In our latest podcast episode, we dive deep into the world of affiliate marketing with a special guest, Viktorija Ratomske, co-founder and CEO of Partnergap. With over a decade of experience in the field, Vik brings a wealth of knowledge and insights that are invaluable for anyone looking to understand or venture into affiliate marketing.
In this episode, Vik shares her journey to becoming a seasoned affiliate marketing expert. She explains the basics of affiliate marketing, breaks down its various subdivisions, and provides a detailed look at how to successfully implement and manage an affiliate marketing program. From choosing the right tools and platforms to understanding key metrics and trends of the moment, this conversation is packed with practical advice.
Whether you’re a startup wondering when to start thinking about affiliate marketing, or a seasoned marketer looking to refine your strategies, or like us, simply striving to learn more about marketing, this episode is for you. Join us as we explore the intricacies of affiliate marketing and discover how it can be a game-changer for your business.
Read on for the full transcript of our conversation with Vik Ratomske, and don’t forget to tune in to the podcast for even more insights!
Transcript:
Julija Jegorova: Today we have another very special guest, a seasoned CMO, partner, co-founder, and CEO of Partnergap, Vik Ratomske. So good to have you. Today we’re going to be talking about something that I have zero clue about, and I think Mauro is also very green in this topic, affiliate marketing. So before we dive deep into all the intricacies of affiliate marketing, could you just let us know a little bit more about yourself and your journey?
Vik Ratomske: Excited. So I started working in affiliate marketing 12 years ago, I had no idea what it was. Before that, I used to work as an accountant. I switched from accountancy to marketing and affiliate marketing. Back in the day in 2012, when I started working at the biggest poker affiliate in the world, Poker News, I had an opportunity to tap into a world that was not known in the field at all. Over the seven years in that industry, I learned a lot and then moved on to working in various different niches, with my role scaling to CMO and working with all things acquisition marketing. After 12 years, I decided that it was time to share my knowledge by having my own company as we see so much potential for companies in affiliate marketing. It’s never boring, honestly.
Julija Jegorova: So Vik, what is affiliate marketing? Explain in layman’s terms for people that have no clue about it at all.
Vik Ratomske: This is my favorite part. Let’s imagine if Mauro wants to buy, let’s say, a motorcycle jacket. He Googles “top 10 best motorcycle jackets,” he gets an article on GQ with all the brands and all the beautiful pictures with links to buy. Once he’s landing on the brand pages, and he makes the purchase, GQ gets a commission for every client referred to the actual seller of the product. So, in a way, Mauro or anyone else buying a product through the affiliate links helps any content sites, bloggers, influencers, or creators earn a commission from the brand side. That’s as simple as that.
Mauro Battellini: Thanks for simplifying it first, because it’s a really useful mental note. But could you also break down affiliate marketing as a whole? What areas of affiliate marketing are there? What are the subdivisions? What do you do in each area? How would you categorize what’s within affiliate marketing?
Vik Ratomske: First of all, it’s a very common misconception that affiliate marketing doesn’t work for B2B. It actually does, depending on the product, it works just the same for B2B as it works for B2C products. Initially, if we want to start in affiliate marketing, we have to do some homework. We have to have internal or third-party platforms and tools that allow us to create our program and those links. Sometimes I still get the question, “Oh, can we do it just by giving some promo codes?” In this age of data, no, because everything can be tracked, everything can be reported and recorded. So this is the essential part to know when you’re starting, that there are tools that help you to launch everything. In terms of how it differs from B2B and B2C, it’s just the audiences. Let’s imagine if it’s a VPN product or web hosting or email automation tool. It’s needed for both B2B and B2C companies. It may be searched for a bit differently. Once we get on Google, once we get through our sources, where we look for these things, it’s still the same, and we still end up with the same products.
Mauro Battellini: So the methodology is essentially the same always. Are there different ways of doing affiliate marketing? Could you take us through the process? What does an affiliate marketing specialist actually do? How does their day-to-day look like?
Vik Ratomske: Yeah, this is easy to explain as I have my students, and I have to explain to them how this works. Let’s imagine you’re starting a company where they want to launch an affiliate marketing channel, and they have no idea what’s happening. First of all, look for somebody who has knowledge. I see way too many mistakes being made just out of not knowing things, not knowing how it works and just going not even by the book, but just trying it. It might work. In most cases, it doesn’t. It brings a lot of mistakes. It brings a lot of burned budgets, etc. So we have to start with finding somebody in your network, in your closest or secondary network, who can advise you a bit on how to do things. Do competitor analysis, be very clear about your product, and which markets you want to target. Basically doing just the background check, if none of the competitors are doing affiliate marketing, then the question is why? Maybe they didn’t tap into it yet, which happened a couple of times with some of our clients, or maybe there is an opportunity there. And that also happens. Explore which markets you want to focus on and if affiliate marketing is a thing there, because there are some smaller markets, or countries, where it just doesn’t make sense to do affiliate marketing, and it’s just not as evolved. Once you do the background check and see what’s happening around, it’s easier for you to decide. Let’s say competitor ABC is doing affiliate marketing, they’re using these tools, they’re paying this much commission. So here we go. This allows you to pick out similar tools or the same tools because we don’t need to create or invent anything from scratch. We know how much we can pay in commission, the default commission. The next part, which is the hard one but the fun one, at least for me, is finding all the possible affiliate partners who would promote your product, and then the outreach, pitching, negotiation, selling, and agreeing on various promotional deals starts. That’s that.
Mauro Battellini: What do these platforms actually do? Exactly? And why are they so crucial?
Vik Ratomske: They provide tracking. Let’s say in a very simple way, back in the day, 10 years ago, there were cases where affiliates would be giving UTM codes or something like that. We would say, “We’ll just give you screenshots from Google Analytics, and you’ll see the numbers,” etc. But even then, there were already tools and platforms, as we call them, or networks, that provided very high-level engines, creating tracking links for creating all the small details, there are session IDs and everything that needs to go there. That integrates with your brand, yes, and gives back the events and provides information, very detailed information and not sampled one like Google Analytics, both to the brand and to every affiliate. Meaning, me who’s working with a brand, I don’t have to go and take some half-right data from somewhere, but I can go into the affiliate tool, I can bring out reports of all the affiliates or some worthy affiliates, and all the affiliates that work with me. All those people who promote or brands who promote also have accounts where they can log in, see how they’re doing, how many clicks they’re sending, etc. So this is really crucial. And more than any time earlier, now we have an abundance of these platforms that we can choose from, starting from freemium or free $40 going up to, I don’t know, 2k per month.
Mauro Battellini: A shout out. So in terms of what you consider the best platforms to use?
Vik Ratomske: We have, I don’t want to say favorite ones, but we partner with some of the top ones that change every few years or so. But these days, we just love working with Impact, where we have amazing managers. Every client that we onboard really is in the best hands. We also work with Everflow and a couple of others. So these are two state-of-the-art products that can be either accessed online or integrated with your product as a white label solution.
Mauro Battellini: So at the end of this process, there’s also analyzing the results, and so on. When performing those analytics, what are you looking for? What are acceptable metrics? How do you know you’re succeeding? What are indicators that you’re not succeeding? And how can you fix that?
Vik Ratomske: I love the term vanity metrics when you’re saying, “Oh my god, there are so many impressions or so many clicks there.” I ran into cases like this when it was reported to me from the team or whatever, and we’re doing so well. Then you turn to them, like where’s the money? We have a few main KPIs that are really important. We care about the clicks, the conversion rate from click to either registration or purchase, the average order value, and what else, and new clients brought in, average order value, and some other metrics like ROAS, so spend versus revenue generated. This is what gives you health. We don’t care about the impressions. I had some bad examples where companies bought campaigns like impression campaigns, like 10k for 100,000 impressions, and not a single sale from that. In a way, you didn’t know what you were buying, but did you think it through? You were just getting air, so this is really important to understand. What I love about affiliate marketing is we’re paying just after the purchase is happening, the purchase, the registration, I don’t know, a deposit, sale. This helps brands manage their expectations, manage their budgets, and makes affiliate marketing one of the best ROI channels in marketing.
Mauro Battellini: So this campaign for impressions, was it not consciously for that? It seems to me that by nature, affiliate marketing would not really be used for brand awareness or something like that.
Vik Ratomske: Brand awareness is a part. Maybe we can go back to the types of affiliate marketing. There are at least 10 or 12 of them. It’s everything that you can imagine: content marketing, so basically anything you read on Forbes, Vogue, or Decanter; it can be YouTube, Instagram, email marketing; it can be pop-up banners, you get the idea. Basically, any marketing channel can be used as an affiliate channel. Telegram groups are now a growing one. Reddit is also becoming a very big affiliate resource. Between all those channels, understandably, there are some that are more profitable, and others are riskier. Imagine if you’re buying impressions, so probably you’re doing a banner campaign on some websites, you’re showing something, and how blind people are to the ads these days. If your product is not known, and it’s not written about on that website, what will happen if you just show ads? Nothing. It’s gone in seconds. That’s it. Imagine the site has 50 million visitors per month, but 10k is nothing. In this case, this is not like brand awareness, but if we focus on SEO affiliates, on SEO content affiliates, then it’s both acquisition and brand awareness for sure.
Mauro Battellini: What’s interesting is you don’t pay until after a sale is made, so you could get almost technically free brand awareness in a way.
Vik Ratomske: Yes. But then again, let’s say if we have top 10 lists or just reviews or a product review, we still need readers to come in and read it. It might be if you only have a review for a product on some other website, and it’s a new product, maybe nobody will just read it. There won’t be any clicks, any brand visibility. We’re always aiming for bigger visibility, listicles, various comparisons, etc., then yes, you are getting some traction already, even without the conversion. There comes another part where affiliates are also interested in earning as much as possible. If you’re not converting, they will say, “Hey, you know what? Your brand is not converting.” It goes both ways. That’s what I love about this industry. It’s always negotiations, always making deals, making business.
Mauro Battellini: How does the negotiation look? Who would you negotiate with? Is it individually with each channel, for example, in media, with different magazines, in YouTube, with individual YouTube channel owners? How does that look?
Vik Ratomske: Honestly, there are various ways. For influencers or creators, YouTubers, if they’re big enough, there will always be agencies. But as much as possible, we try to stay away from the agencies unless our budgets are big, and we don’t care about that. We just want to save time and move ahead. We know that some of the creator agencies take a very hefty cut, and then you don’t reach the creator yourself. You’re doing it through a mediator. Depending on the product, or almost for any product, you want to work with the creator yourself. You want to know how they will incorporate the product or how it will be done. I remember at Hostinger we had the whole playbook on how it should be done, presented, when, where, etc. In most cases, when it’s possible, we’re trying to reach out directly. With content creators, maybe one of the most recent examples over the last year is the Hearst group, who, as you may know, own a lot of really big names. First of all, we opted to each one of their business development managers from the Hearst group. We got a list of all the domains they own, we negotiated a deal, we set up for them for all the brands in the affiliate platform. Then we went on to communicate with every single media site, like Good Housekeeping or Esquire, etc. Even in those dedicated media sites, you have different people who are responsible, maybe for SaaS products, or for kids-focused products, for fashion, beauty, etc. It’s finding the right people.
Mauro Battellini: What are the biggest channels that companies want to be in? What brings the biggest volumes of sales? What would you recommend to start with?
Vik Ratomske: The affiliate landscape is changing as every other channel as well. These days, it might be a bit tougher to get into affiliates without a fixed budget or additional fixed fees, but we still have success with that, and we still push for that, especially for new brands, maybe smaller brands that don’t have huge budgets. But I definitely would say that at the top of high-quality traffic stands SEO and content affiliates. Not only that, but look beyond Google. Even for some of the brands, Bing converts really well, which might be surprising, but it does, especially if your product is US-focused. Then we have PPC affiliates, which works just the same as PPC does, as paid media does in your own company. We just don’t allow them to bid on brand names or brand review names or something like that. PPC affiliates also bring a very big chunk of the traffic. With the creators, influencers, it’s a bit of a separate part, but they also can, depending on the product, bring tons of new clients for sure.
Julija Jegorova: I have a question about clients. At what stage does it make sense for a startup or company to start thinking about affiliate marketing? Because we talked about Good Housekeeping, all of these big and well-known brands. That might be a little bit too pricey, let’s say, if you’re an early-stage startup. So when does it make sense to start a conversation?
Vik Ratomske: Honestly, when you have your product up and running, and you have your paid media campaigns on Facebook and Google, it’s already time to do affiliate marketing for your product as well. We might think that it’s pricey if we want to do it faster. Yes. Recently, a few months ago, we had an amazing case with one of the fashion retail brands that we work with, where New York Magazine just organically picked up one of the products and posted it in one of their articles. We didn’t pay any fixed fees or anything. We just had a deal set up in the platform available for the group of companies. The way I think it happened, the reporter thought, “Okay, I’m making a top 10 list of my favorite things. Let’s see who we have deals with.” She saw that brand in the list, she copied the tracking link after the review, and here we go. I think in a few days, the return was in five numbers.
Mauro Battellini: So what is the cost if you are a young but a hip brand, and you believe to write a well-rounded article, a journalist might pick you up simply because you’re bio or handmade or whatever. You don’t want to directly negotiate, but you believe if you’re on the platform, you could get picked up. What would be the cost of simply uploading your deals or your links to the platform?
Vik Ratomske: The cost is for the platform itself. Yes, we are using a tool where we can promote our affiliate program. I understand that you’re asking about commission, what we would pay for brands. So it differs for the affiliates, depending on the industry. For example, for fashion and retail, commission to affiliates is from 10 to 20%. In SaaS, it goes up to 70% or sometimes even 200% when we see promoting a brand and affiliate marketing as an investment because we know the lifetime value, and we know that the time value that your client will bring in will pay for itself. So it really depends on the product.
Mauro Battellini: SaaS with 100%, would that be of one month, one year?
Vik Ratomske: Usually, the commission is paid for the first purchase. Imagine you’re buying a VPN product for 12 months, so the affiliate would get paid just for the fraction of that payment that you’re making.
Mauro Battellini: If they go for a subscription and pay monthly, they only get one month, but they don’t get the second month?
Vik Ratomske: It depends. But usually, brands have pretty strict rules on how they’re paying out commissions. The most popular models are revenue share, a percentage from the purchase, or CPA (cost per acquisition), meaning an exact amount. For example, for a subscription, the brand can say to the affiliates, “I will pay $100,” not a percentage but an exact amount. This sort of removes a long-term investment from the brand side. While there are recurring deals, lifetime deals, and a lot of interesting things, we see affiliate marketing moving to a one-time payment just for the first interaction.
Mauro Battellini: In terms of affiliate marketing trends, could you tell us what is a thing in affiliate marketing in 2024? What are the latest trends? Maybe you could contextualize, like how did affiliate marketing emerge? And how did we arrive at affiliate marketing as it is today?
Vik Ratomske: The first affiliate marketing deal was actually the program launched in 1976. It was a flower shop via a US veteran, where he promised to give discounts and free flowers to the clients who brought new clients. So here you go. This is how old the industry is. The more digital life started happening around the time when the oldest affiliate networks were created, such as CJ (Commission Junction) or Rakuten, ShareASale, maybe one of them as well. These are the first affiliate networks that allowed brands to imagine or put their affiliate programs inside. Then affiliates could come, pick and choose them, and start promoting online in different industries and niches. Affiliate marketing, even today, is not very explored, I would say. There is a constant need, as you would find in the gaming industr. It’s like, we need traffic. We always need traffic. So there is a huge potential. Some industries, for example, online gaming or online gambling in a way, because they are not allowed to acquire customers through Facebook or Google, it’s very complicated, very regulated. They’re going into other industries. But there are some industries where affiliate marketing has never been done before. For example, as mentioned, motorcycle gear. When the client contacted us, they said, “Vik, everybody’s just selling through B2B outlets, B2B marketplaces. But we want to try this.” The results are beating themselves every month, and the growth is really nice. So it’s like an untapped potential depending on the niche and market.
Julija Jegorova: Maybe we can talk a little bit about the timelines because we live in a very consumer-focused world. Everyone wants everything right now, right away. We see that in public relations, and we try to explain that it takes time for certain desired results to come to fruition. Is it the same with affiliate marketing, or do you just get results within the first month, become rich and famous, and retire?
Vik Ratomske: When I launched my affiliate marketing lectures with Add on Academy, some comments on the Facebook promotion said, “She will be teaching how to get rich and famous,” and it’s like crap. This is not real. But we’re not teaching that. It’s not “sell this digital marketing course on Instagram and earn 90k in a month.” It depends. To give a bit of context, I’ve seen brands who started converting in the first month, and I’ve seen brands who started converting in six to seven months. Obviously, it’s easier if you have dedicated budgets and if you want to go faster, if you are all in, but you have to have somebody who knows what to do with how to invest the money. You can kick off faster, but usually, we can’t. It’s around two to three months for a new affiliate program to pick up, to be introduced to the affiliate partners, especially if you don’t have a network of affiliate connections to negotiate the deals or get your brand information on the affiliate site, maybe send some test products, etc. It really depends. Usually, in the second month, we already see some traction from the first month. One more detail, which starts really fast, but we don’t count that as quality, is coupon and cashback sites. They’re like hawks. If you launch a new program, on the next day 70 applications, everybody wants to promote, but what they do is scrape promo codes. They help with conversion, but sometimes they steal those conversions from our good partners or even from your influencers, etc.
Julija Jegorova: I will be very cheeky and ask a question that not a lot of people probably ask. Let’s talk about money. You hear about affiliate marketing being expensive, that if you want to launch it, you have to have a budget. What kind of budgets are we talking about? Is it thousands or tens of thousands? Just give us some juice.
Vik Ratomske: If a brand wants to launch an affiliate marketing program, obviously you have to hire a person or come to an agency who will do that for you, so you don’t have to hire people because you don’t know if it will be a success or not. Let’s say it’s an account manager investment. Then you choose a platform, the platform usually, depending on the product, starts from $30 per month. Let’s say $100 per month. That’s it. Then you calculate the commission, how much you’re paying. But we know that this is an investment that repays right away. And that’s it. Additional budgets are needed only if, for example, you’re working with reaching out to those big SEO content-focused media, like Hearst group, etc. They will always send you a mediator, and they will say the starting price for the article is from 2k to 10k, for email inclusion from 500 to 4000 or something like that. It’s your decision if you want to invest in that or not. I’m old school. I tell brands we’re off if we can, let’s just push for commission deals. Maybe we will not get it as fast, but it will happen. Still, there are quite a few affiliates where you can negotiate or maybe higher commission but no fixed fees and get included. With one of our brands, it took us three and a half months. The founder was skeptical, he even thought we should stop, but literally two days later, one of the biggest affiliates picked up the deal. Today, affiliate marketing brings them 50 to 60% of revenue. It’s a very nice channel, but it takes time.
Julija Jegorova: With affiliates and affiliate marketing, you can’t do it in random outbursts, right? It has to be consistent. You can’t just say, “Okay, we’ll do it in January and February because that’s how we feel like it,” then wait for half a year and do it again.
Vik Ratomske: It’s the same as with PR. You can’t do it just like that. It has to be consistent. If you want to have your products reviewed, presented, introduced, shared, there is a constant relationship management, constant checking in, doing sales, renegotiating results, etc. There are cases where the brand closes the affiliate account. But what happens then, and I love this part, imagine you work with various affiliates, influencers, coupon sites. If you’re closing your affiliate program, some of them will delist you, like they will remove you from their coupon directories, etc. What about SEO affiliates? Will they harm their content by deleting or removing? No, you are there to stay. They will update the article with something like, “But this brand is no longer active,” or something like that. They will add somebody else to the promotion. But that’s what I love about affiliate marketing. It’s not only acquisition, it’s long-term brand awareness. It’s long-term brand awareness that you don’t have to pay for.
Mauro Battellini: How does affiliate marketing connect to all the other areas of marketing? So you have a good-sized company, maybe a scale-up, not necessarily a startup or an established company. They want to start an affiliate marketing department or team or hire a person leading it. With what other marketing areas do they need to communicate and align with? In an ideal situation, how does it cooperate with the other areas of marketing?
Vik Ratomske: It goes even beyond marketing. Within the marketing team, let’s imagine we have, I don’t know, 20 people. Every part of marketing already has a couple of dedicated people. The affiliate marketing team works a lot with the SEO team because some of the possible partners will reply that they’re not interested in affiliate marketing, but they’re doing SEO backlinks. So then you’re exchanging information with your SEO team. It goes both ways because they’re outreaching some of the partners that might be good affiliates. Then you’re always constantly in communication with PPC, with paid media managers, because there are sneaky affiliates that are bidding on your brand name. You can always ask your teammates to check if nobody’s bidding on the brand name. If they are, we turn to those affiliates, and we’re like, “Thank you, bye.” Also, the PPC team and SEO teams can help us with keyword analysis, trending keywords. By this, we can research better possible affiliate partners. Also, when working with the affiliates themselves, we can say, “Hey, this is the list of keywords that we want to, or would like to have, or they work really well for us,” etc. Obviously, the creative team, if any of the affiliates would need any images, etc. Apart from that, the affiliate marketing team works a lot with tech teams and legal and finance. Legal, there’s a crucial part of our terms and conditions for what we’re paying, any disputes. With legal, that is one part. But with accounting, try to explain to accountants or banks what is affiliate marketing and why you’re paying to somebody in Singapore or in Brazil or something like that, and how to account for that. Here comes the huge help of affiliate platforms where they do the payouts for you. You just get one bill with all the details and everything. They blindly do payouts in every possible currency, so you don’t have to take care of it. Some years ago, we used to do that manually. For example, imagine if you have 400 affiliate partners every month. You have to check their payouts, check the currencies, pass it on to accounting, answer tons of questions, and then talk to the bank about some of the payment volumes. And obviously with IT, you have to talk about the tracking technicalities.
Mauro Battellini: Cool, Vik. Thank you so much for this introduction to affiliate marketing. I feel like I understand it a lot better now. Although I have a feeling that we only scratched the surface, and probably it’d be good to have you for a round two at some point. If people want to find out more about you, hire you, and also you mentioned that course that you recorded, where can they find all that information?
Vik Ratomske: My main source of communication is LinkedIn. My personal LinkedIn is Vik Ratomske, or also check us out at partnergap.com, or Partnergap on LinkedIn is the best way. And of course, we have a course with Ad Addon Academy and they love working with those guys, teaching students. So what I do is with marketing.
Mauro Battellini: Vik, thank you so much for being on the pod with us. It’s been a pleasure.
Vik Ratomske: Thank you.
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