And trying to test. Learn what's new. And trending. Failure marketing. And much more. The trade is you simply won't find the inside anywhere else. Now you're too host.com. Leanne Johnson.
SPEAKER_01Welcome to the affiliate marketing podcast with me, Leanne Johnson, your host. And today I'm thrilled and excited to have Lacey Thompson from LTE Partners on the podcast here with me. Lacey, it's a pleasure to have you here today. How are you doing?
SPEAKER_02Great.
SPEAKER_01Excited to be here. Awesome. So I believe this is the first time that you're coming on a podcast. We're going to make it one of the best times that you're going to be on this podcast. But to start you off and just to let our audience know a little bit more about you, tell us your history and how you came to found LT Partners, which is an affiliate marketing agency based over in the US.
SPEAKER_02Yeah, um, I think there's probably a group of us in the affiliate marketing industry who have some like weird story about what happened before they got into affiliate marketing. Um I don't have like a, oh, I was a doctor. I went to law school. I've heard those stories in the past, but yeah, I kind of bopped around a lot before I got into affiliate marketing. I was a real estate agent and I had my insurance agency license. I did a lot of random things until I sort of landed in affiliate. And I landed into it via my first job at Blue Nile running their affiliate marketing program. So I was brand side first. Uh, and then I oversaw all of international marketing for them. So I got to oversee other channels as well through that experience, uh, which I think has really helped shape a lot of my perspective on this channel specifically and how it sort of interacts with all of the other ones. After that, I went to Expedia, ran their affiliate program primarily in the US, but also oversaw a few international programs during my time there. And I actually hadn't worked with agencies at all until that moment. And I needed more support for my programs when I was at Expedia. And so I did a bunch of research and figured out that I could hire an agency. So I did. And then after my time at Expedia, I actually went and joined an agency. Uh, the one that I had hired actually when I was at Expedia sort of recruited me in to work with them. So for three years, I oversaw all of client services at that agency. But it was a small agency when I started. So we all wore a lot of different hats. Um, I did a lot of different things other than just running the programs and overseeing the team that ran the programs. So I really got a good understanding of how to run an agency and best practices and all of that during my time at Streamline. Uh, and then I decided in September of 2018 to leave and start my own agency. I put it in air quotes because I didn't know what it was going to be at the time, to be totally honest. I just, you know, it was a little bit of a scary endeavor. My husband's an entrepreneur. And for me to kind of step away from being employed elsewhere was a difficult thing for both of us. And we just both agreed that if I could get three clients by the end of the first year, that I could keep on going in whatever whatever that meant, keep on going. Um and I I sort of went through this phase of trying to understand whether I was going to just be a consultant myself and um, you know, find brands that needed support, or even maybe not brands that needed support, and work directly with them forever, you know, and sort of have that autonomy and flexibility versus, you know, scale and grow and have it turn into um, you know, a more well-known, respectable agency in the space. Um, and I hired a coach to kind of help me through that process. Uh, it didn't take long to get through that process. Now that you know me, you probably know why. Like it was pretty evident that like this was what I wanted to do. And um, so I set off on that path really um, I would say maybe six months into starting the company because I had signed three clients all from referrals within the first two months and one day. And so I had to make a decision pretty quickly about the future. So I hired my first employee about six months, five or six months after I started the company, and we've just been continuing to grow since then very organically. Um, today it's been four and a half years. We have 56 employees um in a couple of weeks, 57. Um, and we run programs for brands. Thanks. We run programs for brands um really like across the board. We have a subset of fintech clients and have a really uh strong practice in fintech. We have retail brands, um, but we we also um support a lot of brands that are kind of have a little bit of a unique business model because we really try to continue to operate very strategically and more with a consultative approach. And so brands that are a little bit outside of the box is really kind of our forte and where we're we're strong, I think.
SPEAKER_01And I think that's one of the reasons that attracted me to you because we kind of like pinged together like a magnet or something, the two of us, in um affiliate summit rest a couple of weeks back, and it was like a meeting of like minds because we're both very consultative in the way that we work with our clients. And I really wanted to get you on the podcast today to obviously talk about how you see the industry from your perspective because you've got a huge subset of clients that you're managing, lots of different problems that happen on all of these different types of programs. And this is the experience that I want to tap into in this podcast for everybody that listens to us. So, one of the first questions that I want to set out is what are some of the biggest learnings that you've had about affiliate marketing this year so far and the way that it can drive incrementality in e-commerce businesses? Now I know that you guys do a lot of uh data analysis, you do a lot of modeling, financial modeling. So, talk to us a little bit about how you perceive what's been changing in affiliate marketing and and how it really drives incrementality in e-commerce.
SPEAKER_02Yeah, I mean, I think for a long time, I would say, really since I started the company, incrementality has been the key for me to focus on how to solve for that. I think that our industry in particular has this skepticism around incrementality. And I I always find it a little bit funny because I think that other marketing channels don't necessarily have as much skepticism around incrementality. And I don't really know exactly why that is. I think the thing that we focus on is bringing the data together to drive our strategy. So the data that brands are piping into their affiliate programs is somewhat limited, right? It's it's not the full picture. In some cases, there may be broader data, in particular, if they're piping in other channel data and doing any sort of like attribution within their affiliate program, that's always fantastic. But the piece that I think has been missing that we really focus on tying together is the traffic data. And we know if orders are new or repeat. I think that's kind of table stakes now. That's evolved since I started in the industry that you would have that in the network. But what we do is bring together the traffic data from Google Analytics with all of the other data that you're plugging into your affiliate program. And based on that, we're able to decide, you know, which partners are more incremental and how we define that is which partners are able to introduce the brand to their audience, which is shown in the traffic data.
SPEAKER_01So it's really taking a holistic approach because a lot of affiliate managers listening into this probably wouldn't even be looking at Google Analytics for their sites. So they're they're probably looking at just the data that the that the network is showing them in their reports. And what that can mean is that you're missing out on opportunities for kind of look-alike type partners that you could be approaching and bringing into the program that bring you those value customers.
SPEAKER_02Yeah, I think that I hear a lot in the industry is that partners like content partners or influencers don't convert. And I think that if we want to grow into a channel that has more incremental value, we need to do a better job of understanding what conversion means. It doesn't mean that you got the last click before you convert. That's not always valuable because if we're just focusing on the partners that are at the bottom of the funnel, then we're reliant on other channels to bring traffic in at the top of the funnel for us to convert. And there's not a lot of incremental value on that.
SPEAKER_01And talk about top of funnel and lower funnel because some of the affiliate managers that are tuning into this podcast, they might not even know what that means. So just expand on that a little bit.
SPEAKER_02I mean, at a very basic level, the marketing funnel, you know, looks like a funnel. And there are partners that bring people into that funnel, you know, and Google, I think Google's data shows that there's like almost 10 clicks that happen before a new customer decides to make a purchase. So people get into the funnel and then they click 10 times before they convert. What you have to understand is which partners have the ability to interact along that journey, not just the ones that drive the conversion at the end. And so attribution data and click path data is very important because of that. And I also very strongly believe that running programs on a last-click basis is inherently against the intention of building a full funnel affiliate program with partners that are able to bring value all along the way.
SPEAKER_01And some of those partnerships are things like Vatcher code sites. You know, there's a there's a huge conversation that happens in the e-commerce space about the value of Vatcher code and loyalty and cashback sites. But when you're talking about the funnel as a whole, it's very important to consider that those guys play a very important role in terms of getting their customer down to the purchase intent stage. Now, we recently, and this is a bit of a hot topic that you and I are going to discuss next, but we recently saw in the US a huge company like Walgreens, who's a prominent retail brand in the in the US, they shut their affiliate program for a short period, I think it was about a month, uh, citing that they had budget constraints or that their budget had had run out. Now, anybody working in the performance industry sort of, you know, shudders to believe that that is happening because it's pay on performance, meaning there should be no budget. You pay when the sale happens. Um, so what what are your thoughts on this? Because there was a lot of chatter around the community Slack channels that, you know, we're both in. Um, talk to me why you think this is a problem and why brands and retailers should approach this differently. Um, you know, obviously everybody's got budgets that they need to work on with marketing, but why do we still see this happen right now in the in the space? What are your thoughts on it?
SPEAKER_02Well, I I agree with a lot of my colleagues who put messages in the Martech Record Slack when that message was posted that um this channel is, you know, I went through 2008 at Blue Nile, and we would cut our paid search budgets halfway through the month, but kept affiliate rocking and rolling because um it was pay for performance and it didn't make sense to cut it off. It's also, you know, very detrimental to the partners. This is the only marketing channel where we have relationships and we rely on other people, other businesses and other people to promote our brands. And if you just all of a sudden cut it off, it's going to be very difficult to be able to go back to them and try to rebuild the relationship. And it's not just turnkey, it's not like paid search or paid social where you go in and pause your campaign and then just turn it back on. It doesn't work like that. So I think a lot of what everyone else said in that channel is very, very true. Um, I think my perspective on why a brand, especially a brand as large as Walgreens, would say we have to stop is because they don't have enough confidence that the channel is bringing the value that it needs to bring. And so I think I think what I hear a lot from companies of all sizes, is that it doesn't really matter if it's pay for performance, if the performance that I'm paying on is not really that valuable. And I think that's going back to the inherent challenge that we have in this industry is that I think there's a lot of people who question the value of a lot of these bottom-of-the-funnel partnerships. And it's our job as affiliate marketers to prove the value with the data. And I think the problem is that in our industry, we've always been focused on the wrong data. We've been focused on revenue and efficiency because it's the most efficient channel as far as the spend goes. And people are just kind of sick of hearing that story because they still go, Well, I don't want to spend the money if I didn't need to to get the customer. So us saying, you're not spending that much anyway compared to Facebook, it doesn't really land. It falls flat. I think that that is why we focus a lot on peeling back the layers of the onion and looking at data points like first-click attributed revenue and Google Analytics at the new traffic data. And you will see, I think, very similar trends for a lot of programs that have been run in a really traditional way where first click attributed revenue for affiliate is a lot lower than last-click attributed revenue. But if you go into like the Google or Paid Search, I should call it not just Google, but Paid Search channel in Google Analytics and you look at first click attributed revenue compared to last click, you'll typically see much better performance on a first-click basis for some of these other channels. And so then it's about understanding how does your spend compare not just to the last click attributed revenue, but to the first click attributed revenue as well. And then for marketers who you know are at like the CMO level, it's about understanding how does how do those metrics compare to Google? Because even for most of the brands that we've done the analysis for, everybody knows the spend compared to last click attributed revenue. But when you bring the data to the table and show how the spend compares to the first click attributed revenue, usually affiliate is still more efficient. Yeah. So that I think, and that's really like the most extreme way to think about incrementality. I think everybody knows that the first click is not the only incremental click that happens along the journey. And so if we're able to prove that our channel is more efficient, even on a first click attributed basis, that's the data that I think builds confidence to keep things going.
SPEAKER_01I think that's a good answer. And the other thing is that I think what I'd like to add is that it's very short-sighted. Like you must know your budgeting at least a quarter in advance. So why are you now shutting your program for a month? And why have you not prepared uh in advance to maybe tweak some of the other channels if your affiliate channel is flying? So I think there needs to be more clarity as well for the part for the publishers because they they do seem to be the ones that get burnt. You know, they last to know whatever's happening. And I think for brands to consider the the um you know, budget cycles that happen, because you you touched on this earlier where you said, you know, it's very difficult to go back and rebuild those relationships once you've told an affiliate to remove that link. You know, it takes some in some in some publishers, you know, it takes three months to just get a link added to them to the platform that they're working in. So really thinking a little bit more longer term with your program is something that I think is very important for brands to think about. And um, you know, for the agencies and managers that manage these brands, you know, start really educating your clients about how performance really should be working and how budgeting should be tweaked alongside some of the other channels that they're working in.
SPEAKER_02Especially for a brand like Walgreens, where you know they sell a bunch of other brands. So when they turn the program off, the partners that are promoting them are just gonna direct that traffic to other places that you can buy those products. It's not like they have some sort of unique product that you can't find anywhere else. So, especially for a company like them, it's going to be even more challenging to come back and try to earn back, you know, that traffic.
SPEAKER_01Yep, 100% agree in that. Now, can you talk a little bit about the advantages that brands have in terms of utilizing an agency to grow and scale their for their program? Because that's a question that I get asked a lot is why do I need an agency to run my program? I'm an XYZ network. And I think this is a question that you and I can probably debate quite well, um, having years and years and years in the experience. So tell us what you think. Why why do you think it's important for a brand to actually chat to an agency and how do they find the right agency for them?
SPEAKER_02I I love this question because I started my career on the brand side, and I actually started my career at a company that was pretty agency averse. So I know what it's like to be in-house and have senior leadership criticize agencies, criticize their value, not want to work with them in general, and then also have an approach of working with agencies that's different than how they would work with anybody who's on their team. And I think for me, when people ask me about bringing on an agency partner, I generally tell people that I think the moment is when you believe that you actually value an agency and you believe that they're your partner, not that this certain thing happens within your business and that's a trigger point for you to bring on an agency. It's it's that you believe that you have a partner who's going to help support your business in the way that's right for your business. I think that there's a lot of really great things that agencies can do. I think we have amazing access to data across so many different brands. I think that this is all we do every day. So we're totally experts in this space. I think that for us in particular, I've focused on reinvesting the profits of the company over the years into building a technology platform, which ours is called Lyft, that allows our team to make decisions based on data super, super fast. I think that's something that brands probably wouldn't do in-house. So I but I believe all of that stuff, right? I believe all the value that agencies can bring to the table. But I also know all of the things that people hate about agencies, frankly. And I think I think the level of transparency is a big factor that brands don't like, is that there's a lot of agencies that aren't very open about what's going on. They don't share a lot of information. They question, brands question what the agency is doing for them. And I think that unfortunately, a lot of people have had experiences with agencies that are not transparent, not just with what they're doing, but sometimes even with their pricing. And I think part of that is just because it doesn't make sense for the company, right? We're all running companies. And if we're running companies that are in a lot of cases charging our clients based on the performance of their program, there's an inherent, I guess, benefit for us to do things that, in quotes again, drive revenue, but we can't always drive revenue for our channel if it's not valuable for the client. And so you get this misalignment of motivation. And I think that's that's where we strive to really set ourselves apart is that if we know that a certain partner or a certain methodology of marketing is not actually driving value for the brand, it doesn't matter if our financial arrangement is on a performance basis, we will not do it. And I think that's really like the hard thing for some brands to believe in. But I just philosophically believe that even if next month we don't make the most money from our engagement with a client because we're doing something that is in their best interest, I know that it builds trust in the partnership and the relationship and it will lead to a longer-term engagement together, which ultimately is good for our company as well. So going back to your question, I just I think that a lot of a lot of the decision to work with an agency partner should be based on finding a partner that you believe is going to be in lockstep with you and do the things that are best for your business and advocate for you, not just for the things that they think will bring value to them, to their company.
SPEAKER_01100%. And I think it's also a little bit about chemistry too. I mean, if you're gonna go and look for a new the the way that I think of an agency is you know, your tech solution is the car. Your agency is the driver of the car. You can have a really poor driver and a really good car and still become last in the race. Think about Formula One, or you can have a really bad car and a really good driver and still come first. So it really is a marrying of not only culture in terms of how the agency runs their business and how the how the client runs their business, it's also around chemistry. Like, are we gonna have each other's best interests at heart? Because for an agency partnership to succeed, it has to be just that a partnership. It cannot be a supplier. Because oh, for an agency to really work well with a client, they need to be as if they are an employee of the client. And that's exactly the same way you and I run our agencies. And I think that speaks volumes because when you're just playing for a service provider, they don't really have your best interest at heart, they're just doing the work, they're just doing the key tasks that they're being told to do with no care or attention or due diligence because they don't have a vested interest in being part of that business. So understanding how to choose an agency and looking at the skill set that the agency brings to complement the team that you have within your business is just as important as the price and you know all the other negotiation factors that go into working with an agency. But I think something that you and I both agree is that brands that do hire agencies fast track a lot faster because they've got access to all of that spread of data, of information. And that is probably one of the biggest things that I think is a benefit of working with an agency, is that you tap into that knowledge on this particular niche like from day one. And you don't have to test and repeat and try and you know reiterate and all the things that all of the other brands are doing that don't work with agencies. Um and you've grown your agency incredibly fast. So I think the model that you're working to, which is to really partner with your your clients and show the value using the tools that you've created in Lyft is it kind of speaks volumes, you know?
SPEAKER_02Yeah, it's it's interesting because um we actually hired a third-party firm to do some interviews with some of our clients after the end of last year. And I just got the the some quotes and responses back, and one of our clients had said that he's worked with a lot of other affiliate agencies, but our ability to get their brand into content in a very short period of time was pretty astounding because he himself has tried to do it on his own with partners like Forbes, and it takes months, you know. And whereas our team was able to get them featured in that content within three weeks, was what he had said. And so I always think that's a really important thing when you think about how you're going to evaluate your partner and find the right agencies, is like, don't ask them. Every agency is gonna say they're the best. I mean, if they didn't feel that way, then they wouldn't be in their business, right? But talk to the clients.
SPEAKER_01And I think that and I think the other thing is, and I know I'm a big, I'm I'm a big doer of this. I am, you know, most agencies are yes agencies. I call them yes agencies. They just say yes to whatever the client wants because the client's paying them. Whereas I've been around long enough to know when to say no. When it's in the best interest of the client to say no, you're not at that stage yet. Leave it for another three months and we'll do that, you know, big idea that you've got once we've established the groundwork. And running very fast to try and grow an affiliate program can also bring you into a lot of limitations. And that's why the chemistry is so important with the client. The client needs to trust that you really do have their best interest at heart. And that needs to come across in the way that you actually manage your campaigns and your client relationships too. So I think we've cleared up why you choose an agency. And I think, you know, those people listening who maybe are thinking about taking that next step, there's some very clear value questions that we've given you here to actually think about when you're looking at your at partnering with an agency. But I'd like to get your thoughts on the agency network versus in-house management conundrum because you know, some of the industries that I've worked in, in-house has always been the way that everybody has gone. And some of the industries that you've worked in have been very much reliant on networks. And now we're seeing companies like Impact, Cake Tune, they're all coming, you know, Refersion, there's a whole bunch of them, um, coming to the marketplace and enabling brands to actually take this function in-house. So it seems to be quite cyclical in the industry, but when is the right time to go in-house? When is the right time to leave it with experts with an agency to manage? What are your thoughts on that?
SPEAKER_02I think at the end of the day, it's about knowing what the expectations are. I think that, you know, we support brands who are not well known, you know, and we also have very well-known brands. So it's not about the size of the company. I don't think it's about the vertical per se. Um, some brands are very protective of their data for some reason. And I think that to me, I don't really understand why at the end of the day, like we're not curing cancer. We don't have like some sort of like groundbreaking technology. Like if you sell mattresses or diamonds, even or like it's a product. And I think that the concerns with like access to somebody's data is is kind of weird to me. Like, I just don't get it. Um, but I know that some companies are just like that. So if companies are like that, I don't think that they should have an agency partner. If if you're not willing to share your information with your partner as you would share it with somebody that's in-house, then don't work with an agency. I think that's a very clear definitive line that I would say. I also think that there's a lot of brands who have a perspective that agencies are not strategic. And I think because of that, they just say, I'm not going to work with an agency. I always encourage people to be aware of any innovation in any marketing industry. And part of that is understanding: are there new agencies that are out there that are doing things that are different than the experiences that I've had in the past? Because there could be brands out there who run their programs in-house who have tried working with an agency partner in the past and not been happy. And they just have this point of view that it's because they're an agency. And that doesn't always have to be the case. Um, you know, I think for us, like we've had brand, we have brands that we work with today who had worked with multiple agencies in the past and it didn't work. And one of the CEOs even told me one time, she's like, maybe it's our fault. Maybe we don't know how to work with an agency. Um, and I think that that is always a good sign as well, is if you can have a conversation about how to make the partnership work and be truly authentic about what your expectations are of each other, that's a really good indicator that an agency partner is a good potential path forward. I don't, again, I just don't feel like there's this black and white, you should run your program in-house if this, or you should have an agency partner if this. It's not a playbook. It's really about your mentality, about the engagement and what your expectations are.
SPEAKER_01And also about what the internal resource deficits are, because I mean, agencies don't have to manage it all. They can come in and manage certain parts that maybe the internal team just don't have the capacity or the experience to deal with. Our agency is often brought in to deal with, you know, regions outside of Europe. So we've got very strong Latin American and African connections. So, you know, like it's it's really about finding the right fit and understanding when it's a good time to bring that additional resource in, but also understanding the value that that additional resource is going to bring to your business. So again, it goes back to the chemistry, it goes back to the value systems that the agency works to, it goes back to the understanding of their kind of role that they're going to be playing in terms of helping their program to scale.
SPEAKER_02You bring up a really good point though, because I think a lot of brands, people that work in-house, don't know that. They don't know that they can find a partner to just do a piece of the work, that agencies don't have to do all of it.
SPEAKER_01No, I mean it makes it easier when the agency is doing all of it because they can obviously pull the levers and make the decisions a little bit better. But if if it is just a part of the uh program that you're gonna be coming in. I mean, often my agency is brought in to do technical migrations. Like that's the b some of the biggest project work that we get done is how do I move from one platform to another and how does all of this data have to get transferred? And which platform do I need to do if I want to scale? And that's the like sliver of expertise that we plug in. But I think also there never is a right time. You just organically migrate to that point when you know that it's not working, we're not growing as fast as we should, we get a second, you know, set of eyes, a fresh perspective, which is something that I think brands don't touch enough when they look at agencies. They don't actually get agencies to look at their program from the cold light of day with a fresh perspective and go, here's all the things that are actually not, you know, being optimized right now. And that to me is invaluable. A program audit is really the first place that you should start when you're thinking about working with an agency, is get the agency that you've finally whittled it down to to actually take a closer look at your program and tell you what is wrong. Because the insights that you receive from that first meeting can set you know the tone for the rest of the relationship that you have with the agency that you choose.
SPEAKER_02I couldn't agree more. And even if you don't decide to work with an agency, that exercise can be really valuable for you as a brand in-house and you can take that information and action on it yourself. So there's really I don't think there's any harm in in contacting an agency. Yeah, yeah, and seeing what they have to say. It's it doesn't take that much time.
SPEAKER_01Not at all. Now, Lacey, it's been a pleasure to host you on our podcast. If you can give our audience this one piece of parting advice from all the experience that you've had running, you know, global agency with multiple clients. What is the one thing that brands or affiliate program managers or networks or agencies, other agencies maybe listening to this podcast, need to be doing to scale their affiliate programs this year? Where would you say is a is a key focal point that people need to be looking at to grow their affiliate programs or relationships successfully in 2023?
SPEAKER_02I mean, I think when you go into, you know, potentially challenging economic times, and I I say that with a big question mark because I think everybody's sort of not exactly sure what's going on right now and and when it's going to end. Um, but I I think this always, but I think especially right now with this year and the climate that we're in, it requires a really open mind. And I think that you have to be open to testing and exploring relationships that are out of the box, but also maybe relationships that you've tried in the past and they didn't work, understanding that sometimes in different times, things that didn't work before could work now. Um, so I think for me in this environment, especially this year, I think it's a lot about test and learn. And, you know, when you do those tests, bringing different data to the table that will help you understand whether the test that you've done is is driving that incremental value. So, like not just looking at how much did I spend and how much did I get out of it, looking at the new traffic that it brought, looking at the first click attributed revenue, and understanding whether having a different view on the data provides more meaning and maybe potentially drives success in a different way than if you were measuring it.
SPEAKER_01I love it. I've actually just written down three things be open, test more, and get collaborative. Those are the three things that you've just mentioned now. And really, I think that's a good way to start this year. So thank you so much for being on the podcast, for sharing your insights on affiliate marketing and how complex it is and helping people to understand when and how to get in touch with agencies to help them scale and grow. It's been a pleasure to have you.
SPEAKER_02Thank you so much. It's been great to be here.
SPEAKER_00If you're looking to launch an affiliate program but aren't 100% sure where or how to start, or you've launched your affiliate program but something isn't quite working, why not book a free 50 minute call with our agency team to find out how we can help? We offer a range of program managers and support from strategic team consulting to technical complex program migrations. Our Warwin team handled everything for N-depth program or the YOR topic code as one of the UK's top 50 rated agencies as ranked on the product digital agency centers 2001. We've got hundreds of brands lower scale and quote. Multi-million dollar programs across a wide range of interest rates. That's a wrap for this week's affiliate marketing podcast. If you're loving what we're putting down, why not head over to Apple IT to give us a five-star review? Make sure to subscribe to our podcast and our YouTube channel so you never miss another insightful episode of one of our free webinars ever again. Tune in next week for more digital affiliate marketing insights, trends, tips, and content to keep your affiliate and performance marketing five and your fastest driving consistent days.