You Can be the Hero Who Transforms Your Company’s Advertising Into a Profit Center

By Maura Smith, CMO on October 26, 2020

pepperjam_leadership_mauraMarketing teams are tasked with attracting and nurturing new customers. But this task traditionally comes with a steep price tag. Take for example long-standing, non-digital marketing tactics like direct sales, television ads, radio, mail and print advertising. These means are costly and rife with challenges that only serve to fuel the department’s reputation as a cost center, or an operating expense, making it very cost-prohibitive for smaller businesses to scale.

Even further, such traditional marketing tactics employ a one-way engagement model, eliminating any dialogue or chance at establishing a relationship with the consumer. Simply put, there just isn’t an easy way to start of conversation from one direct mail flyer.

However, with the advent of additional and more sophisticated digital advertising mediums and distribution channels, the outlook has shifted. And along with the proliferation of these digital marketing channels, new advertising spend models emerged, flexing their muscles within the plan.

In its evolved version, marketing doesn’t just drive brand awareness – it plays a role at every stage of the buyer journey from awareness and interest all the way through desire and into action. Marketing can drive awareness and interest at a branding level but can also incite decision and action, driving new and repeat business in the form of traffic, sales, conversions and downloads. It can also influence purchasing decisions including that to spend more money. It’s downright heroic.

Yet, not all marketing departments effectively draw the connection between the dollars they spend to the direct response impact or influence those dollars have on the generation of results. So, this hero goes unsung. Imagine if its full strength could be unlocked. It might just become a profit center. So, where is that key?

The key is the channel that so often gets overlooked by even Marketing and eCommerce VPs and CMOs increasingly comfortable with digital—affiliate marketing. Affiliate marketing’s proprietary strength, even within digital itself, is that it spans all forms of marketing like editorial content to search ads to influencers—the list goes on. And in these uncertain of times, with the costs to do business in the paid search and paid social channels only skyrocketing and becoming unsustainable over time, affiliate presents itself as the ideal way to subsidize these costs, as it is a pay-for-outcome, not pay-for-access model as seen in other channels.

What is the Perfect Vehicle to Reach, Engage and Convert Audiences? Performance-Based Channels.

Today’s marketing landscape commands marketers to be present at every touchpoint in the buyer’s journey. But being omnipresent gets very expensive, very fast when you’re using paid channels. In stark contrast, a pay-for-performance model makes affiliate marketing especially desirable. And this desirability has prompted an expected rise in the channel’s marketing budget as we head into 2021. In fact, a recent Gartner CMO spend survey shows executive-level marketers are taking notice of the channel, citing a 65% budget increase heading into 2021.

Traditionally, advertising expenses can be viewed as a cost center since they only indirectly contribute to producing revenue while nearly always requiring investment. But when the correlation of spend-to-revenue generation (as found with the pay-for-performance model) is so direct, it should then be regarded as a profit center.

Its unique pay-for-performance model makes affiliate marketing the ideal vehicle for brands to effectively reach engage and convert both new and existing consumers. With affiliate, you’re not just spending, you’re only attributing cost upon revenue generation and in turn, you’re transforming what would otherwise be known as a cost center, into a true profit center.

In a digital marketing landscape overcrowded with expensive channels and complex, difficult-to-decipher metrics, there’s a clear need for channels that do something straightforward and simple: drive additional or incremental profits.

The Bottom Line: How Can You Leverage Affiliate to Transform Your Advertising from a Cost Center to a Profit Center?

By leveraging a channel that is inherently built to only compensate outcomes like sales, leads or mobile app downloads, marketers can prove their ability to correlate spending dollars with driving revenue. And there is no better or more effective way than that to begin to transform your marketing from a cost center to a true profit center while serving up a win when your organization needs it most.

Unlock and embrace hero, for when affiliate marketing is in the mix, flexing its muscle across the plan, advertising can finally be a regarded as a center of profit for your company rather than a continually growing cost center and when all is said and done, that’s the goal for every CMO. Guess who’s the hero now?