September 26, 2023

Inflation Prices are Pushing Brands Down Alternative Routes of Advertising

Unless you’ve been peacefully in hibernation for the past 3 years you’re more than aware of the steady increase in prices for just about everything. It’s hard enough to get a carton of eggs for a nice scramble and god forbid you have to fill up your tank just to go sit in traffic on your morning commute. With regular prices over $6.00 a gallon in Southern California it’s a daily debacle – do I get gas… or do I buy food to sustain my body? Every day we’re doing cost-benefit analyses for things that should be effortless purchases, and we don’t even realize it. 

And that’s just looking at our basic needs. Business owners are getting hit the hardest by these prices. When you take into account the increase in cost of the raw materials used to make their product, the increased labor cost to produce it, a higher cost to distribute and market their product, it’s a wonder lip balm isn’t $50 now. 

The spend on digital advertising in the US has increased 11.2% since 2022, and a significant portion of that is due to the increased cost to advertise. It’s not really that more business is getting pushed through, it’s that the cost to do business with these advertising companies and social media platforms has gone up. 

According to RevealBot, which tracks changes in CPM for several of the largest digital advertising platforms, the average CPM for Instagram is resting at $10.28 and Facebook’s CPM up at $10.49. Insider Intelligence reveals that over the last two years, Facebook’s CPM went up 16% and Instagram’s an astounding 55%. And those dollars aren’t even guaranteed performance in terms of conversions, that’s purely to appear in a users’ feed with a maybe 20% chance they’ll actually pay a bit of attention to your ad display. 

Now what if there was a world in which you could ensure your money goes towards effective ads, ads that result in sales. Wouldn’t that be nice? 

Well let us be the bearer of good news, that world does exist, and it’s called affiliate marketing (insert OOHs and AAHs here). Affiliate advertising is the process of brands partnering with publishers to secure promotions that get paid out based on their performance. Coming from a perspective of constantly paying more for less, it sounds like it’s too good to be true, and we’re right there with you.

Advertise Purple has been in the affiliate arena since the very beginning. We’ve seen the channel grow over the past decade to something we could’ve never imagined. As the cost for other advertising methods started to skyrocket, brands and businesses turned to lesser known marketing methods for a more efficient ROI. Since 2020 especially, affiliate marketing has been one of the strongest powerhouses in performance marketing and brands are turning to it left and right to achieve profitable growth and get the most bang for their buck. 

According to a recent report by the Performance Marketing Association, average ROAS in the affiliate channel was 12:1 across all industries, meaning every $1 spent on affiliate commissions drove around $12 in e-commerce revenue. Now compare that to spending $10+ for 1,000 views and little to no conversions and it’s a no brainer why brands have started to rework their media spending. 

We aren’t advising you to completely eliminate your other digital channels – part of an effective marketing strategy is using multiple channels to reach your audience. But it’s important to know why you’re using the channels you’re using and what you expect to get from each. You can’t rely only on affiliate marketing, although it will increase your brand awareness and sales. Other advertising methods like SEM programs, PPC, UGC, brand-owned content and event marketing are always going to be necessary for a holistic approach to marketing your brand and products, but having that steady channel where you’re achieving a high ROI is going to free up room in your budget to allocate to those other channels. 

When it comes down to it, it’s really about being intentional with your spending – for everyone, but right now I’m looking at you business owners and marketing teams. It’s a matter of understanding the goals you have for each channel and making sure you aren’t overspending in areas that aren’t likely to see strong returns. Affiliate marketing has been proven to achieve incomparable performance when looking at all other digital marketing channels with 84% of businesses rating their affiliate ROI better than other marketing methods, and when finances are stretched, being money smart matters more than ever. 

And luckily getting started with affiliate marketing is pretty easy to do. For smaller brands, fighting for an TOF (top-of-feed) advertisement is going to be a losing battle every time. Those spots will be bought out by the biggest players time and time again. Getting started with an affiliate agency like Advertise Purple can secure you a team of industry experts to vouch for you and work directly with the top media houses and content publishers to get your brand promoted in a cost-effective way that is guaranteed to drive traffic and sales to your program. For more information on how you can start scaling your business with affiliate marketing reach out to a team member today.

Are you getting started in affiliate marketing or looking to improve your current program?

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