Why retailers in Southeast Asia are embracing affiliate marketing and partnerships to drive new customer acquisition

PARTNER CONTENT

For brands and retailers across Southeast Asia, the last few months have been both the best and worst of times.

On the one hand, digital retail has exploded over the last 12 months, growing 85% year-on-year, with Bain & Company and Facebook’s annual SYNC Southeast Asia report estimating that 80% of the region’s consumers will go digital by the end of 2021. This creates tremendous opportunities for marketers seeking to reach and engage new consumers that were previously more difficult to find.

On the other hand, it’s getting harder and more expensive to make connections through digital advertising, driven in part by  Google and Facebook’s effective monopoly, which has  driven customer acquisition costs increasingly skywards.  Last month Australia’s ACCC was the latest jurisdiction in the world to express its concerns about Google’s ad tech dominance and its negative effect on brands, publishers and consumers. Compounding the issue, the explosion in online shopping has pushed ad prices up further, meaning more established brands with deeper pockets are boxing out newer, less established brands.

Throw in the privacy changes from Apple and Google (which will further ramp up prices as marketers can no longer fall back on third party cookies to target) as well as the demonstrable consequences of an over-reliance on a single marketing channel that Facebook’s outage last week proved, and it’s clear that marketers need to look at alternative growth marketing strategies if they wish to flourish.

New path to consumer purchase

The (sort of) good news is that the time is right to explore alternative growth strategies. Price hikes aside, the reality is that today’s consumer is less tolerant of digital advertising. Annoyingly slow-to-load or intrusive ads, concerns about the ethics of large media platforms (exacerbated by the recent Facebook whistleblower exposé) and a general decline in consumer trust in advertising over wider data privacy issues, have all taken their collective toll.

However, whilst consumers are paying less attention to advertising, they are paying much more attention to recommendations, reviews and word of mouth online to make purchase decisions. It’s hardly surprising given the sheer volume and fragmentation of media consumption habits that people are seeking the type of reassurance and human element that they used to get from their local shopkeeper.

In a digital world this means taking advice from a wider circle of influencer partners, which in turn is opening up a lucrative acquisition channel for retail brands across the region.

The affiliate and partnership opportunity that awaits

According to Statista, by 2022 the amount spent on affiliate marketing is expected to reach $8.2 billion — over three times the channel’s worth in 2012. Part of the appeal is that the channel is low risk, highly efficient and performance-based, meaning brands only pay when an affiliate or partner drives a sale. Simply put, affiliates or partners promote products on behalf of brands and each time an advertiser receives a sale, it pays a commission reward to the affiliate that helped make the sale happen.

Popular female fashion brand, Love Bonito, launched its affiliate partnership programme in 2020 yet is already seeing the channel drive 20% of total new orders with revenue growing 253% quarter-on-quarter. The company is working with various partners, from content creators and influencers to partnerships with other brands to aid its international expansion ambitions. Similarly, leading sports retailer Decathlon Singapore’s affiliate partnership programme has driven 50% of new customers in eight months with a quarter-on-quarter revenue growth rate of 156%. The company’s partners range from business institutions and sports clubs to influencers and content creators.

Managing affiliate and partnerships at scale

Today, brands have the opportunity to enter into almost limitless commercial partnerships with brands who share the same values, with opportunities including alignment with key online influencers, publishers, mobile apps, charities, ambassadors and more. These relationships can be managed at scale with partnership management technology allowing brands to take care of the whole lifecycle of an affiliate or partnership relationship; from recruitment right through to contracting, managing, rewarding, optimising and reporting. Leading online fashion and lifestyle brand Zalora is one of the companies showcasing how this can be done, having recently launched The Zalora Community Influencer Program. The program encourages influencers and Zalora customers to endorse and earn via their social media platforms, rewarding them commission on sales, with no limit to how many they will be able to recruit and manage.

The dynamic growth achieved by Love, Bonito and Decathlon is attainable for all sizes of organisations, from global enterprises to smaller, local start-ups. Last year, Forrester Consulting conducted a series of in-depth interviews with some of impact.com’s customers, to understand the Total Economic Impact (TEI) of the company's Partnership Cloud. These interviews showed  that the average organisation experienced a remarkable 314% return on investment with the solution paying for itself in under six months. It comes as no surprise that  Deloitte listed partnerships as one of its seven 2021 Global Marketing Trends (under the term ‘Fusion’).

In a time when it's never been more strategically or fiscally important to ensure you have diversified customer acquisition channels in play, we’re going to see an increasingly large number of  retail brands in Southeast Asia embrace and extend their partnerships across the region.