attention is focused on posting UGC on LP and introducing chatbots .
(3) Measures to have customers who have purchased once continue to use the product for a long time (CRM measures, improvement of LTV)
It is essential not only to focus on acquiring new customers, but also to make efforts to keep customers purchasing products for a long time. From the customer's point of view, each company is continuing to improve its service / product design and CRM measures to find out what kind of service provision / communication should be done to continue .
The issue that the recent tightening of affiliate regulations poses to advertisers can be said to be a warning to the advertising system that emphasizes only efficiency without being close to consumers . Originally, advertising should be an opportunity to provide consumers with a richer experience. We are now being asked again what is product / service design that is close to consumers and how we should convey it through advertisements .