In this month’s instalment of our Contributor Series, Rob Berrisford shares his thoughts on profitable partnerships and the AI-driven future of affiliate marketing. Rob is the founder of Affiliate.ai and has 20 years of experience in affiliate marketing. Alongside his team, he is creating generative AI software for the affiliate marketing industry.
Words: Rob Berrisford, Founder of Affiliate.ai
The Affiliate Marketing Landscape
Affiliate marketing has traditionally been a manual and labour-intensive practice. This has led to a market dominated by a few key players, primarily coupon and cashback sites. Meanwhile, companies in the influencer space often grapple with high costs and the challenges of leveraging micro-influencers effectively. However, as we enter 2024, Artificial Intelligence (AI) is poised to revolutionise this domain, potentially driving the future of affiliate marketing towards a zero marginal cost model. This shift could dramatically alter the affiliate marketing landscape.
The Cost Equation for Brands
AI’s integration into affiliate marketing signifies a pivotal change for brands, especially in terms of cost structures. The advent of a zero marginal cost environment, enabled by AI’s efficiency and scalability, implies that the additional cost of producing another unit of a product or service becomes increasingly insignificant. This shift has several crucial implications:
- Reduced Network Costs: With AI automating many tasks, operational and labour costs are set to decrease significantly. This may intensify price competition among major networks. A key question arises: will these networks opt to pass on these savings to spur growth, or will they retain these gains to enhance their bottom line?
- Dynamic Commission Strategies: The concept of personalised, dynamic commission strategies has been a topic of discussion for years. Is AI the breakthrough technology that can finally make this a reality for brands?
- The Long Tail: Enhanced efficiency in program management could finally unlock the potential of the long tail of publishers, which has remained largely untapped due to operational complexities.
Publisher Commission in a Zero Marginal Cost World
As we gaze into the AI-driven future of affiliate marketing, one major uncertainty is the direction in which net publisher commissions will move. Will they increase or decrease?
Personalised Rates: The push for a more personalised affiliate channel has been strong, but largely unrealised. AI could be the catalyst that unlocks this, potentially driving average commission rates higher.
Affiliate Networks’ Take Rate: Affiliate networks, the intermediaries in these partnerships, are also poised to experience significant changes:
- Lower Operating Costs, Higher Profit Margins: By automating processes and streamlining operations, AI could substantially lower the operating costs for these networks. This could translate into increased profit margins.
- A Competitive Advantage: Historically, companies that manage to operate at significantly lower costs than their competitors don’t just pocket the savings; they leverage this advantage to cut rates and increase market share.
In Conclusion…
As we step into 2024, the blending of AI with affiliate marketing marks the beginning of a new epoch characterised by efficiency, cost-effectiveness, and targeted marketing strategies. The zero marginal cost world offers multifaceted benefits: brands enjoy reduced costs and improved targeting, publishers gain from more lucrative and performance-oriented commission structures, and affiliate networks can transcend their traditional intermediary roles to become strategic partners, offering value-added services. This AI-infused landscape promises profitable partnerships for all stakeholders involved.
The reshaping of affiliate marketing through AI integration is a testament to the transformative power of technology in business models. It not only simplifies processes but also levels the playing field, allowing smaller players to compete effectively with established ones. This democratisation of marketing resources could lead to a more diverse and vibrant affiliate marketing ecosystem, where innovation and performance are the primary drivers of success.
Furthermore, the potential for AI in affiliate marketing extends beyond operational efficiency. AI can provide deeper insights into consumer behaviour, enable predictive analytics for trend forecasting, and offer sophisticated tools for audience segmentation and targeting. This not only enhances the effectiveness of marketing campaigns but also ensures a more personalised and engaging consumer experience.
The AI-driven future of affiliate marketing is not just about reducing costs and automating processes; it’s about reimagining and reinventing the field. It’s an opportunity to create more equitable, efficient, and effective marketing partnerships. As we embrace this new era, it’s crucial for brands, publishers, and networks to stay adaptable, innovative, and open to the myriad possibilities that AI brings to the table. The future of affiliate marketing, infused with AI, is not just bright; it’s revolutionary.
Lee-Ann sat down with Rob last year to talk about AI’s effect on affiliate marketing. Listen again…
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