How AI Is Poised to Disrupt, Transform, and Improve the World of Affiliate Marketing

The race is on as strategic marketers turn to automation and artificial intelligence (AI) to increase efficiency, enhance targeting precision, and keep pace with consumer expectations for personalization.

By 2023, global spending on marketing automation tools is projected to reach $25 billion. That translates to a 14 percent annual growth rate fueled by the fact that 55 percent of marketers plan to increase their marketing technology spending within the next year.

However, this spending isn’t about adopting technology for technology’s sake. The transformation is driven by a need to interpret and optimize increasingly complex data across channels. While the capabilities are exciting, the industry is still in the early stages of using automation and AI to improve performance. Affiliate marketing, in particular, is poised to reap the benefits as marketers increasingly adopt more AI optimization techniques.

How AI Will Streamline the Affiliate Partnership Process

Relationships comprise the very core of affiliate marketing, and AI can be a major part of how they form and how successful they become. On a basic level, recommendation engines can match brands and publishers that could conceivably work well together. For example, if a company has a goal of a 10:1 return on ad spend, machines can examine the campaign data, spot trends within it, and identify new potential partnerships on behalf of the brand that can drive similar ROAS.

However, the power of AI in relationship building goes far beyond that. AI can automatically invite affiliates and publishers to join programs. AI operates at an accelerated rate that surpasses manual efforts and streamlines the establishment of relationships, saving time and ultimately leading to faster activation. Eliminating manual processes allows account managers to focus on cultivating and nurturing relationships with high-potential publishers and increasing productivity for all involved.

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Achieving Optimization Through Machine Learning

Beyond partnership identification and establishment, AI will also transform the optimization component of affiliate marketing. While optimization in affiliate marketing is broad, at its core, the current process involves manually identifying areas of opportunity or risk and implementing alternative tactics to achieve desired outcomes.

Drawing from the wealth of data available, machine learning streamlines the manual exchange between publishers and brands and automates processes. Think of it as automatically recommending program optimizations to improve conversion rates and optimize spend on a publisher basis. For example, tailored machine learning recommendations drive 35 percent of purchases on Amazon, optimizing their sales and targeting efforts.

AI will also enhance the optimization of paid placements. Akin to media buying, affiliate managers contact publishers to determine available premium ad inventory and broker a purchase. Based on available inventory, the marketer negotiates a paid placement and formalizes the purchase through an insertion order.

Perhaps most importantly, machine learning capabilities will take unstructured data and identify patterns almost immediately that humans might not see right away—or ever. Affiliate marketing managers will spend less time pulling levers to optimize campaign performance, partnerships, or placements and more time refining their overall strategy by using machine learning.

Dispel the Myths: Be a Change Agent for AI in the Affiliate Space

So far, affiliate marketing has been relatively slow to adapt and maximize technology. It might be due to a fear that introducing automation and AI will put jobs at risk and reduce the authenticity of relationship-based strategies. However, affiliate marketing will always require people who know the brands and publishers. In fact, a recent survey by CleverTouch found that 40 percent of marketing directors and CMOs say a lack of human expertise is preventing their marketing automation strategies from fully succeeding. Marketers will still need human support for automated self-service tools as they establish more expertise in-house and stop outsourcing.

Affiliate marketers are used to identifying opportunities and solving problems on their own. As more technology solutions become available, marketers will see the value in the reliable data that machine learning produces. In other words, AI will simply make affiliate marketers more efficient and empowered to make better optimization decisions.

Despite the power of AI in affiliate marketing, it has yet to be fully recognized and utilized by the industry. Here are three key predictions for how affiliate marketers will see AI play a role in the industry in the future:

1. Investment will be in R&D.
Research and development will no doubt be one of the first to see a stream of cash flowing as affiliate marketing technology providers identify ways in which AI will be useful in their work. As this technology is explored, providers will implement cutting-edge technology to save marketers time and optimize results.

2. Machine learning will empower marketers to segment audiences.
Nearly half of digital advertising professionals say they’re already using AI for audience targeting and segmentation. But, like any marketing strategy, effectively leveraging AI requires defining the problem you’re solving from the customer’s or brand’s point of view. Companies will start seeing the need to identify affiliate marketing technology providers that understand and align with their customer-centric approaches and offer segmentation tools powered by AI.

3. Marketers will take notice, and solution providers will need to take action.
Ultimately, AI will become an integral part of affiliate marketing when marketers recognize its capabilities and solution providers rise to meet marketers’ AI needs. AI is expected to increase global business value to $3.9 trillion in 2022 as the technology leads to positive effects on the customer experience, new revenue from increased sales, and reduced costs for production and delivery.

If the race to adopt AI in the affiliate marketing industry isn’t on yet, it will be soon. Now is the time to consider adopting it as standard practice for your brand. Speak to your solution provider to learn more about how AI can improve your affiliate marketing strategy.
Maura Smith is the senior vice president of Pepperjam. She can be reached at [email protected]