Why should companies consider partner marketing?
Partner marketing is a misunderstood and underappreciated approach…
In this episode, Tye DeGrange, founder and CEO of Round Barn Labs, shares how you can get started with partner marketing.
He’ll cover:
- The difference between partner marketing and affiliate marketing
- Common mistakes with partner marketing
- How to measure the success of partner marketing
- Successfully approaching partners and influencers
- Can partner marketing work for B2B?
- And more
Mentioned in this episode:
Transcript
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I'm your host, Steffen Horst. In today's episode, we're going to talk about partner marketing. Here to speak with me is Tye DeGrange, who is the founder and CEO of Round Barn Labs, a growth marketing agency based in Austin, Texas. Tye has 19 years of data-driven acquisition marketing experience, and 17 years in affiliate marketing, growing startups and fortune 500 companies specifically in e-commerce and direct to consumer. Tye, welcome to the show.Tye DeGrange: Thanks so much for having me. Excited to be here.Steffen: Now Tye, before we start talking about partner marketing, tell our listeners a little bit more about yourself. How did you get started in your career? And what led you to founding Round Barn Labs?Tye: Thank you so much. Yeah, so I grew up on a working ranch in Northern California and went to UC Santa Barbara. After that I got lucky enough to stumble into performance marketing and direct response marketing. I think I was a self proclaimed history nerd. And years ago prior to digital's extensiveness that it is now, history majors were kind of told to go into teaching or law, maybe one or two other fields. And fortunately, I didn't have to be pigeonholed. I had a very strong interest in law and political science in my college years, and as I evolved in my career, I got to find a very interesting, DR based performance company down in Southern California where I learned a ton about placing buys on digital, print, audio, TV. And then a few years after that, I got to a Sequoia backed startup that was one of the first ad networks about 17 years ago. So that really kicked things off. I got hooked by the startup bug. I got hooked by Silicon Valley. I got hooked by the constant changing nature of things and got to learn so much. And so for me, that was the real exciting part. How I started RBL, Round Barn Labs, after being in a number of those roles, people kept coming to me saying, hey, how do we do this? How do we do it better? I would actually hire agencies in my in house roles myself, and notice opportunities to improve upon service, pricing, offering, etc. And so I was lucky to kind of know that one of my roles was winding down. They were winding down our satellite office from afar and I had a few months of prep. And so I was able to kind of say now's the time, and no time like the present. So it was born out of necessity. And it has evolved a lot since its founding about nine years ago.Steffen: Awesome. Now, what does partner marketing, or what do you do with partner marketing at Round Barn Labs?Tye: Yeah, so at Round Barn Labs, you know, we've always taken a kind of growth view of things which can, you know, anyone can use growth as the business, when you think about the ability to grow with viral marketing or through content or sales. Where we sit is under the realm of paid marketing. And there you have your search or social, your programmatic. But affiliate is a little different, and partner marketing is a little different. I kind of view partner marketing as a way to really work with a trusted partner to drive a particular outcome as simple as that can be. And it's a bit more relationship based, but it has a lot of the data. And for example, you can have a partner be an affiliate that happens to be a media buyer that will run on Google, Meta and Tik Tok on a performance basis. You might have an influencer that is on Instagram that is maybe doing a flat fee placement with a little bit of a cost per action and maybe a gift. So they can range the channels, they can range the payouts. The partners can be a number of things. A lot of people might think of it as like performance PR. So it's not necessarily just a channel. It's almost like a way of creating outcomes from the right incentives.Steffen: So with you partner marketing is equal to affiliate marketing? Is that a fair statement?Tye: I think that I, yeah. That could be debatable, right. I think that partner marketing probably is a little bit broader in that. But I often use them interchangeably. It's often simpler for people to just think of them as the same thing. I think that with partners, I think you can kind of get into the realm of influencer a bit more. I think there's often times internally in fortune 500s and other organizations that are more evolved, they have full fledged partnerships team. They're looking at integration, they're looking at brands to brand partners. And I think once you get into that realm, you know, I've heard people kind of talk about affiliate as partner light. And I think partners can be a larger umbrella with affiliates under it if you really want to get into the detail. But often in terms of our work and how we view it and what we bring to the table for clients, it's often like, hey, these are very similar mechanisms. We can do them for you. And so a lot of times, as you probably know, the work we do is to simplify things for folks and not necessarily make it more complicated.Steffen: Okay. Now, why should companies think about partner marketing? Why does it matter?Tye: Great question. So for me, it's an I think a number of data points have proven this out, a number of people mentioned this and lived through this, but it is the most misunderstood and most underrated performance marketing channel. It can easily make up 10, 20, even 30% of your revenue if it's managed appropriately. It's really one that I think a lot of people attempt to run, and they fall into so many little traps around it, or they don't necessarily have the right staff on it. The right time and resource on it. The right budgeting for it. But if it's managed well, it can go really well for the right type sized brands and becoming, I think, a lot more important and exciting and growing. Because you've seen Google and Meta kind of eat up the ecosystem. People want to get away from that reliance. The price points there are not always within their control or are too high, depending upon where you are in the time of the year. So you get a diversification opportunity. It's just a really good opportunity to kind of diversify and help improve your overall mix in a big way.Steffen: Where are the core differences between partner marketing and affiliate marketing?Tye: Yeah, I mean for me, I would include influencer. Influencers become quite large. And I would say that if you include that under the umbrella partner, I think that can help kind of clarify some of the misunderstanding around the channel. I think it would also include under partner marketing, things like brand to brand collaborations. I think it kind of goes beyond your typical site that's promoting, a publisher site that's promoting an advertiser. It can be advertiser to advertiser, it could unlock a partnership that is not a typical advertiser. Advertisers, retailer, to content publisher are kind of typical partnership. It could, it could be more dynamic, it could be different than that. It can be heck, even a complimentary, you know, publisher. It could be a number of different things. So that's kind of where there's a lot of overlap between the two, but they're kind of different.Steffen: Interesting, interesting. I would have almost thought it's kind of like an overarching term. Partner marketing. Because what you mentioned, in regards to brands working together, like, you know, sponsoring email newsletters or things like that, or there's a kind of a complimentary service that you can offer your clients. You're using a CRM system, you're having a partnership with a CRM company. And those kinds of things are very familiar for me from a partner marketing perspective. I hadn't heard that you would put influencer marketing which I see as kind of a separate solution and affiliate marketing under one. But when people think about how they can use partner. And that's what in the end what it's all about. However they can use partners to grow their revenue or grow their business. Where do these people get it wrong when they start the journey of identifying who they can work with?Tye: Yeah, great, great question. So the pool of talent of people that know the influencer in a partner marketing space and affiliate space is not massive. So yes, it can be learned, yes, it can be trained, but you've got to have somebody that at least is willing and able to learn it or knows it. That's step one. Another piece is the allocation of time around it is, you know, if you're not doing that work internally of setting up the proper program, which we can get into. You've got to have somebody doing it externally to help you. So it's doable. And I think that's why it lends itself to being outsourceable, but you've got to, you've got to be able to invest in that. The other pitfall I see is that people will try to apply paid social, paid search principles to it, and it doesn't really behave that way. You can't just sit back, set up an ad in ShareASale, or an Impact or a CJ, run an offer, click start and watch the money and customers come in like you can with Google and Meta. You've got to actively manage these platforms. They're not at all like programmatic. I think there's a long list of pitfalls that people run into. But those are some initial ones that I see.Steffen: Interesting. No, we are performance marketers, right. And everything we do, we spend money, we like to see what the impact is of that. So how do you measure the success of partner marketing?Tye: Yeah, great question. So fortunately, it's highly measurable. With pixel tracking, with API, with batch tracking, utilizing platforms like Impact, we can see and run tests. Programs on the attribution side, like North Beam, and others can be compatible to ensure that, hey, it is what we set out to do. We can appropriately attribute revenue, traffic, clicks to this partner ID and to this channel. And so from our side, it's kind of required and needed to be able to prove out. Going back to my original comment, you know, it can often be your most efficient CAC, ROAS, or MER, depending on your measurement channel of all your performance marketing efforts. It's not going to move as quickly. It's not going to stop on a dime like programmatic. It isn't a start stop, because it's relationship based. It is something where you kind of wind down and provide heads up, and there's things that you can do to accelerate it. But fortunately, it is quite measurable. And that is something that's been kind of a key element of it for a while.Steffen: And I think what made in the past, even these days, affiliate marketing, partner marketing, so interesting, wide, there usually is a limited amount of investment required to get that started. At least, you know, when we run paid search, or programmatic or paid social, you got to put a good amount of money down in order to achieve results, right. If your product is more expensive, you have to put on more because it costs more to find a seller or buyer for that. With this, it's something you know, if you identify partners, whether they are influencers or other companies that are willing to promote or offer your product or service, you might, as you said earlier, be able to negotiate a cost per sale, for example, or percentage of revenue generated, which basically can help companies that are relatively young to get started in order to build awareness, but at the same time, get sales. And with that in mind, how do you approach partners and influencers for them also to take the air quotes risk to take a newer brand on? Because, you know, they're only making money if people pick up the product or the service. And if they're not so known if they're completely new, it could be a little bit of an uphill battle.Tye: Yeah, no doubt. And I think that's kind of where we have value and benefit and buying power and relationships that can really help. Partners are going to look at a number of factors. They're going to look at the brand, they're going to look at the value prop, they're going to look at the pain points that it's solving for the customer, they're gonna get conversion rate, they're gonna look at average order value. Not dissimilar than an understanding or strategy or competitive analysis for another channel, right. Earnings per click, EPC, or earnings per hundred click is something that often comes up. They want to know what's typically derived from a partnership like the one they're about to enter into. The thing that we help with is kind of adding a little bit of that color or commentary around it. Like, hey, this is a brand that's really growing. This is a really responsive team. This is an advertiser brand partner that's willing to pay out bonuses, if certain milestones are reached over time. You know, hey, oh, you want to get a really interesting, semi exclusive offer from them that you've seen them do in the past? Let's, let's ask for that at some point, or now. So there's a lot of like, I think there's a level of creativity in the negotiation that's really exciting with partner marketing, with influencer marketing. It's affiliate marketing that doesn't exist in other performance marketing channels. I think that's where you get to kind of lean into some of the human elements, but also supported by the data. And I think that's often where we can see it, where we can make it sing, where we can see it come in.Steffen: That sounds a little too good to be true. It's like no risk by a lot of upsides. What are your thoughts?Tye: The great question. It definitely has risk, right? Like, I think another misnomer is that it's only pay per action. There's definitely an upfront, there's a huge upfront investment from the team building, the team working on it, the agency building it out. Heck, there's a huge upfront investment in even in taking on an existing program. The amount of cleanup that is to be done, and oftentimes looking at an existing program. Not always, but often. So it's absolutely not a slam dunk. It's never always the right fit. You know, there's oftentimes partners that have grown to a size and value that they're charging pretty high rates in their own right on getting placement just to start a relationship with them. And then also that pay per, you know, sale, or pay per revenue action afterwards. So if it's managed well, part is always the challenging thing, right? Because it does take, it is a labor intensive channel. You're talking about setting up, validating, getting creative, making sure tracking is in place, going out and recruiting 10s, hundreds, maybe 1000s of partners, but then the managing and policing of them afterwards. A bunch of stuff has gone wrong in the history of affiliate marketing that we've seen firsthand. And we've seen others go through. When I was at eBay internet marketing back in, you know, years ago, they actually went so far as to prosecute violators of fraud. That's how big and bad it got. I think there's been a lot of legitimacy brought into the industry and better visibility and quality and tracking, and higher quality partners in terms of the sites that you're associated with. But there's still bad actors, and there's fraud and a lot of digital channels, unfortunately. But in affiliate, I think it got a particularly bad rap, for good reason. And we keep a close eye on that. You have to really watch and monitor the duration and the time between certain activities. We use a lot of combination of tooling in terms of what's on top of the network solutions to make sure that fraud is mitigated, so I appreciate that. I liked that conversation and question. It's one that is important.Steffen: Yeah, because I mean, in the end, it's supposed to add additional value, not take off sales that would have happened anyway. So you know, if you have the code sites, where you get your 10% additional off, and the person is at the point of checkout. And it's like, enter your code. I mean, I do too, right? And you go, it's like, oh, let's see if I find a code that gets me X percent off or whatever. I mean, would I have converted without that code? Probably, because I'm literally at the last point. So it's not really adding value to that. And I know, that's more an affiliate issue. But as an example, those are the issues that you have to think about.Tye: Yeah, absolutely. And so we're always counseling and cautioning and helping brands through that challenge of like, okay, well, if we're going to offer a code, or if we're going to offer a discount, we got to get the unit economics really right. We've got to really be eyes wide open about what value that partner brought. Are we really measuring the quality downstream of those activities effectively? Are we getting a percentage of new customers coming through those channels? So it's such a funny deal, where it's such an easy thing to slap it on and say, well, I'm doing affiliate marketing, and we've got our codes out, and we're paying people and we're tracking it all. And here's the numbers, NS it's like, it's so easy to get a false signal if you're not really looking at it properly. And so we've been very careful about the toolbar options, and it's not the it's not that they're wrong or bad or need to be thrown out. But you've got to really, if you do work with them, you got to really monitor. You got to really make sure they're bringing value. You got to really measure their quality down the stream. Price them right. All that really matters. And so it's so true.Steffen: Yeah, that reminds me of back in the days in Europe when you had a lot of search affiliates that would just spam Google and what happened is if the brand did not police this all the sudden, you as the brand paid a lot of money for your brand term because the only thing they bought were brand terms because they were cheap. In Europe, you didn't have any issues to do that. And it inflated the cost for clients massively till you know, agency started and said look this makes no sense. You're literally paying way too much for the sales that you would get anyway. So this, this adding value, is I think a very important part in the entire equation.Tye: The search arbitrage game and early 2000s was off the charts. I mean, if you could, you could be an affiliate rather quickly and it's just I think it's completely reined in on so many levels for the organic as well as paid. But absolutely it was out of control in some instances. Even prior to Ebay you'd see it with a number of brands. You'd have to really, it's amazing how many brands don't even have a proper policy in place now, and it's like this was sorted out 20 years ago. Let's help you get back to reality here.Steffen: Yeah. Now, when you get started with a new client, where do you begin partner marketing with that particular client? What are the first things you're doing?Tye: Yeah, I mean, I think we oftentimes there's how does this fit in or not fit into their existing mix, right? How far along are they from a product market fit, overall budget, conversion rate perspective? Are they getting retention in their business? Like some of those foundational things I enjoy kind of getting dialed in on and knowing that if a brand's already there, you know, then for us, it's really about getting into things like ICP and segments and knowing okay, well, what can we learn from their data, either through Google Analytics or other tools? What can we learn through looking at their existing program, if they have one. If they don't, how would we kind of build that out one step at a time. We want to look at forecasts from now until the next 12 months forward looking. We would want to look at kind of like a 30, 60, 90 day plan of like, these are the big deliverables, we're going to be getting out the door on those timelines. You know, for us, it's also about having a nice diverse portfolio of partners. So we can go out and get the top 100 that kind of exist in our world, from a hey, this is who are going to generate the most revenue perspective. But we're gonna make sure that that aligns with the brand and the brand guidelines and the Northstar metrics we've outlined and talked about. And you know, how much of it can we you know, do we need to accelerate based on the needs of the brand? Like I shared earlier, it's not going to be as fast of a ramp up as search or social. So you've got to kind of set those expectations. Say hey are we okay with this level of growth with this type of efficiency? If not, here's what we can do about it. So a lot of that build is important. The other, maybe the most important piece is, you know, affiliate and partner marketing gives you the chance to kind of recruit and harness like an army of marketers at your disposal. So you've got to feed the relationships. You got to feed them with the basic data. You've got to give them great creative, competitive payout, landing page offers. So often overlooked. You don't want to just send them to any destination. Just like other levers, you need to, oftentimes you'll kind of once a partnership becomes larger and more revenue, they're driving, you then invest and say hey, let's do something really unique and do maybe a co-branded landing page or something like that. Yes, that doesn't work for all brands. And it has to require a lot of skin in the game and investment from both sides. But even before that, your page should be really well suited for this particular experience, depending upon what channel they're on. Is it a listicle, or a review site or a gift guide. That can really dictate the type of landing page you want it to be on. So that's one of the bigger opportunities I think people miss. The thoughtfulness of that and giving the partners the ammunition, they need to really do a great job for you. I think that's huge.Steffen: Now, you guys at Round Barn Labs, you focus more on e-commerce and direct to consumer, where I can see this works really well. What about the b2b side? Can you see this working really successfully? And if so, what are your thoughts on this working successfully? And how would it work successfully?Tye: Yeah, that's a great question. We've had some successes in b2b. I'd say it's probably been about 20 or 30% of our business since our history nine years ago. So we know the space. It's fascinating. And we're seeing affiliate actually and partner marketing really grow a lot of interest in this space. A lot of like prosumer and enterprise and mid market opportunities. I think when a brand and b2b SaaS or b2b is quite ubiquitous, quite large, has a good total addressable market, I think it can really be an interesting opportunity and an exciting one. We're seeing brands really take advantage of this and build out full on what they call partner programs or ambassador programs where they're getting maybe customized gear as people get excited about being like an evangelist for the brand or repping it. And they're talking about it. Maybe they're on YouTube, like doing crazy explanations of software or helpful guides for people. So, as technology has improved, I think b2b has really stepped up as a, it could very well be the faster growing of the two, right? I mean, it most likely is. It seems to be a movement we're noticing. And so I love some of the brands that are stepping into this space and doing a really good job with it. We're kind of loving our efforts there. It's fun and interesting. And I think as long as you can wrap your head around just the different metrics and not putting yourself in the shoes of the customer and saying, hey, this is a different process, we may have to capture that signup, we may have to capture, what's the quality metric associated with it. And really tying those two together, not just not just focused on one, and kind of really orienting. We have a lot of folks that are dedicated to kind of solving that one. And I think it's fun. I think it's interesting. It's certainly fast growing, and the need seems to be growing a lot in that space. It's certainly there. Yeah.Steffen: So for the listeners who have been with us up to this point, and are like, man, this sounds interesting. I might want to find out even more or see if this is something for us. But ask, how do I have to pay for the service, as I said earlier, right? I mean, setting up a program takes a good amount of time, because you have to identify partners, you have to manage the partners, you have to make sure that they follow what is said in kind of in the onset of the partner program, etc. So how do agencies usually charge? Get remunerated for that service?Tye: Yeah, it's a good question you know, typically what we see and how we operate is a retainer model. And then there's some performance incentive tied to that. So not too dissimilar from the search and social side of the world. It's typically a retainer per month basis, a flat fee, with like a percentage of sometimes the payout partners, sometimes the percentage of the revenue. We kind of prefer the percentage of the revenue because then we're incentivized to grow what the client is capturing and not what they're paying out on. What you paid on might go down a lot if you're being more efficient. So we want to be aligned more with the brand that way. But in some cases, we've seen it work. We've seen work in different cases in different ways. And that's typically how payments are structured there.Steffen: Perfect. Well, Tye, thank you so much for joining me on the Performance Delivered podcast and sharing your knowledge on partner marketing. Now, if people want to actually reach out and say, hey, Tye, can you help me think through all partner marketing? How can we get in touch?Tye: Absolutely. I love it. I'm on Twitter quite a bit, but I'm also on LinkedIn. You can find me there. Tye DeGrange. You can also check out our site roundbarnlabs.com. And I'd love to hear your questions, concerns and ideas and see if we can be of help.Steffen: Wonderful. As always, we'll leave that information the show notes. Thanks everyone for listening. If you like the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again and see you next time.Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience-focused and data-driven digital marketing solutions for small and medium businesses at symphonicdigital.com.
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