Today, marketers across industries are being asked to do more with less — and the financial sector is no exception.
The current uncertainty in the global economy has severely influenced how much companies are willing to spend on their marketing, and as budgets don’t stretch as far as they used to, marketers are feeling the heat to make the most of the limited budgets and find out the best investment channels.
One such channel is affiliate marketing. Also known as partner marketing, this channel is proven to be one of the most cost-effective methods for companies to acquire new customers.
In this piece, we take a closer look at affiliate marketing and explore how it can be a valuable addition to your marketing mix.
Before we dive into affiliate marketing and why it should be a line item in your financial institution’s marketing budget, it’s important to define the metrics that this channel can influence.
What Are CAC and CPA?
Customer acquisition cost (CAC): CAC refers to the average amount of money a company spends to acquire a new customer. This is measured by adding up the cost of all the activities that lead to customer acquisitions (marketing, advertising, sales, technical platforms) and dividing that by the number of customers acquired.
Cost per acquisition (CPA): While CAC measures the cost of acquiring new customers across all channels and departments, CPA measures the total cost of converting a new customer in specific channels or campaigns. This makes it a more granular measure that marketing teams can use to evaluate the return on investment (ROI) of their campaign. CPA is calculated by taking the total cost of a specific campaign or channel, divided by the number of new customers acquired through that campaign or channel.
CAC and CPA are both important metrics because they provide insight into how much goes into getting new customers through the door. Using CPA, marketers can also better understand which campaigns and channels are more cost-effective and make more strategic decisions about where to invest their marketing budget. In the same vein, CAC and CPA are both good metrics for conducting A/B testing on channels and campaigns to determine which options have a better ROI.
What Is Affiliate or Partner Marketing?
Affiliate marketing — or partner marketing — is a performance-based marketing channel that connects brands with affiliates. Also known as publishers, affiliates help brands reach a targeted audience and convert them into paying customers. Often, this is a curated audience that aligns with the affiliate’s subject matter expertise.
The affiliate shares the brand’s content with their existing audience and earns commission only on approved transactions or conversions. This means that brands can manage their online marketing spend more, as the cost of acquisition is limited entirely to the number of customers that actually convert.
There are multiple types of partner marketing programs — and these have largely evolved with the development of new technologies. What started with coupons, loyalty, and blog affiliates now also includes social media content creators, and paid media partners. These programs can be sorted into four categories, content affiliates, rate comparison sites, coupon and deal affiliates and loyalty affiliates.
The Value of Affiliate Marketing
Incorporating an affiliate marketing program into your financial institution’s marketing strategy can offer numerous advantages.
The publishers you choose to partner with have deep industry knowledge. They get direct access to an audience of potential customers and have proven insights into what works and what doesn’t when trying to engage this audience. This is data they can then share with your financial institution, so you can make impactful decisions, optimize your strategy, and keep costs down.
Furthermore, affiliate marketing is one of the most cost-effective channels for banks and financial institutions. This is because you only pay for approved transactions or conversions, depending on the campaign, lowering the overall CPA. This puts you more in control of your digital marketing spend as there’s a clearer connection between your spend and the number of customers acquired—so you get to allocate your budget where it has more impact.
The added benefit here is that partner marketing reduces risk of spending. Financial services companies can drive more traffic, leads, and sales without sinking huge chunks of their marketing budget into campaigns they’re not certain will work.
What Does Budgeting for Affiliate Marketing Look Like?
Since partner marketing is a performance-based channel, you only have to pay for the number of conversions made. Usually, the cost of acquisition will be significantly lower than the profits made by that conversion — resulting in a positive ROI.
Each of your publishers will have their own commission rates, which will largely vary depending on the size of the audience, the publisher’s influence, the level of engagement that their audience has with their content, the geographic location of their audience, the publisher’s past performance in terms of driving traffic and generating sales, and other factors. Once you’ve explored this channel and established relationships, you’ll have a better sense of what you’ll need to spend and the typical rate of return on that spend.
When it comes to spend, it is also worth taking the time to budget for your affiliate marketing program as a whole. For example, how you source affiliates — whether that’s through an affiliate network or dedicating a role to forging relationships with publishers — will require an investment. Choosing a platform or network that specializes in affiliates in the financial services industry can be a great way to minimize the overall cost of sourcing the right partners, access a wider network of relevant affiliates, improve tracking and reporting, among other things.
Making the Most of Affiliate Marketing with the Right Platform
Partner marketing is still an evolving concept in the financial services space, and you should start implementing it now and making the most of it. The Fintel Performance platform was designed exclusively with financial institutions in mind to fully leverage affiliate marketing as a channel.
Users get access to a curated and trusted network of affiliates. We pre-vet every publisher we work with and we do the heavy lifting of categorizing and filtering these partners for you. We know that their success is your success, so we provide them with the tools they need to achieve their full potential. In addition, our customers also get access to a robust partnership solution, where they get to manage their partner marketing channels in a breeze.
With Fintel Performance, you get in front of the right audience at the right time — all from one centralized management platform. Your marketing team can use dashboards to have a clearer picture of the content that has been shared, how it’s performing, and more.
Are you ready to start working in affiliate marketing? Speak with one of our experts and learn more about how our specialized technology can help you reach new customers and scale your online growth in a safe, cost-effective way.