This critical marketing problem that Amazon, Walmart and others face just got solved

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For more than a decade, leading online retailers such as Amazon, eBay, QVC, Walmart, and Target have relied on affiliate marketing channels to build brand awareness and drive online transactions. Their approach is straightforward: give publishers with large online audiences an incentive to drive traffic to the retailers’ online stores, and pay them a commission based on the sales they generate, typically a fixed percentage of the total transaction amount. Because it is performance-based, affiliate marketing nicely aligns incentives and avoids the perils of ad buys that may or may not convert to sale. Affiliate networks such as Rakuten (Linkshare), Commission Junction, Pepperjam, and Impact Radius facilitate this process by handling the tracking and last-click attribution, and solving for the one-to-many challenge, such that retailers can easily leverage multiple publishers’ online audiences at once. 

Affiliate marketing is a booming business. Nearly 20% of all online transactions now originate through a publisher link. This channel exceeds email and rivals paid search in terms of online sale volumes generated, and it’s growing faster than any other acquisition channel. Commissions to publishers in the US are expected to top $4B for the first time in 2016. 

But there is a critical problem confronting affiliate marketing today: it doesn’t work for purchases made through mobile apps. Because traditional affiliate networks can’t rely on tracking pixels and cookies in the native app environment, they cannot measure when a publisher sends traffic to a retailer’s app or drives a purchase therein. These transactions are lost and no commissions are paid to the publisher. Making matters worse, today’s consumers often develop purchase intent in the course of using mobile apps, not sitting in front of the Google search terminal on their desktop browser. Current affiliate networks cannot accommodate this change in consumer behavior because they don’t allow consumers to deeplink from one app experience into another app where they can complete a transaction. In short, the app-to-app economy has been stunted by the limitations of technology and affiliate networks in particular. 

Why does this pose such a challenge for retailers? According to ComScore, native mobile commerce is now the fastest growing sector of the US retail economy. In Q1 2016, purchases within apps outpaced transactions on mobile web for the first time. Native app commerce is growing 70% year-over-year, compared with 40% growth in mobile web and 15-20% growth on the web.  The experience of browsing an online catalogue and paying is superior inside of apps. Not surprisingly, this translates into higher average order values and dramatically higher conversion and repeat purchase rates in app versus on a mobile website. Savvy retailers are increasingly emphasizing the need to drive more mobile app transactions, and making this a cornerstone of their mobile strategies in 2017.  Yet one of their most important techniques for driving valuable user acquisition – affiliate marketing -- has been entirely off-limits to them. Until now. 

Earlier this month my company, Ibotta, together in partnership with Button, brought to market the first app commerce based affiliate program in US history.  Many of the world’s most innovative mobile commerce companies – including iTunes, Jet.com, Boxed Wholesale, Spring, Doordash, and Groupon – are now taking their affiliate marketing into the world of app commerce for the first time. They are tapping into Ibotta’s audience of 20 million mobile shoppers and using Button’s innovative affiliate technology to deeplink mobile users directly from the Ibotta app to the relevant section within their own app, where the shopper can make a purchase and earn a small reward from Ibotta in the form of percentage cash back. Where the consumer does not have the retailer’s app installed, she is prompted to do so within Ibotta and then automatically deeplinked into the destination app. 

Retailers are happy to innovate, but what they really care about are the early results. Within just the first month since launch, Ibotta is already driving more than $1 million per week in in-app sales. Repeat purchase rates and conversion rates are far higher than on mobile web.  And customer support tickets are one hundred times lower than with mobile web. With more and more leading retailers looking to take advantage of this new, fast growing app-to-app economy, affiliate networks are reaching out to understand the implications of this opportunity, and many are now partnering directly with Ibotta and Button. 

As the path to purchase evolves, popular marketing techniques must keep up. The emergence of an app commerce affiliate program is just the latest and most prominent example. The combination of explosive growth in native app commerce with innovations in affiliate marketing technology is opening up a new vista for retailers to introduce their brand to a new generation of shoppers.