Affiliate marketing finds its sweet spot in niche categories

By: | Published: November 20, 2018 4:54 AM

While affiliate marketing (coupons, price comparison and cashback sites) is a component that all e-commerce players are trying to drive in order to get more acquisitions, search remains the biggest traffic contributor.

Another category where affiliate marketing works well is in-game advertising.

While affiliate marketing (coupons, price comparison and cashback sites) is a component that all e-commerce players are trying to drive in order to get more acquisitions, search remains the biggest traffic contributor. “Less than 5% of the marketing budget goes into affiliate marketing in India, while globally the average is 10%,” said Ashok Reddy, founder, GrabOn, an affiliate marketing firm.

Unlike in the West, performance marketing is very cyclical in India. “The marketing budget at each e-tailer is defined by CMOs. It depends upon the criteria at the time. If branding is the criteria, they cut down on affiliate marketing that quarter with a focus on visibility campaigns,” said Reddy. If the current festive season is to go by, vertical players like Nykaa, AJIO and TataCliQ are driving a major chunk of the growth for affiliate players. “We are also seeing more push towards performance marketing by Flipkart and Amazon during the festive season, in addition to vertical players,” said Rohan Bhargava, co-founder, CashKaro.

Reddy of GrabOn reveals that during Flipkart’s Big Billion Days and Amazon’s The Great India Festival, the coupon site has seen 43% y-o-y jump in transactions on Flipkart and 38% on Amazon. As of today, 15% of GrabOn’s business comes from marketplaces such as Flipkart, Amazon, Shopclues and Snapdeal. “Between price comparison, coupons and deals, 15-16% transactions of the total e-commerce GMV in India are through affiliate marketing companies.” said Reddy.

However, affiliate marketing is becoming more significant in niche categories like tech, where unboxing and product reviews are important. Another industry is baby care, where content sites are able to generate a significant affiliate traffic proportion. “While coupon and deals sites are the biggest evolving successes, affiliate marketing would grow further in product categories. However, there needs to be control on the publishers and alignment with content,” said Sujay Kar, group director – e-commerce, VMLY&R, SEA and India. “The idea should be to look at search and organic traffic for baseline conversions, and top it up with affiliate marketing and other mediums.”

Meanwhile CashKaro, which spends only 5% of its marketing spend on Google and Facebook, has built a platform for influencer marketing. “We are looking to tap micro influencers on Facebook, Instagram, YouTube and WhatsApp,” said Bhargava.

Another category where affiliate marketing works well is in-game advertising. “Affiliate marketing cannot be a main channel unless you are looking at something very rudimentary or campaigns like cost per install for gaming apps,” said Benedict Hayes, executive director, Ethinos Digital Marketing. “From a revenue-based metric, it cannot replace Google or Facebook.”

GrabOn gets 30% of its revenue from campaign management and brands see value in advertising on its platform, claims the company. “The RoI that we provide is much higher versus all the Google ad-words campaigns done by e-commerce players, except for branding,” said Reddy.

But all is not smooth sailing. Affiliate marketing may be effective as e-commerce companies only pay for revenue, but it may not be scalable. Shrenik Gandhi, CEO, White Rivers Media, said: “Affiliates don’t do premium inventory buying, which impacts how much they can scale.”

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